United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (May 2015)

49 slides from United Overseas Bank's investor presentation, May 2015

  1. Slide 1: UOB Group: Steady Core Earnings supported by Healthy Balance Sheet Position

    UOB Group Steady Core Earnings supported by Healthy Balance Sheet Position May 2015 Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not pu

  2. Slide 2: Agenda

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

  3. Slide 3: UOB Overview

    UOB Overview Founding Key Statistics for 1Q15 Founded in August 1935 by a group of Chinese businessmen ■ Total assets : SGD313.6b (USD228.1b1) and Datuk Wee Kheng Chiang, grandfather of the present ■ Shareholder’s equity : SGD30.8b (USD22.4b1) UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD203.

  4. Slide 4: A Leading Singapore Bank With Established Franchise In Core Market Segments

    A Leading Singapore Bank With Established Franchise In Core Market Segments Group Retail Group Wholesale Banking Global Markets and Investment Management  Best Retail Bank in Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards and

  5. Slide 5: 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. Achieved record NPAT of SGD3,249 million in 2014  Stability of management team ensures consistent execution of strategies  Disciplined management styl

  6. Slide 6: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with 500+ Offices Profit before Tax and Intangibles by Region (SGD m) MYANMAR 2 offices 324 21 252 GREATER CHINA 32% of 305 222 272 99 THAILAND 26 offices1 Group PBT 184 178 159 156 offices 118 156 146 105 180 VIETNAM 175 147 593 557

  7. Slide 7: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 7

  8. Slide 8: Central Banks' Recent Easing Moves Spurred by Low/Negative Inflation & Weak Growth

    Central Banks’ Recent Easing Moves Spurred by Low/Negative Inflation & Weak Growth Recent Central Banks’ Policy Decisions on Rates in year-to-date 2015 Contractionary Expansionary Sources: Bloomberg and various news wires 1. QE: Quantitative easing 8

  9. Slide 9: Fed Expected to Hike Rates in 2015, With Conclusion of QE Tapering in 2014

    Fed Expected to Hike Rates in 2015, With Conclusion of QE Tapering in 2014 Negative Implications • Reversal of capital flows and unwinding of • Increased liquidity on Markets carry trades • Lower interest rates • Depreciation of Asian currencies → and borrowing costs unhedged foreign exchange (FX) r

  10. Slide 10: Singapore Interest Rates Lifted by Stronger US$; Further Upside When Fed Eventually Hikes Rates

    Singapore Interest Rates Lifted by Stronger US$; Further Upside When Fed Eventually Hikes Rates UOB’s S$ Floating-rate Loans to Benefit from Uptrend in Singapore’s Short-term Interest Rates SIBOR / SOR (%) S$ per US$ 1.4 1.41 1.2 1.39 1.0 1.37 0.8 1.35 0.6 1.33 0.4 1.31 0.2 1.29 0.0 1.27 18-Dec-14 1

  11. Slide 11: Southeast Asia – Resilient Key Markets

    Southeast Asia – Resilient Key Markets  The long-term fundamentals and prospects of key Southeast Asian markets have greatly improved since the 1997 Asian Financial Crisis.  Compared with 1997, they have: ‒ Significantly higher levels of foreign reserves ‒ Healthier current account and balance of

  12. Slide 12: Singapore Expected to Grow 3.3% in 2015, While Restructuring Continues

    Singapore Expected to Grow 3.3% in 2015, While Restructuring Continues  Singapore’s 1Q15 GDP (adv. est.) grew 2.1% y/y; key External Sectors Slowed Considerably drag from manufacturing due to slowdown in electronics, precision engineering and transport engineering clusters. Weakness was also partly

  13. Slide 13: SEA Banking Sector: Strong Fundamentals Remain Intact

    SEA Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Robust Capital Positions  There has been a resurgence in loan demand after the (Tier 1 CAR, in %) deleveraging of ASEAN banks during the Global Financial Crisis  ASEAN banks have healthy capital and funding levels 15.3 16.1 1

  14. Slide 14: Prospects for Asia Remain Optimistic Due to Growing Population and Consumer Affluence

    Prospects for Asia Remain Optimistic Due to Growing Population and Consumer Affluence Growing Global Middle Class Spending by Global Middle Class APAC’s middle class: APAC’s middle class spending: 2009: 28% of global middle class 2009: 23% of global middle class 2030: 66% (Trillion of 2030: 56% (Bil

