United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (March 2019)

54 slides from United Overseas Bank's investor presentation, March 2019

  1. Slide 1: UOB Group: Record Earnings Supported by Strong Balance Sheet

    UOB Group Record Earnings Supported by Strong Balance Sheet March 2019 Discla imer : The mater ial in th is pr ese ntat ion conta ins g enera l b ackgro und informat ion a bout Un it ed Overse as Ba nk L im ited (“UO B”) and it s act ivit ies as at the date of the presentat ion. The informat ion is

  2. Slide 2: Agenda

    Agenda 1. Overview of UOB Group 2. Macroeconomic Outlook 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials

  3. Slide 3: Overview of UOB Group

    Overview of UOB Group HtUOB

  4. Slide 4: UOB Overview

    UOB Overview Founding Key Statistics for FY18 Founded in August 1935 by a group of Chinese ■ Total assets : SGD388b (USD285b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholders’ equity : SGD38b (USD28b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD262b (USD192

  5. Slide 5: A Leading Singapore Bank; Established Franchise in Core Market Segments

    A Leading Singapore Bank; Established Franchise in Core Market Segments Group Retail Group Wholesale Banking Global Markets  Best Retail Bank in Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards and  Seamless access to regional

  6. Slide 6: Proven Track Record of Execution

    Proven Track Record of Execution  UOB Group’s management has a proven track record in steering the Group through various global events and crises.  Stability of management team ensures consistent execution of strategies  Disciplined management style which underpins the Group’s overall resilience

  7. Slide 7: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with c.500 Offices Profit Before Tax by Region (SGD m) MYANMAR GREATER CHINA 40% of 2 offices 28 offices1 Group profit before tax VIETNAM 39% of THAILAND 1 office Group profit 507 154 offices before tax PHILIPPINES 469 443 1 office 77

  8. Slide 8: Why UOB?

    Why UOB?  Proven track record in steering the bank through various global events and Stable crises Management  Stability of management team ensures consistent execution of strategies  Entrenched local presence. Ground resources and integrated regional Integrated Regional network allow us to bette

  9. Slide 9: Macroeconomic Outlook

    Macroeconomic Outlook {itt VOB

  10. Slide 10: Trade Tensions Cloud China's Outlook

    Trade Tensions Cloud China’s Outlook but Low Risk of Hard Landing  The Chinese economy has its underlying momentum, supported by rebalancing reforms and steady jobs market.  Low central government debt underpins China’s fiscal capacity, which could help mitigate “black swan” events.  Our base cas

  11. Slide 11: Global Trade Tension Negative for Asia but Some Silver Lining May Emerge

    Global Trade Tension Negative for Asia but Some Silver Lining May Emerge Exports growth slowed across Asian countries in Key recipients of foreign direct investments in 2018 Asia Year on year export growth in USD terms (%) Foreign direct investments* (USD billion) 15 24 Malaysia Vietnam 36 14 35 22

  12. Slide 12: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19f 2Q19f 3Q19f 4Q19f US 10-Year Treasury 2.33 2.40 2.74 2.86 3.06 2.68 2.80 3.00 3.00 3.25 US Fed Funds 1.25 1.50 1.75 2.00 2.25 2.50 2.50 2.75 2.75 3.00 SG 3M SIBOR 1.12 1.50 1.45 1.52 1.64 1.89 1.95 2.15 2.20 2.45 SG 3M SOR 1.01

  13. Slide 13: Southeast Asia: Resilient Key Markets

    Southeast Asia: Resilient Key Markets Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 289 15.3 18.3 205 75 118 105 8.1 30 24 26 2.3 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –2.4 –5.5 1998 2018 (latest available) Singapore Malaysia Thailand Indon

