United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (November 2016)

54 slides from United Overseas Bank's investor presentation, November 2016

  1. Slide 1: UOB Group

    UOB Group Steady Performance with Resilient Balance Sheet amid Slower Economic Growth November 2016 Discla imer: Th is mater ial that follo ws is a prese ntat io n of genera l ba ckgrou nd informat ion ab out the Ba nk’s act ivities current at the date of the present at ion. It is informat ion g ive

  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 9M16 Founded in August 1935 by a group of Chinese ■ Total assets : SGD328b (USD240.1b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD32b (USD23.7 b1) grandfather of the present UOB Group CEO, Mr. ■ Gross loans : SGD217b (USD159.2b1) Wee

  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 and Intangibles by Region (SGD m) MYANMAR GREATER CHINA 2 offices 28 offices1 VIETNAM THAILAND 33% of 1 office 157 offices Group PBT 324 367 21 252 38% of PHILIPPINES 305 366 222 272 Group PBT 1 of

  8. Slide 8: Macroeconomic Outlook

    Macroeconomic Outlook {itt VOB

  9. Slide 9: China’s Growth Slower but Low Risk of Hard Landing

    China’s Growth Slower but Low Risk of Hard Landing  While China’s GDP growth rate is slowing, the annual increase in absolute GDP has been stable.  The Chinese economy has its underlying momentum, supported by rebalancing reforms and steady job market.  Low government debt underpins China’s fisca

  10. Slide 10: Brexit Impact on Asian Markets via Trade and Investment Channels

    Brexit Impact on Asian Markets via Trade and Investment Channels  It is a challenge to quantify Brexit effects with EU & UK Export Mix of Selected Partners (2015) certainty at this stage.  The immediate impact on Asian economies is likely 19% to be limited and shallow, considering the low export 1

  11. Slide 11: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 3Q15 4Q15 1Q16 2Q16 3Q16f 4Q16f 1Q17f 2Q17f 3Q17f 4Q17f US Fed Funds 0.25 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.00 1.25 SG 3M SOR 1.24 1.70 0.81 0.81 0.90 1.10 1.35 1.50 1.55 1.70 MY Overnight Policy 3.25 3.25 3.25 3.25 3.00 3.00 3.00 3.00 3.00 3.00 Rate TH 1-Day

  12. Slide 12: Southeast Asia: Resilient Key Markets

    Southeast Asia: Resilient Key Markets Long-term fundamentals and prospects of key Southeast Asia 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 payment positions

  13. Slide 13: Slightly Stronger Singapore GDP Growth at 2.2% in 2016

    Slightly Stronger Singapore GDP Growth at 2.2% in 2016  Singapore’s GDP grew 2.2% y/y in 2Q16, as the Neutral Stance Adopted In April 2016 manufacturing sector finally registered a 1.1% y/y growth, after contracting for the past six consecutive SGD NEER quarters. However, the services sector growth

  14. Slide 14: ASEAN Banking Sector: Strong Fundamentals Remain Intact

    ASEAN Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Higher NIM in Lightly Penetrated Markets  ASEAN banks have healthy capital and funding levels (Net interest margin and private-sector credit / GDP, in %) — Singapore banks have among the highest capital 6.7 6.9 ratios in the

  15. Slide 15: Asia’s Healthy Prospects, with Rising Population & Consumer Affluence

    Asia’s Healthy Prospects, with Rising Population & Consumer Affluence Growing Global Middle Class Spending by Global Middle Class APAC’s middle class: (USD trillion APAC’s middle class spending: (Billion) of 2005 2009: 28% of global middle class 2009: 23% of global middle class 2030: 66% PPP dollars

  16. Slide 16: Room for More Optimism on Intra-Regional Trade in the ASEAN Region

    Room for More Optimism on Intra-Regional Trade in the ASEAN Region Association of Southeast North American Free Trade European Union (EU) Asian Nations (ASEAN) Agreement (NAFTA) USD0.7 USD2.2 USD3.4 USD8.2 USD2.2 USD4.8 trillion trillion trillion trillion trillion trillion Share of total goods trade

  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: Resolution Regime Overview