  15. Slide 15: Room For More Optimism As Intra-Regional Trade is Set to Thrive in ASEAN after AEC Kicks Off

    Room For More Optimism As Intra-Regional Trade is Set to Thrive in ASEAN after AEC1 Kicks Off Association of Southeast Asian North American Free Trade European Union (EU) Nations (ASEAN) Agreement (NAFTA) $0.7 $2.2 $3.4 $8.2 $2.2 $4.8 Share of total trillion trillion trillion trillion trillion trill

  16. Slide 16: Basel III Implementation across Jurisdictions

    Basel III Implementation across Jurisdictions Particulars BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% Minimum Tier 1 6.0% 8.0%1 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total Capital 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15 J

  17. Slide 17: Resolution Regime Overview

    Resolution Regime Overview Resolution Regime in Asia Public Existing Resolution Factors influencing How Past resolution been Country Discussion Powers views on bail-in 1 handled Role as an international financial centre; Crisis prevention tools; no Transfer powers; Singapore No strength of system; g

  18. Slide 18: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 18

  19. Slide 19: Strong UOB Fundamentals

    Strong UOB Fundamentals Strong Management with  Proven track record in steering the bank through various global events and crises Proven Track  Stability of management team ensures consistent execution of strategies Record  Delivered record NPAT of SGD3,249m in FY14, driven by broad-based growth

  20. Slide 20: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others 8% IDR 11% Greater 2% SGD China Singapore THB 53% 12% 56% 5% Malaysia USD Indonesia 13% MYR 17% 5% Thailand 12% 6% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing L

  21. Slide 21: Competitive Against Peers

    Competitive Against Peers Bank Standalone Strength Efficient Cost Management aa3 aa3 aa3 73.3% Cost/Income Ratio a1 58.9% 58.6% 67.4% 62.0% a3 a3 a3 43.2% 55.7% 48.9% 55.0% Baseline Credit baa1 43.6% Assessment baa2 baa2 baa2 41.4% 41.4% baa3 Citi OCBC HSBC CIMB JPM UOB Maybank DBS SCB Bank BCA BOA

  22. Slide 22: Strong Capitalisation and Low Leverage

    Strong Capitalisation and Low Leverage Total CAR, Tier 1 CAR, Common Equity Tier 1 19.6 18.0 18.0 17.4 17.1 16.7 16.2 15.7 15.5 15.3 15.3 15.2 15.2 15.1 14.3 14.3 13.6 13.5 13.5 13.5 (Total CAR, 13.4 13.4 13.3 12.9 12.3 12.1 12.0 11.7 11.5 11.4 11.2 11.1 11.0 10.7 10.5 10.1 Tier 1 CAR, Common Equity

  23. Slide 23: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Ratings Aa1/Stable/P-1 AA– /Stable/A-1+ AA– /Stable/F1+  ‘…Strong and valuable business franchise’  ‘Prudent management team… expect the bank to  ‘Ratings reflect its strong domestic franchise,  ‘Long experience in serving continue its emphasis on funding a

  24. Slide 24: Robust Risk Management Framework

    Robust Risk Management Framework  Operate under strict regulatory regime; prudential standards in line with global best practices  Strong risk culture; do not believe in achieving short-term gains at the expense of long-term interests Robust  Focused on businesses which we understand and are well

  25. Slide 25: Managing Risks for Stable Growth

    Managing Risks for Stable Growth  Prudent approach has been key to Group Risk Appetite Statement (GRAS) delivering sustainable returns over the years Manage  Institutionalised framework through concentration GRAS risk – Outlines risk and return objectives to guide strategic decision-making Maintai

  26. Slide 26: Resilient Asset Quality; High Impairment Coverage

    Resilient Asset Quality; High Impairment Coverage Stable NPL Ratio Consistently High Impairment Coverage (SGD m) (SGD m) 3,500 2.0% 350.3% 362.5% 6,000 316.3% 400% 1.2% 1.2% 1.2% 1.2% 305.1% 311.4% 3,000 1.1% 300% 1.0% 5,000 160.2% 149.2% 146.8% 145.9% 147.0% 200% 2,500 536 605 4,000 100% 570 548 0.

