United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (February 2016)
55 slides from United Overseas Bank's debt investor presentation, February 2016
Slide 1: United Overseas Bank Limited Covered Bond Investor Presentation
United Overseas Bank Limited Covered Bond Investor Presentation February 2016
Slide 2: Disclaimer
Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES This confidential document (the “Presentation”) and the information contained herein do not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acqui
Slide 3: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 4: Investment Highlights
Investment Highlights Triple-A* Rated Covered Bonds to be issued by Highly Rated Solid Issuer Triple-A* rated Covered Bond to be issued by Aa1/AA-/AA- (Moody’s/S&P/Fitch) rated bank Strong balance sheet and management with proven track record Prudent Capital, Liquidity and Balance Sheet Manage
Slide 5: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 6: UOB Overview
UOB Overview Group Profile Extensive Regional Footprint with 500+ Offices Head office in Singapore, founded in August 1935 by a group of Chinese businessmen and Datuk Wee Kheng Chiang, grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong UOB has grown over the decades through organic mean
Slide 7: UOB Financial Highlights
UOB Financial Highlights Key Statistics for FY15 Asset Liability Mix ■ Total assets : SGD316.0b (USD223.5b1) Others 8% Assets: Inner circle: 2008 ■ Shareholder’s equity : SGD30.8b (USD21.8b1) Investments Outer circle: 2015 ■ Gross loans : SGD207.4b (USD146.7b1) 3% ■ Customer deposits : SGD240.5b (US
Slide 8: Established Franchise In Core Market Segments
Established Franchise In Core Market Segments Global Markets and Group Retail Group Wholesale Banking Investment Management 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 9: Diversified Loan Portfolio
Diversified Loan Portfolio Gross Customer Loans by Geography1 Gross Customer Loans by Currency Singapore Others Others 56% 13% 8% IDR SGD Greater 52% 2% China 12% THB 5% Indonesia 6% MYR 11% Thailand 6% Malaysia USD 12% 17% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing Lo
Slide 10: 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 FY15 NPAT stable at SGD3,209m, despite volatile market and
Slide 11: 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
Slide 12: Competitive Against Peers
Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA Liquidity Moody’s S&P Fitch Baseline credit Return on average Costs/income ratio Loan/deposit ratio assessment assets1 Aa1 AA– AA– UOB aa3 44.1% 1.04% 81.6% Singaporean Banks Aa1 AA– AA– OCBC aa3
Slide 13: Strong Capitalisation and Low Gearing Ratio
Strong Capitalisation and Low Gearing Ratio Total CAR, Tier 1 CAR, Common Equity Tier 1 19.5 18.6 18.6 18.2 18.2 17.0 16.6 16.4 16.1 16.1 15.8 15.0 14.9 14.8 14.5 14.5 14.5 13.8 13.6 13.6 13.4 (Total CAR, 13.3 13.0 12.9 12.9 12.9 12.9 12.8 11.8 11.6 11.6 11.5 11.5 11.2 10.6 Tier 1 CAR, 9.3 Common Eq
Slide 14: 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
Slide 15: Resilient Asset Quality; High Allowances Coverage
Resilient Asset Quality; High Allowances Coverage Stable NPL Ratio Consistently High Allowances Coverage 2.0% 1.4% 6,000 145.9% 147.0% 144.1% 142.7% 130.5% 20 1.2% 1.2% 1.2% 1.3% 10 1.0% 5,000 1.4% 1.4% 1.4% 1.4% 1.4% 651 0% 160 536 605 648 635 4,000 146 0.0% -10 197 187 204 712 773 657 699 747 3,00
Slide 16: Delivering on Regional Strategy
Delivering on Regional Strategy Most diverse regional franchise among Singapore Profit before Tax and Intangible by Region banks; effectively full control of regional subsidiaries (SGD m) 39% of Integrated regional platform improves operational Group PBT efficiencies, enhances risk management an
Slide 17: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 18: Background of Singapore Housing Market
Background of Singapore Housing Market ■ Housing and Development Board (HDB)1 – Set up in 1960 to solve Singapore’s housing crisis – Singapore’s public housing authority under the Ministry of National Development to plan and develop Singapore’s housing estates ■ Singapore housing market is skewed to
Slide 19: Strong Macroeconomic Fundamentals
Strong Macroeconomic Fundamentals Key Data Summary1 GDP per capita2 Population (2015) 5.535 million Current US$ 60,000 Area / Population Density (2015) 719.1 Sq. Km / 7,697 per Sq. Km 50,000 Currency Singapore (SGD) 40,000 GDP (3Q15) SGD98,894 million 30,000 Unemployment Rate (3Q15) 2.0% 20,000 GDP
Slide 20: Strong Housing Demand
Strong Housing Demand ■ The total population in Singapore is anticipated to reach 5.8 to 6.0 million by the end of 2020 and continue to increase during the following decade, growing to between 6.5 and 6.9 million in the year of 2030 ■ Household Formation – Average marriages last 5 years was 26,844 p