    Resolution Regime Overview Resolution Regime in Asia Public Existing resolution Factors influencing How past resolution Country discussion powers views on bail-in 1 was handled Statutory bail-in proposed Role as a global financial hub; Crisis prevention tools; Singapore Yes, ended to apply to only s

  19. Slide 19: Strong UOB Fundamentals

    Strong UOB Fundamentals ttt UOB

  20. 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  Total income grew 1.1% yoy in 9M16, despite slower economi

  21. Slide 21: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Singapore Others Others 55% Greater 10% IDR 12% SGD China 2% 51% 12% THB 5% Indonesia MYR 5% 11% Thailand 6% Malaysia USD 12% 19% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing

  22. 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 aa3 45.4% 0.97% 85.0% Aa1 AA– AA– OCBC aa3 44.5% 1.

  23. Slide 23: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 21.9 21.0 21.0 20.5 20.1 19.2 18.8 17.6 (Common Equity 16.9 16.9 16.6 16.5 16.3 16.3 15.6 15.6 15.5 15.1 14.9 14.4 14.4 14.3 14.2 14.2 14.1 13.9 13.8 13.5 13.4 Tier 1 CAR; 13.0 12.6 12.4 12.3 12.2 12.2 11.0 1

  24. Slide 24: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Ratings Aa1/Stable/P-1 AA– /Stable/A-1+ AA– /Stable/F1+  ‘Very strong buffers in terms of capital, loan  ‘Prudent management team… expect the bank to  ‘Ratings reflect its strong domestic franchise, loss provisions and pre-provision income’ continue its emph

  25. Slide 25: Robust Risk Management Framework

    Robust Risk Management Framework  Operate under strict regulatory regime; prudential rules in line with global best practices  Strong risk culture; focus beyond long-term sustainability, beyond gains in short-term Robust  Focused on businesses which we understand and are well-equipped to manage R

  26. Slide 26: 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

  27. Slide 27: Resilient Asset Quality; High Allowances Coverage

    Resilient Asset Quality; High Allowances Coverage Largely Stable NPL Ratio High Allowances Coverage 4,500 1.6% 2.0% 1.4% 1.4% 1.4% 6,000 142.7% 130.5% 133.2% 200% 1.3% 125.6% 112.4% 4,000 100% 3,500 1.0% 1.4% 5,000 1.4% 1.5% 1.5% 1.4% 615 0% 3,000 530 651 586 517 4,000 0.0% -100% 2,500 635 350 751 7

  28. Slide 28: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Resilient balance sheet Assets – Largely stable NPL ratio: 1.6% Others; 7% – High general allowances-to-loans ratio Investments; 4% Customer of 1.4% loans; 65% – Strong NPL coverage: 112.4% Government; 6% Interbank;  Strong funding and capital base 10% – Liqui

  29. Slide 29: Our Growth Drivers

    Our Growth Drivers {itt VOB

  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: Wholesale Banking: Steady Performance

    Wholesale Banking: Steady Performance Wholesale Banking Business  Wholesale banking’s loans and income Gross Loans ($bn) Total Income ($m) up in 1H16 despite weaker macro +13% environment +6% +5% 4000 YoY 4.00% YoY YoY 3500 3.50% 3000 +6% 3.00%  Financial Institutions segment doing 2500 YoY 2.50%

  32. Slide 32: Transaction Banking Continues to Grow

    Transaction Banking Continues to Grow  One of main pillars for Trade Loans Deposits wholesale banking 23% CAGR 15% CAGR +4% YoY  Cash management grows with +1% YoY 35% 36% 38% 37% significant mandates 39% 42% 39% 30% 33% 41% 63% 61% 65% 64% 62%  Good traction from trade due 58% 61% 70% 67% 59% to

  33. Slide 33: Retail Banking: Growing Income with Stable Asset Quality

    Retail Banking: Growing Income with Stable Asset Quality  Growth in retail banking1 income Group Retail Business outpaced loan growth in 1H16 Gross Loans ($bn) Total Income ($m) +11%  Singapore housing loan portfolio’s 4000 4.00% +5% YoY +3% YoY 3500 growth improved YoY in 1H16 YoY 3000 3.00% +8%