  27. Slide 27: Focusing on Preserving Balance Sheet Strength

    Focusing on Preserving Balance Sheet Strength Strengthening our Balance Sheet  Overall portfolio resilient in face of market uncertainties Assets: Others 6% Inner circle: 2008 Investments Outer circle: 1Q15 4%  Diversifying funding sources and Government reducing reliance on interbank 11% 5% marke

  28. Slide 28: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 28

  29. Slide 29: Our Growth Drivers

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

  30. Slide 30: Milestone in Regionalisation

    Milestone in Regionalisation ■ Harnessing potential of regional network through an integrated platform Full Rollout of Integrated Regional Platform – Completion of platform at end-2013 ■ Integrated regional platform to bring: – Improved productivity and operational efficiency – Quicker speed to mark

  31. Slide 31: Capitalising on Rising Intra-Regional Flows

    Capitalising on Rising Intra-Regional Flows ■ Building 3 growth pillars in Growing Intra-Regional Wholesale Business wholesale banking – Strengthen geographical footprint Intra-Regional Loan (S$) Breakdown by Origin Dec 2010 Dec 2014 – Develop integrated portfolio of product solutions Greater Others

  32. Slide 32: Making Good Progress in Transaction Banking

    Making Good Progress in Transaction Banking Trade Loans Deposits ■ Healthy growth in trade assets CAGR spurred by new and deeper CAGR +12% client acquisition 33% +31% 37% 30% 33% 26% ■ Continue to invest in regional 24% 41% 67% cash management and liquidity 63% 67% 70% 49% 48% 76% 74% management sol

  33. Slide 33: Capturing Rising Asian Consumer Affluence

    Capturing Rising Asian Consumer Affluence  Wealth management’s1 Growing Regional Wealth Management Profit Contribution FY2010 – 2014 performance: — AUM up from $48bn to $80bn CAGR +25% 30% — Customer base grew from 100,000 to 191,000 30% 27% — Widened regional wealth Region 26% 26% management footp

  34. Slide 34: Tapping on Increasing Connectivity in ASEAN

    Tapping on Increasing Connectivity in ASEAN Strong ASEAN-China and Intra-ASEAN Flows UOB: Towards a Multi-Channel Model China ASEAN-China 2013 Total trade: US$405bn 10-yr CAGR: 17% Myanmar MYANMAR Thailand 2 offices GREATER AEC1: New THAILAND CHINA 26 offices2 growth Malaysia 156 offices catalyst VI

  35. Slide 35: Why UOB?

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

  36. Slide 36: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 36

  37. Slide 37: FY14 Financial Overview

    FY14 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY14 vs FY13 (SGD m) 18 281 248 206 42 0 438 3,008 +8.0% 3,249 +10.6% +1.1% +32.3% +8.6% +48.1% –21.9% –0.1% FY13 net Net interest Fee income Other non- Expenses Impairment Share of Tax and mon- FY14 net profit after tax income interest

  38. Slide 38: 1Q15 Financial Overview

    1Q15 Financial Overview Net Profit After Tax1 Movement, 1Q15 vs 4Q14 (SGD m) 3 69 47 3 39 1 33 786 +1.9% 801 +2.8% +0.8% +29.9% +5.9% +1.8% –90.9% +1.0% 4Q14 net Net interest Fee income Other non- Expenses Impairment Share of Tax and mon- 1Q15 net profit after tax income interest charges profit of c

  39. Slide 39: NII driven by Growth in Loans and Margins

    NII driven by Growth in Loans and Margins Net Interest Income (NII) and Margin 10,000 2.41% 2.29% 2.12% 2,500 2.19% 2.06% 2.06% 2.05% 2.06% 2.08% 9,000 2.00% 2.00% 1.92% 1.87% 2,000 8,000 1.72% 1.71% 1.73% 1.71% 1.71% 1.69% 1.76% 1.00% 1.00% 7,000 0.97% 0.91% 0.90% 0.84% 0.76% 0.82% 1,500 0.81% 0.71

  40. Slide 40: Steady Non-Interest Income Mix Underpins Diversity

    Steady Non-Interest Income Mix Underpins Diversity Non-Interest Income (Non-NII) and Non-NII Ratio 5,000 50.0% 41.4% 50.0% 39.7% 38.7% 38.9% 40.3% 38.6% 35.5% 1,400 36.7% 36.8% 4,500 40.0% 40.0% 4,000 25.8% 23.5% 1,200 30.0% 23.6% 24.1% 24.3% 30.0% 23.1% 23.2% 21.8% 23.2% 3,500 20.0% 20.0% 1,000 2,9