Slide 21: Strong Fundamentals to Support Singapore Mortgage Market
Strong Fundamentals to Support Singapore ■ Mortgage Market Increasing Monthly Household Income1 – Median monthly HH income increased from S$6,342 in 2010 to S$8,290 in 2014 ■ At the same time, the average loan tenure of new mortgage loans had shortened from 30 years in Q3 2012, to about 24 years in
Slide 22: Low Household Leverage and Affordability Ratio
Low Household Leverage and Affordability Ratio ■ Singapore’s household balance sheet remains robust with Singapore household net worth (defined as household assets less household debt) growing at an average rate of 8% p.a. over the past 10 years (2Q2005 to 3Q2015) ■ Household Assets – Property asset
Slide 23: Mortgage Debt Serving Ratio Remains Low
Mortgage Debt Serving Ratio Remains Low Low Mortgage Debt Service Ratio due to Lower Interest Rates, High Income Growth and Smaller Unit Sizes 23
Slide 24: Supply of Private and Public Housing
Supply of Private and Public Housing Private Residential Units By Year of Completion And Status (4Q 2015) Units 17,114 units Index 28,000 Avg Supply Per Year (2014-2018) 160 24,000 140 20,000 10,015 units 71% 68 120 8,700 1,702 16,000 Avg Supply Per Year (1996-2013) 2,573 3,967 12,000 100 21,906 14,
Slide 25: Prudent Policies for Sustainable Housing Market
Prudent Policies for Sustainable Housing Market Residential Property Price Indices 160 140 120 2013: Introduction of 100 TDSR 80 2011: Introduction of 1997: Asian Crisis 2008: Onset of 2010: Introduction ABSD 60 Credit Crisis of SSD 2001: Dot Com Bubble 2003: SARS Outbreak Collapses 40 2002: HDB bui
Slide 26: Comparison to Other Markets
Comparison to Other Markets Global House Price Indices Regional House Price Indices Singapore Hong Kong Korea Malaysia Thailand Singapore Australia Canada UK USA 275 250 250 225 200 200 175 150 150 125 100 100 75 50 50 Jul-00 Jul-01 Jul-12 Jul-13 Jan-00 Jan-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Nov-
Slide 27: Mass Market Private Home Prices More Resilient Since TDSR
Mass Market Private Home Prices More Resilient Since TDSR* ■ Price declines across all segments after consecutive Property Price Index: Private (Non-Landed) rounds of cooling measures, with TDSR (since 3Q13) being the most effective Since 3Q13 170.0 1Q05 – 2Q08 ■ Performance in high-end segments of
Slide 28: Key Features – Singapore Mortgage Loans
Key Features – Singapore Mortgage Loans • Contractual Tenor between • Variable rate based on: • Borrower • Mortgage insurance 15 to 35 years • Market benchmark rates • Mortgaged property (Optional) • Subject to age limit of 65 (i.e. SIBOR1 or SOR2) or • Fire insurance (Mandatory) • Borrowers tend to
Slide 29: Key Features – Use of CPF funds in Residential Property Financing
Key Features – Use of CPF funds in Residential Property Financing What is CPF CPF Board and Priority of Use of CPF for housing loan (Central Provident Fund)? Payments CPF, established in 1955, is a CPF Members can use their savings (and Under the present regime, if the property is comprehensiv
Slide 30: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 31: One of The Leading Mortgage Providers in Singapore
One of The Leading Mortgage Providers in Singapore Key characteristics for UOB’s Singapore residential mortgage loan portfolio Product Private Residential Property HDB Outstanding Amount (in SGD bn) 43.2 3.9 Weighted average Loan-to-value ratio 60% 57% Weighted average Seasoning (years) 3.3 3.3 Weig
Slide 32: UOB's Main Mortgage Loan Products
UOB’s Main Mortgage Loan Products Summary of UOB’s Mortgage Loan Products Home Loan (HL) – is used to finance the purchase of the mortgaged property or refinance the loan from an existing financier. The refinanced amount is based on either the outstanding loan amount owing to the existing financie
Slide 33: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 34: Singapore Covered Bond Legal Framework
Singapore Covered Bond Legal Framework History MAS1 issued a MAS published its consultation paper on regulations regarding the MAS proposed an the proposed rules issuance of covered amendment to its The amendments March December January June relating to covered bonds by banks regulation regarding we
Slide 35: UOB Covered Bond Programme Summary
UOB Covered Bond Programme Summary USD8,000,000,000 Global Covered Bond Programme Issuer United Overseas Bank Limited Issuer Long Term Rating Aa1 (stable) / AA- (stable) / AA- (stable) (Moody’s / S&P / Fitch) Issuer Short Term Rating P-1 (stable) / A-1+ (stable) / F1+ (stable) (Moody’s / S&P / Fitch
Slide 36: Structure Diagram