  34. Slide 34: Digitalisation: Enriching Customer Experience

    Digitalisation: Enriching Customer Experience 1 Seamless connectivity 2 Analytics-driven 3 Innovation within & across channels for customer insights collaboration with superior customer Increase & improve Eco-system partners & experience & access customer engagement FinTechs to deliver customer- cen

  35. Slide 35: 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

  36. Slide 36: Latest Financials

    Latest Financials {itt VOB

  37. Slide 37: 9M16 Financial Overview

    9M16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 9M16 vs 9M15 (SGD m) 66 3 3 106 18 45 4 2,421 –2.6% 2,357 +1.8% –0.3% +0.3% +4.0% –3.8% –62.1% –0.8% 9M15 net Net interest Fee income Other non- Expenses Total Share of Tax and 9M16 net profit after income interest allowances profit of m

  38. Slide 38: 3Q16 Financial Overview

    3Q16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 2Q16 vs 1Q16 (SGD m) 19 17 20 9 24 7 4 801 791 -1.2% +1.6% +3.8% –6.1% –0.9% +15.0% –20.8% +2.3% 2Q16 net Net interest Fee income Other non- Expenses Total Share of Tax and 3Q16 net profit after income interest allowances profit of mon-

  39. Slide 39: Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth

    Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth Net Interest Income (NII) and Margin 9,000 2,200 3.00% 2.34% 2.36% 3.00% 2.29% 2.12% 2.26% 2.27% 2.23% 2.13% 2.06% 8,000 2,000 2.00% 2.00% 1.87% 1.72% 1.71% 1.77% 1.77% 1.79% 1.78% 1.68% 1.69% 1,800 1.00% 1.00% 7,000 0.91%

  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 50.0% 50.0% 39.7% 38.7% 38.9% 38.8% 40.8% 38.6% 40.2% 39.7% 5,000 1400 40.0% 35.3% 40.0% 25.8% 23.5% 23.4% 30.0% 23.2% 1200 23.3% 23.1% 22.0% 23.4% 24.1% 30.0% 4,000 20.0% 20.0% 1000 3,122 10.0% 850 10

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

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 485 492 1,731 1,749 74 500 480 475 1,800 59 22 16 20 114 258 433 21 1,600 1,508 64 64 67 273 27 66 268 121 400 120 33 1,400 30 35 63 113 31 256 111 1,200 498 31 300 136 114 124 107 490 135 1,000 504 110 800 446 416 2

  42. Slide 42: Maintain Costs Discipline while Investing in Long-term Capabilities

    Maintain Costs Discipline while Investing in Long-term Capabilities Operating Expenses and Expense / Income Ratio 42.3% 43.1% 44.7% 50.0% 46.3% 45.4% 45.8% 45.0% 50.0% 42.2% 43.4% 5,000 1400 40.0% 40.0% 30.0% 1200 30.0% 4,000 3,597 20.0% 964 20.0% 1000 904 927 918 3,146 894 10.0% 10.0% 2,898 3,000 2

  43. Slide 43: Stable Total Credit Costs

    Stable Total Credit Costs Allowances on Loans 996 60bps499 53bps 60bps 30bps 30bps 32bps 32bps 40bps 32bps 32bps 32bps 32bps 32bps 40bps 796 399 30bps 20bps 20bps 22bps 25bps 23bps 19bps 12bps 0bps 11bps 0bps 596 8bps 299 (20)bps (20)bps 396 199 (40)bps (40)bps 288 454 (60)bps (60)bps 196 392 99 238

  44. Slide 44: Loan Growth was 2.2% QoQ in Constant Currency Terms

    Loan Growth was 2.2% QoQ in Constant Currency Terms QoQ YoY Gross loans breakdown: Sep-16 Jun-16 +/(–) Sep-15 +/(–) Inner circle: Jun-16 Gross Loans 1 SGD b SGD b % SGD b % Outer circle: Sep-16 Singapore 120.4 119.9 +0.4 114.3 +5.4 Others Regional: 75.8 72.8 +4.1 70.7 +7.2 10% Singapore 55% Malaysia