  14. Slide 14: Singapore GDP Growth to Moderate in 2019 Amidst Further Policy Tightening

    Singapore GDP Growth to Moderate in 2019 Amidst Further Policy Tightening  4Q18 GDP growth slowed to 1.9% y/y (3Q18: +2.4%). MAS Normalised SGD NEER Further in Oct’18 This brought the full-year GDP growth to 3.2% (2017: +3.9%), as manufacturing growth slowed to 7.2% in 131 MAS kept neutral stance a

  15. Slide 15: Southeast Asia Banking Sectors: Strong Fundamentals Remain Intact

    Southeast Asia Banking Sectors: Strong Fundamentals Remain Intact Robust Capital Positions Adequate Loan/Deposit Ratio Healthy Reserves (Common equity Tier 1 capital adequacy (Loan/deposit ratio, in %) (NPL reserve cover, in %) ratio, in %) 21.6 98 Thailand Singapore 93 Indonesia Indonesia 146 Thail

  16. Slide 16: Conducive Macro Conditions Underpin Singapore Property Market

    Conducive Macro Conditions Underpin Singapore Property Market Regional House Price Indices over Last 10 Years Low Unemployment vs Global Peers (4Q08 = 100) (%) HK, 342 7.7 EU, 6.6 MY, 211 4.2 US, 3.9 AU, 165 CH, 3.8 100 TH, 153 SG, 129 HK, 2.7 2.4 SG, 2.0 4Q08 4Q10 4Q12 4Q14 4Q16 4Q18 2008 2010 2012

  17. Slide 17: Basel III across the Region

    Basel III across the Region BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15 Jan-15 Jan-15 Jan-13 Jan-14

  18. Slide 18: Banking Regulations Still Evolving

    Banking Regulations Still Evolving Year ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 Basel III Phased-in Full capital ratios Leverage ratio Disclosure phase Start Revised7 LCR1 Phased-in Full NSFR2 Start SACCR3 Start MCRMR4 Start TLAC5 Phased-in Full Basel IV6 Phased-in Full IFRS 9 St

  19. Slide 19: Impact of Basel IV Likely to be Manageable

    Impact of Basel IV1 Likely to be Manageable Retail credit Wholesale credit Others LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for to 5% from 10% QRRE4 and Other Retail Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%

  20. Slide 20: Strong UOB Fundamentals

    tit UOB Strong UOB Fundamentals 20

  21. Slide 21: Strong UOB Fundamentals

    Strong UOB Fundamentals Strong  Proven track record in steering the bank through various global events and Management with crises Proven Track Record  Stability of management team ensures consistent execution of strategies Consistent and  Prudent growth amid the subdued business environment Focus

  22. Slide 22: Managing Risks for Stable Growth

    Managing Risks for Stable Growth  Prudent approach has been key to delivering sustainable returns over the years Manage concentration risk  Institutionalised framework through Group Risk Appetite Maintain Statement (GRAS): Nurture core balance talent sheet – Outlines risk and return strength objec

  23. Slide 23: Competitive Against Peers

    Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA1 Liquidity Moody’s S&P Fitch Moody’s baseline Costs/income Return on average Loan/deposit credit assessment ratio assets1 ratio Aa1 AA– AA– UOB a1 43.9% 1.07% 88.2% Aa1 AA– AA– OCBC a1 43.4% 1.17

  24. Slide 24: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 24.0 22.9 22.9 21.6 20.0 19.0 (Common Equity 18.0 17.3 17.0 17.0 16.9 16.8 16.4 16.4 16.4 16.3 15.8 15.8 15.1 15.1 15.0 14.9 14.8 14.2 Tier 1 CAR; 14.1 14.1 14.0 14.0 13.9 13.9 13.5 13.4 12.9 12.6 12.4 11.

