United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (August 2019)
53 slides from United Overseas Bank's investor presentation, August 2019
Slide 1: UOB Group: Steady Business Momentum Backed by Solid Balance Sheet
UOB Group Steady Business Momentum Backed by Solid Balance Sheet August 2019 Discla imer: The mater ial in th is pre se 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 io
Slide 2: Agenda
Agenda 1. Overview of UOB Group 2. Macroeconomic Outlook 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials
Slide 3: Overview of UOB Group
Overview of UOB Group HtUOB
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1H19 Founded in August 1935 by a group of Chinese ■ Total assets : SGD406b (USD300b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholders’ equity : SGD39b (USD29b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD273b (USD202
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
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
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 2 offices 28 offices1 VIETNAM 39% of THAILAND 2 offices Group profit 507 155 offices before tax PHILIPPINES 443 469 77 1 office 367 MALAYSIA 301 282 419 39%
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
Slide 9: Macroeconomic Outlook
Macroeconomic Outlook {itt VOB
Slide 10: Trade Tensions Cloud China's Outlook
Trade Tensions Cloud China’s Outlook but Low Risk of Hard Landing Despite ongoing structural slowdown, 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 mitigat
Slide 11: Global Trade Tension Negative for ASEAN but Some Silver Lining May Emerge
Global Trade Tension Negative for ASEAN but Some Silver Lining May Emerge Exports growth slowed across ASEAN countries Strong foreign direct investment inflows in 1H2019 to ASEAN Year on year growth (%) (US$ billion) 30 40 25 35 Average: 31 20 30 15 25 10 20 5 15 0 -1.9 -5 -4.4 10 -10 5 30 31 31 30
Slide 12: Implication on Regional Policy Rates
Implication on Regional Policy Rates 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19f 4Q19f 1Q20f US 10-Year Treasury 2.40 2.74 2.86 3.06 2.68 2.41 2.00 2.00 1.90 1.80 US Fed Funds 1.50 1.75 2.00 2.25 2.50 2.50 2.50 2.25 2.00 2.00 SG 3M SIBOR 1.50 1.45 1.52 1.64 1.89 1.94 2.00 2.00 1.95 1.95 SG 3M SOR 1.30
Slide 13: Southeast Asia: Resilient Key Markets
Southeast Asia: Resilient Key Markets Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 265 210 15.3 17.6 120 102 75 7.1 30 24 26 2.1 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –2.7 –5.5 1998 May 2019 (latest available) Singapore Malaysia Thailand I
Slide 14: 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 %) 22.0 Thailand Singapore 97 146 Indonesia 94 Thailand Indone
Slide 15: 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 (4Q09 = 100) (%) HK, 347 9.5 MY, 224 EU, 6.4 AU, 162 4.3 US, 3.8 100 TH, 153 CH, 3.7 SG, 149 HK, 2.8 2.1 SG, 2.2 1Q09 1Q11 1Q13 1Q15 1Q17 1Q19 2009 2011 2013
Slide 16: 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
Slide 17: 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
Slide 18: 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%
Slide 19: Strong UOB Fundamentals
tit UOB Strong UOB Fundamentals 19
Slide 20: 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 income growth amid the subdued business environmen
Slide 21: 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
Slide 22: 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 44.1% 1.12% 88.5% Aa1 AA– AA– OCBC a1 42.4% 1.27
Slide 23: Strong Capital and Leverage Ratios
Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 23.2 23.2 24.2 20.2 19.5 (Common Equity 18.3 17.3 17.2 17.2 16.8 16.8 16.8 16.5 16.2 16.2 16.0 15.9 15.8 15.4 15.1 15.1 14.9 14.5 14.4 14.3 Tier 1 CAR; 14.0 13.9 13.7 13.6 13.6 13.5 13.5 12.9 12.8 12.5 12.