  45. Slide 45: Stable Liquidity Position

    Stable Liquidity Position Customer Loans and Deposits; Loan/Deposit Ratios (LDR); and Liquidity Coverage Ratios (LCR) All-currency LCR (%) 138% 142% 139% 167% 148% SGD LCR (%) 179% 217% 169% 224% 213% 100.0% 91.7% 91.9% SGD LDR (%) 88.4% 88.1% 89.7% 90.0% 80.0% 84.7% 85.0% Group LDR (%) 81.6% 84.0%

  46. Slide 46: Robust Credit Quality; NPL Ratio Largely Stable at 1.6%

    Robust Credit Quality; NPL Ratio Largely Stable at 1.6% NPL ratio 1.3% 1.4% 1.4% 1.4% 1.6% NPLs1 (SGD m) 2,551 2,882 2,841 3,056 3,496 3,600 255 Others 3,100 303 206 344 176 2,600 401 565 Greater China 351 218 158 564 293 2,100 166 569 564 264 Indonesia 372 466 1,600 249 250 451 238 Thailand 386 401

  47. Slide 47: Movements in Non-Performing Assets

    Movements in Non-Performing Assets 3Q16 2Q16 3Q15 $m $m $m NPA at start of period 3,164 3,016 2,705 New NPA 780 802 422 Upgrades, recoveries and translations (201) (548) (278) Write-offs (111) (106) (112) NPA at end of period 3,632 3,164 2,737 47

  48. Slide 48: Exposure to China

    Exposure to China Total = SGD21.1b Bank exposure in China or 6.4% of total assets  99% with <1 year tenor  Around 75% accounted for by top 5 domestic banks and policy banks Bank,  Trade exposures mostly with bank counterparties, SGD11.9b representing slightly more than half of bank exposure Debt,

  49. Slide 49: Exposure to Commodities

    Exposure to Commodities Oil and gas Other As of Traders/ Upstream commodity Total 30 Sep 16 downstream industries segments industries Total SGD4.8b SGD8.4b SGD9.0b SGD22.2b exposure1 Outstanding SGD4.0b SGD5.2b SGD6.9b SGD16.1b loans 4% of total loans 7.4% of total loans  Total exposure, including

  50. Slide 50: Exposure to Europe

    Exposure to Europe As of As a % of Non-bank Bank Debt securities Total 30 Sep 2016 total assets Europe SGD3.6b SGD4.0b SGD1.7b SGD9.3b 2.8% of which UK SGD2.7b SGD0.8b SGD0.2b SGD3.7b 1.1% Minimal direct impact from Brexit  Bulk of UK non-bank exposure is 95% secured and 78% denominated in GBP  Co

  51. Slide 51: High Allowances Coverage

    High Allowances Coverage Total 200.0% Allowances / 142.7% 130.5% 133.2% Total NPL (%) 150.0% 125.6% 112.4% 100.0% General Allowances / 50.0% Gross Loans 0.0% net of Specific 1.4% 1.5% 1.5% 1.4% 1.4% Allowances (%) -50.0% 4,500 4,000 Specific Allowances 3,500 773 751 770 975 712 (SGD m) 3,000 2,500 2

  52. Slide 52: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.2% 7.3% 7.0% 7.4% 7.5% Leverage ratio 1 5.0% Total CAR 2 20.0% 16.4% 15.6% 16.0% 15.9% 16.6% 0% 18.0% Tier 2 CAR 2 16.0% -20000% 2.8% 3.2% 2.7% 3.1% 14.0% 2.6% Tier 1 CAR 2 0.1% 0.1% 12.0% -40000% 10.0% 8.0% -60000% CET1 CAR 2 13.6% 13.0% 13.1% 13.4% 6.0% 12.8% 4

  53. Slide 53: Stable Dividend Payout

    Stable Dividend Payout 20 5 5 35 50 50 35 35 20 20 2013 2014 2015 1H16 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,182 1,201 1,442 563 Payout ratio (%) 39 37 45 36 Note: The Scrip Dividend Scheme was applied to the final and special dividend

  54. Slide 54: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (November 2016) on 6ix