  25. Slide 25: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Improved balance sheet efficiency Balance Sheet Efficiency a Key Priority – Stronger RoRWA1 driven mainly by higher profit RoRWA1 1.51% 1.63% 1.93%  Healthy portfolio quality – NPL ratio improved to 1.5% in 2018 FY16 FY17 FY18 – 16bp credit cost on loans lower

  26. Slide 26: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others Greater 12% Singapore 16% SGD IDR 47% China 52% 2% 15% THB 6% Indonesia 4% MYR Thailand 10% 6% Malaysia USD 11% 19% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professi

  27. Slide 27: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Aa1 / Stable / P-1 AA– / Stable / A-1+ AA– / Stable / F1+  Capital good by global standards  Well-established market position, strong  Sound capital and high loan-loss buffers  Deposit-funded and liquid balance sheet funding and prudent management record 

  28. Slide 28: Our Sustainability Milestones

    Our Sustainability Milestones Notable Achievements Notable Recognitions 1. FTSE4Good ASEAN 5 Index UOB was ranked second by market capitalisation at end- 2018 2. Bloomberg Gender-Equality Index Sinar Kamiri Sdn Bhd UOB was included in 2019 based on disclosure in 2018. (A subsidiary of Mudajaya Group

  29. Slide 29: Our Growth Drivers

    itt UOB Our Growth Drivers 29

  30. Slide 30: Our Growth Drivers

    Our Growth Drivers  Provides us with ability to serve expanding regional needs of our Realise Full customers Potential of our Integrated Platform  Improves operational efficiency, enhances risk management, seamless customer experience and faster time to market  Global macro environment remains un

  31. Slide 31: Southeast Asia's Immense Long-term Potential

    Southeast Asia’s Immense Long-term Potential Population GDP1 Trade2 FDI3 (Million persons) (USD trillion) (USD trillion) (USD billion) 749 6.6 4.5 328 643 567 2.6 2.8 115 1.6 1.4 84 2007 2017 2030 2007 2017 2030 2007 2017 2030 2007 2017 2030 • Third largest globally, • Fifth largest economic • Fourt

  32. Slide 32: Revenue Potential from 'Connecting the Dots' in the Region

    Revenue Potential from ‘Connecting the Dots’ in the Region Industry’s Potential Connectivity Revenue Industry’s Potential Connectivity Revenue (2020) (SGD b) c$55b (SGD b) CAGR Markets where UOB has a presence c$14b +11% c$44b Singapore Thailand c$3b c$2b c$10b c$6b +4% Hong Wealth Kong c$6b c$4b Ot

  33. Slide 33: Wholesale Banking: Tapping Intra-Regional Flows through Diversification

    Wholesale Banking: Tapping Intra- Regional Flows through Diversification Strong income & RoRWA1 growth… ... supported by diverse sources By geography By product By sector +11% +17% +15% +11% 3.9 2.2 2.4 3.5 1.9 2.1 1.7 1.8 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 GWB income (SGD b) Non-Singapore Non-

  34. Slide 34: Strategic Initiatives to Tap Intra-Regional Flows

    Strategic Initiatives to Tap Intra- Regional Flows 1 2 3 Strengthen Connectivity Sector Specialisation Products & Platforms Support and grow with Offer customised Building new our customers in the solutions capabilities region to our customers • Focused on tapping • Focused sector teams • New produc

  35. Slide 35: Retail Banking: Serving Rising Affluent via Our Extensive In-country Presence

    Retail Banking: Serving Rising Affluent via Our Extensive In-country Presence Gross Loans (Group Retail1): +4% YoY in FY18 Income3 (Group Retail1) +4% YoY in FY18 SGD b SGD b 104 108 3.8 4.0 3.5 98 FY16 FY17 FY18 FY16 FY177 FY18 High Affluent2 income: +10% YoY in FY18 Segment RoRWA4 +0.50%pt YoY in

  36. Slide 36: Leveraging Digitalisation and Partnerships to Grow and Deepen Customer Franchise

    Leveraging Digitalisation and Partnerships to Grow and Deepen Customer Franchise 1 2 3 Digital Bank Omni-Channel Experience Ecosystem Partnerships Targeting Mobile-First Traditional and affluent Forging collaborations to and Mobile-Only customers with universal widen distribution reach Generation ba