Slide 24: Disciplined Balance Sheet Management
Disciplined Balance Sheet Management Sustained balance sheet efficiency RoRWA1 – Healthy RoRWA1 Healthy portfolio quality 1.93% 2.04% 1.95% – Non-performing loan ratio stable at 1.5% – 13bp credit cost on loans FY18 1H18 1H19 – Adequate non-performing assets reserve Current Account Saving Accoun
Slide 25: Diversified Loan Portfolio
Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others Greater 10% SGD Singapore 17% China IDR 47% 52% 16% 2% THB 6% Indonesia 4% MYR Thailand 9% 7% Malaysia USD 11% 19% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professio
Slide 26: 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
Slide 27: Our Sustainability Milestones
Our Sustainability Milestones Supporting Sustainable Development Notable Recognitions 1. FTSE4Good ASEAN 5 Index UOB was ranked second by market capitalisation in 2019 2. Bloomberg Gender-Equality Index UOB was included in 2019 based on disclosure in 2018. Sinar Kamiri Sdn Bhd (A subsidiary of Mudaj
Slide 28: Our Growth Drivers
itt UOB Our Growth Drivers 28
Slide 29: 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
Slide 30: 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
Slide 31: 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
Slide 32: Group Wholesale Banking: Tapping Intra-Regional Flows through Diversification
Group Wholesale Banking: Tapping Intra- Regional Flows through Diversification Steady income growth… … supported by diverse sources Group Wholesale Banking income (SGD b) +11%2 growth in non-Singapore income +9% 1.9 2.1 +9%2 growth in non-real estate income 1H18 1H19 RoRWA1 2.1% 1.8% +14%2 growth in
Slide 33: Group Wholesale Banking: Strategic Initiatives to Tap Intra-Regional Flows
Group Wholesale Banking: Strategic Initiatives to Tap Intra-Regional Flows Strengthen Sector Products Connectivity Specialisation and Platforms Tapping Greater China / Offering tailored Building new Southeast Asian flows solutions for customers capabilities • Support regional needs of • Improve cust
Slide 34: Group Retail: Serving the Rising Affluent via Extensive In-country Presence
Group Retail: Serving the Rising Affluent via Our Extensive In-country Presence Gross Loans (Group Retail1): +2% YoY in 1H19 Income (Group Retail1) +7% YoY in 1H19 SGD b SGD b 108 108 4.0 106 1.9 2.1 FY18 1H18 1H19 FY18 1H18 1H19 ~60% of AUM from overseas customers2 Segment RoRWA3 +0.2%pt YoY in 1H1
Slide 35: Group Retail: Leveraging Digitalisation & Partnerships
Group Retail: Leveraging Digitalisation & Partnerships for Stronger Customer Franchise Digital Bank: Omni-Channel Ecosystem TMRW Experience Partnerships Targeting Mobile-First & Traditional & affluent Forging collaborations to Mobile-Only Generation customers with universal widen distribution reach
Slide 36: Latest Financials
itt UOB Latest Financials 36
Slide 37: 1H19 Financial Overview
1H19 Financial Overview Net Profit After Tax (NPAT) Movement, 1H19 vs 1H18 (SGD m) 198 194 229 10 26 64 20 2,055 +8% 2,219 +8% –1% +36% +10% –15% –79% +5% 1H18 net Net interest Net fee and Other non- Operating Total Share of Tax and 1H19 net profit after income commission interest expenses allowance
Slide 38: 2Q19 Financial Overview
2Q19 Financial Overview Net Profit After Tax (NPAT) Movement, 2Q19 vs 1Q19 (SGD m) 48 62 56 42 17 30 66 1,052 +11% 1,168 +4% +10% +18% +5% –45% – >100% +14% 1Q19 net Net interest Net fee and Other non- Operating Total Share of Tax and 2Q19 net profit after income commission interest expenses allowan
Slide 39: Net Interest Income Supported by Loan Margin and Volume
Net Interest Income Supported by Loan Margin and Volume Net Interest Income and Net Interest Margin 2,400 3.00% 3.00% 9,500 2.26% 2.20% 2.14% 2.19% 2.22% 2.18% 2.15% 2.16% 2.19% 2,200 2.00% 2.00% 8,500 1.77% 1.71% 1.77% 1.82% 1.83% 1.81% 1.80% 1.79% 1.81% 2,000 1.00% 1.00% 7,500 0.77% 0.89% 0.87% 0.