  41. Slide 41: Broad-based Growth in Fee Income

    Broad-based Growth in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 475 2,000 500 450 453 1,749 14 1,800 1,731 450 414 410 16 16 59 70 114 1,600 1,508 400 15 14 69 64 273 28 120 268 66 69 1,400 1,318 350 32 28 113 95 256 111 27 26 1,200 300 146 116 249 107 490 129 1,000 504 250 110 106 100 800

  42. Slide 42: Disciplined Cost Management

    Disciplined Cost Management Operating Expenses and Expense / Income Ratio 5,000 50.0% 50.0% 1,200 43.0% 43.1% 43.1% 43.5% 43.6% 4,500 42.3% 42.2% 45.0% 41.7% 45.0% 40.6% 4,000 1,000 40.0% 40.0% 852 3,500 35.0% 800 805 35.0% 3,146 787 800 755 3,000 2,898 30.0% 30.0% 2,747 2,450 356 2,500 1,321 25.0%

  43. Slide 43: Total Loans Charge-off Rate Relatively Stable

    Total Loans Charge-off Rate Relatively Stable Impairment Charges on Loans 996 50bps 249 50bps 32bps 40bps 32bps 32bps 32bps 32bps 32bps 40bps 30bps 30bps 30bps 796 30bps 199 30bps 30bps 20bps 20bps 19bps 596 10bps 149 15bps 10bps 12bps 12bps 14bps 12bps 8bps 0bps 0bps (0)bps 396 (10)bps 99 (10)bps (

  44. Slide 44: Healthy Loan Growth

    Healthy Loan Growth Dec-14 QoQ YoY Mar-15 Dec-14 +/(–) Mar-14 +/(–) Greater Others Gross Loans * SGD b SGD b % SGD b % China 8% Singapore 114.5 109.7 4.3 109.7 4.3 13% Regional: 72.5 73.0 -0.6 63.1 15.0 Indonesia 6% Malaysia 25.9 25.8 0.5 24.8 4.3 Singapore Thailand Malaysia 55% Thailand 11.4 10.8 5

  45. Slide 45: Stable Liquidity Position

    Stable Liquidity Position Customer Loans, Deposits and LDR 98.2% 94.5% 93.7% 94.1% 93.0% 400.0 90% 350.0 87.8% 85.5% 85.8% 83.8% 83.4% 70% 300.0 70.2% 70.5% 70.6% 67.7% 58.0% 50% 250.0 30% 200.0 10% 150.0 224.4 233.8 239.4 100.0 216.6 216.1 199.7 -10% 185.3 189.7 192.6 195.9 50.0 -30% 0.0 -50% Mar-1

  46. Slide 46: Robust Credit Quality; NPL Ratio Stable at 1.2%

    Robust Credit Quality; NPL Ratio Stable at 1.2% NPL ratio 1.1% 1.2% 1.2% 1.2% 1.2% NPL* (SGD m) 2,077 2,309 2,289 2,358 2,442 2,500 400 419 432 2,000 127 738 124 Others 118 313 686 298 275 120 Greater China1,500 292 259 267 117 244 Indonesia 167 256 388 386 1,000 211 400 Thailand 407 419 Malaysia 50

  47. Slide 47: Strong Impairment Coverage

    Strong Impairment Coverage Consistently High Impairment Coverage 6,000 350.3% 362.5% 400% 316.3% 305.1% 311.4% 300% 5,000 160.2% 149.2% 146.8% 145.9% 147.0% 200% 4,000 100% 699 0% 3,000 834 659 657 779 -100% 2,000 -200% 2,701 2,783 2,890 -300% 2,548 2,611 1,000 -400% 0 -500% Mar-14 Jun-14 Sep-14 Dec

  48. Slide 48: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 0.08 7.6% Leverage ratio 1 0.07 Total CAR 20.0% 17.7%1 Category 17.8% 2 Category 17.0% 3 Category 16.9% 4 Category 17.1% Mar-15 0% 18.0% Tier 2 CAR 16.0% 3.7% 3.9% 3.0% 3.0% 2.8% -20000% 14.0% 12.0% -40000% 10.0% 8.0% -60000% Tier 1 / CET1 CAR 14.0% 13.9% 14.0% 13.

  49. Slide 49: Stable Dividend Payout

    Stable Dividend Payout 5 5 10 50 50 40 40 20 20 20 20 2011 2012 2013 2014 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 944 1,102 1,182 1,202 Payout ratio (%) 41 39 39 37 49

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