  37. Slide 37: Latest Financials

    itt UOB Latest Financials 37

  38. Slide 38: FY18 Financial Overview

    FY18 Financial Overview Net Profit After Tax (NPAT) Movement, FY18 vs FY17 (SGD m) 692 94 232 265 335 4 2 +18% 4,008 3,390 +13% +5% –20% +7% –46% –4% +0% FY17 net Net interest Net fee and Other non- Operating Total Share of Tax and FY18 net profit after income commission interest expenses 1 allowanc

  39. Slide 39: 4Q18 Financial Overview

    4Q18 Financial Overview Net Profit After Tax (NPAT) Movement, 4Q18 vs 3Q18 (SGD m) 9 17 103 27 33 24 21 1,037 –12% 916 +1% –4% –42% –3% +34% –99% –10% 3Q18 net Net interest Net fee and Other non- Operating Total Share of Tax and 4Q18 net profit after income commission interest expenses allowances pr

  40. Slide 40: Volume Sustained Growth in Net Interest Income; Margin Stable

    Volume Sustained Growth in Net Interest Income; Margin Stable Net Interest Income and Net Interest Margin 2,400 3.00% 3.00% 9,500 2.26% 2.20% 2.14% 2.19% 2.14% 2.18% 2.22% 2.18% 2.15% 2,200 2.00% 2.00% 8,500 1.77% 1.71% 1.77% 1.82% 2,000 1.81% 1.84% 1.83% 1.81% 1.80% 1.00% 1.00% 7,500 0.89% 1,800 0.

  41. Slide 41: Broad-based Increase in Loan Portfolio

    Broad-based Increase in Loan Portfolio QoQ YoY Dec-18 Sep-18 +/(–) Dec-17 +/(–) Gross Loans SGD b SGD b % SGD b % By Geography Singapore 137 133 +3 128 +8 Regional: 97 95 +2 85 +15 Malaysia 29 29 +1 27 +9 Thailand 17 16 +3 15 +12 Indonesia 11 11 +2 11 +5 Greater China 40 39 +3 32 +24 Others 27 27 +1

  42. Slide 42: Non-Interest Income Softened with Subdued Market Conditions

    Non-Interest Income Softened with Subdued Market Conditions Non-Interest Income and as a % of Total Income 50.0% 50.0% 5,300 36.9% 35.9% 35.4% 1400 31.8% 40.0% 34.5% 34.1% 34.2% 40.0% 4,800 31.3% 27.4% 30.0% 30.0% 4,300 1200 20.0% 20.0% 3,800 21.0% 21.3% 21.9% 21.6% 22.8% 23.2% 21.3% 20.8% 21.1% 100

  43. Slide 43: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income 2,500 (SGD m) (SGD m) 2,303 602 585 581 2,161 600 568 63 20 551 18 15 80 15 1,931 296 72 14 2,000 1,883 72 74 74 272 500 76 74 93 154 36 41 37 37 263 148 43 258 1,500 134 545 400 141 121 133 148 135 471 121 498 482 300 1,000 543 142 165 547 132

  44. Slide 44: Pacing Growth in Operating Expenses, with Maintaining a Stable CIR

    Pacing Growth in Operating Expenses, with Maintaining a Stable CIR Operating Expenses and Costs / Income Ratio 5,500 50.0% 50.0% 46.0% 5,000 44.0% 43.7% 43.9% 1,400 44.2% 43.6% 44.4% 43.0% 45.0% 43.4% 45.0% 4,500 4,003 1,200 40.0% 40.0% 4,000 3,739 1,027 1,022 1,011 3,425 35.0% 987 984 3,500 3,356 1

  45. Slide 45: IT Investments Towards "Changing the Bank"

    IT Investments Towards “Changing the Bank” Connectivity and Digital for Focus Centralisation and Standardisation Growth Cumulative 2009 to 2013 2014 to 2018 IT investments (cSGD0.6 b) (cSGD1.6 b) Total IT investments Global Market Platform: Customer flow income +9%1 Cash Management Platform: 36% 34%