Slide 40: Broad-based Increase in Loan Portfolio
Broad-based Increase in Loan Portfolio Jun-19 Mar-19 QoQ Jun-18 YoY SGD b SGD b +/(–) SGD b +/(–) Gross Loans % % By Geography Singapore 142 139 +2 131 +9 Regional: 101 101 – 94 +8 Malaysia 29 29 –1 29 – Thailand 18 18 +3 16 +15 Indonesia 11 11 – 11 +4 Greater China 43 43 – 38 +12 Others 30 29 +2 25
Slide 41: Non-Interest Income Supported by Sustained Rebound in Financial Market
Non-Interest Income Supported by Sustained Rebound in Financial Market Non-Interest Income and as a % of Total Income 50.0% 1500 50.0% 5,300 36.9% 35.9% 35.4% 36.0% 31.8% 40.0% 34.2% 34.0% 40.0% 4,800 31.3% 1300 27.4% 30.0% 30.0% 4,300 20.0% 20.0% 3,800 21.0% 21.3% 21.9% 21.6% 1100 21.3% 20.8% 21.1%
Slide 42: Broad-based Focus in Fee Income
Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,500 621 2,303 581 11 2,161 600 568 569 63 551 15 12 72 80 15 1,931 296 14 2,000 1,883 74 74 70 38 272 500 76 74 93 154 37 37 39 263 148 43 258 162 1,500 134 545 400 121 148 135 471 154 121 498 482 300 1,000 543 160 547 132 133
Slide 43: 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 (CIR) 5,500 50.0% 50.0% 5,000 44.0% 43.7% 43.9% 1,400 44.4% 44.6% 43.7% 43.0% 45.0% 43.6% 43.4% 45.0% 4,500 4,003 1,200 40.0% 1,129 40.0% 4,000 3,739 1,073 1,022 1,011 3,425 35.0% 984 35.0%
Slide 44: 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%
Slide 45: Exposure to China
Exposure to China Bank exposure as of 30 June 2019 Non-bank exposure as of 30 June 2019 • Bank exposure accounted for 56% 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 investment e
Slide 46: NPL Ratio Stable at 1.5%
NPL Ratio Stable at 1.5% NPL ratio 1.7% 1.6% 1.5% 1.5% 1.5% NPLs (SGD m) 4,208 4,185 3,994 4,055 4,030 4,400 Others 300 290 3,900 230 223 139 138 107 416 120 Greater China 106 3,400 721 531 749 545 497 Indonesia 2,900 485 482 416 456 495 Thailand 2,400 558 571 623 629 553 1,900 Malaysia 2,085 2,138
Slide 47: New NPA Formation Stayed within Historical Norm
New NPA Formation Stayed within Historical Norm (SGD m) 2Q18 3Q18 4Q18 1Q19 2Q19 NPA at start of period 4,323 4,404 4,374 4,166 4,215 Group wholesale and small enterprise customers: New NPA 252 275 370 230 357 Upgrades, recoveries and (88) (229) (257) (139) (182) translations Write-offs (101) (29) (
Slide 48: Credit Costs Still Supported by Benign Environment
Credit Costs Still Supported by Benign Environment Allowances for Loans 2,000 80bp 600 22bp 25bp 61bp 1,800 60bp 19bp 45bp 18bp 20bp 500 1,600 32bp 20bp 40bp 16bp 13bp 15bp 1,400 32bp 20bp 400 15bp 11bp 28bp 1,200 19bp 13bp 15bp 0bp 10bp 11bp 1,000 300 (20)bp 8bp 5bp 800 200 (40)bp 600 0bp 400 (60)b
Slide 49: Adequate Reserve Coverage Ratios
Adequate Reserve Coverage Ratios 250% 1 Total Allowances / 202% 203% 190% 189% 191% Unsecured NPAs200%(%) 1 150% Total Allowances / NPAs (%) 89% 90% 87% 89% 84% 100% 50%/ Allowances for NPAs NPAs (%) 44% 44% 40% 40% 0% 36% 4,500 3,935 3,935 4,000 3,635 3,732 3,523 47 3,500 49 Regulatory Loss Allowan
Slide 50: Strong Capital and Leverage Ratios
Strong Capital and Leverage Ratios 7.7% 7.4% 7.6% 7.6% 7.5% Leverage ratio 1 5.0% Total CAR 2 18.4% 17.4% 17.0% 17.0% 17.2% 0% 19.0% Tier 2 CAR 2 17.0% 2.4% -20000% 2.3% 2.1% 2.1% 2.3% Tier 1 CAR 2 15.0% 1.5% 1.0% 1.0% 1.0% 1.0% -40000% 13.0% 11.0% -60000% CET1 CAR 2 9.0% 14.5% 14.1% 13.9% 13.9% 13.
Slide 51: Stable Liquidity and Funding Position
Stable Liquidity and Funding Position Net stable funding115% ratio 110% 110% 109% 108% 107% (%) 105% 94.8% 93.5% SGD loan-deposit ratio 91.6% 92.5% 95% 90.3% (LDR) (%) 85% 88.5% 88.2% 86.6% Group LDR (%) 85.7% 85.7% 75% USD LDR (%) 65% 69.5% 70.1% 64.5% 65.8% 63.5% 55% Jun-18 Sep-18 Dec-18 Mar-19 Ju
Slide 52: Higher Interim Dividend for 1H19
Higher Interim Dividend for 1H19 20 20 50 45 35 50 55 35 35 2016 2017 2018 1H19 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 1,135 1,661 2,000 918 Payout ratio (%) 37 49 50 41 Payout ratio (excluding 37 39 42 41 special/one-off dividends) (%) Note: The Scrip Divide
Slide 53: Thank You
Thank You tt UOB RIGHT BY YOU
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