  46. Slide 46: Exposure to China

    Exposure to China Bank exposure as of 31 December 2018 Non-bank exposure as of 31 December 2018 • Bank exposure accounted for 60% of total • Target customers include top-tier state- exposure to China owned enterprises, large local corporates • Top 5 domestic banks and 3 policy banks and foreign inve

  47. Slide 47: NPL Ratio Improved to 1.5%

    NPL Ratio Improved to 1.5% NPL ratio 1.8% 1.7% 1.7% 1.6% 1.5% NPLs (SGD m) 4,211 4,138 4,208 4,185 3,994 4,400 Others 303 300 290 290 3,900 132 139 230 150 138 120 Greater China 694 3,400 692 721 749 545 Indonesia 2,900 439 456 485 482 416 Thailand 2,400 585 558 603 623 629 1,900 Malaysia 2,058 1,94

  48. Slide 48: New NPA Formation Trending to More Normalised Level

    New NPA Formation Trending to More Normalised Level (SGD m) 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 NPA at start of 3,632 3,480 3,543 3,587 3,919 4,389 4,323 4,404 4,374 period New NPA 387 424 537 799 1,167 416 436 475 609 Upgrades, recoveries and (320) (293) (255) (369) (354) (310) (212) (398)

  49. Slide 49: Credit Costs Also Normalising

    Credit Costs Also Normalising Allowances for Loans 2,000 600 150bp 125bp 150bp 1,800 500 100bp 100bp 1,600 61bp 1,400 45bp 32bp 50bp 400 50bp 16bp 18bp 22bp 1,200 12bp 13bp 32bp 28bp 1,000 19bp 15bp 0bp 300 17bp 11bp 15bp 20bp 0bp 11bp 800 200 (50)bp (50)bp 600 400 655 693 660 100 (100)bp (100)bp 20

  50. Slide 50: Adequate Reserve Coverage Ratios

    Adequate Reserve Coverage Ratios 250% Total Allowances / 195% 178% 178% 177% 188% Unsecured NPLs200% (%) 150% Total Allowances / NPLs (%) 91% 81% 80% 80% 100% 77% 50%/ Allowances for NPLs NPLs (%) 44% 43% 42% 43% 38% 0% 4,500 4,000 3,500 Allowances for performing loans 3,000 1,961 (SGDm) 2,500 1,570

  51. Slide 51: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 8.0% 8.2% 7.7% 7.4% 7.6% Leverage ratio 1 5.0% Total CAR 2 18.7% 18.8% 18.4% 17.4% 17.0% 0% 19.0% 17.0% 2.5% 2.4% 2.4% -20000% 1.1% 1.5% 2.3% 2.1% Tier 2 CAR 2 15.0% 1.5% 1.0% 1.0% -40000% 13.0% Tier 1 CAR 2 11.0% -60000% CET1 CAR 2 15.1% 14.9% 14.5% 14.1% 13.9% 9.

  52. Slide 52: Stable Liquidity and Funding Position

    Stable Liquidity and Funding Position 111% 110% 110% Net stable funding115% ratio 107% (%) 105% 94.2% 94.8% 93.5% SGD loan-deposit ratio 92.3% 91.6% 95% (LDR) (%) 85% 86.7% 88.2% Group LDR (%) 85.1% 85.7% 85.7% 75% USD LDR (%) 65% 69.5% 66.2% 64.5% 63.9% 63.5% 55% Dec-17 Mar-18 Jun-18 Sep-18 Dec-18

  53. Slide 53: Higher Dividend for 2018

    Higher Dividend for 2018 20 20 20 50 45 35 35 50 35 35 35 2015 2016 2017 2018 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,444 1,135 1,661 2,000 Payout ratio (%) 45 37 49 50 Payout ratio (excluding 35 37 39 42 special/one-off dividends) (%) N

  54. Slide 54: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (March 2019) on 6ix