Structure Diagram ■ Notwithstanding that CPF’s consent is required for the transfer or assignment of mortgages relating to CPF Loans, no such consent is required for a declaration of trust over mortgages relating to CPF Loans. The Seller is acting as the Assets Trustee and the CPF Loans are held on
Slide 37: Key Structural Features/Enhancements
Key Structural Features/Enhancements ► The Covered Bonds will be direct, unsecured and unsubordinated obligations of the Issuer Credit Structure (Dual Recourse) ► The CBG guarantees the payment of principal and interest under the Covered Bonds pursuant to the Covered Bond Guarantee and secured by th
Slide 38: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 39: Programme Eligibility Criteria
Programme Eligibility Criteria The “Eligibility Criteria” for each Loan in the Cover Pool shall be as follows: is originated and booked after 1 January 2003 denominated and repayable in SGD a loan which has been fully drawn (the Borrower has no right to re-borrow any amount prepaid or repaid)
Slide 40: Cover Pool Characteristics
Cover Pool Characteristics Cover Pool Summary (as of Dec 31, 2015) Current Balance Number of Mortgage Loans 7,556 (SGD ‘000) >3,000 > 0 and ≤ 500 Loans to UOB’s Staff None 4.6% 19.6% >2,500 and ≤3,000 Total Current Balance (SGD) 4,946,476,037 2.5% Average Current Loan Balance (SGD) 654,642 >2,000 an
Slide 41: Cover Pool Characteristics (cont'd)
Cover Pool Characteristics (cont’d) Occupancy Type Loan Purpose Investment 20.0% Purchase 91.8% Refinance 8.2% Owner Occupied 80.0% Seasoning (in months) Remaining Loan Term (in months) (SGD m) (SGD m) 2,000 37.9% 35.7% 1,800 33.7% 1,800 1,600 1,600 1,400 1,400 24.3% 23.3% 1,200 1,200 1,000 1,000 17
Slide 42: Cover Pool Characteristics (cont'd)
Cover Pool Characteristics (cont’d) Property Type Geographical Distribution Intermediate Others Rest of Central Core Central Region Terrace 4.7% Region 18.8% 5.1% 11.6% Semi-Detached House 4.1% Detached Bungalow 1.6% Apartment 9.3% Outside Central Region Condominium 69.6% 75.2% Ring-Fencing Structur
Slide 43: Contacts
Contacts Questions regarding the Issuer should be directed to UOB Name Title Contact Number Email Managing Director, Chin Chin Koh Tel: +(65) 6539 3108 koh.chinchin@uobgroup.com Central Treasury Unit First Vice President, We Yuan Ng Tel: +(65) 6539 3285 ng.weyuan@uobgroup.com Central Treasury Unit A
Slide 44: Table of Content
Table of Content 1 Investment Highlights P-4 2 United Overseas Bank Limited Overview P-5 3 Singapore Economy & Housing and Mortgage Market P-17 4 UOB Mortgage Lending Business P-30 Singapore Covered Bond Legal Framework & P-33 5 UOB’s Global Covered Bond Programme 6 Cover Pool Characteristics P-38 7
Slide 45: Origination and Underwriting Workflow Overview
Origination and Underwriting Workflow Overview Credit Evaluation/ Documentation/ Implementation 1 Origination 2 3 Data Entry Checks 4 Approval & Disbursement 1 Origination 3 Acceptance by Customer Loan applications are acquired through developers’ property Generate letter of offer launches, accr
Slide 46: Stringent Credit Underwriting Criteria and Checks
Stringent Credit Underwriting Criteria and Checks Descriptions Criteria Descriptions Criteria Age • Minimum (at application): 21 years old Credit Bureau & • No written off / bank involuntary • Maximum (at application): 65 years old* Derogatory checks • No un-discharged bankruptcy • Maximum upon matu
Slide 47: Delinquent Loans Managements
Delinquent Loans Managements ■ UOB administers, manages delinquency and optimizes recoveries through effective and efficient collections process using: Highly automated Collection Tools such as: Computerized Collections System (CACS), a system to manage delinquent accounts Non Performing Loan Sy
Slide 48: Asset Coverage Test (ACT)
Asset Coverage Test (ACT) SGD Equivalent of the Aggregate Outstanding Adjusted Aggregate Loan Amount Nominal Amount of all Covered Bonds Tested monthly on every Test Date prior to the service of a Notice to Pay and for so long as any Covered Bonds remain outstanding Failure of meeting the ACT on
Slide 49: Amortisation Test
Amortisation Test SGD Equivalent of the Aggregated Outstanding Amortisation Test Aggregate Loan Amount Nominal Amount of the Covered Bonds Tested monthly on every Test Date following the service of a Notice to Pay but prior to the service of a CBG Acceleration Notice and for so long as Covered Bon
Slide 50: House Price Indexation
House Price Indexation Indexation is used in the Asset Coverage Test (ACT) to protect investors from a downward move in property prices In the calculation of the LTV Adjusted Principal Balance of each Loan (per Slide 48), on an annual basis, the Valuation of the Property of each Loan will be upd
Slide 51: Equitable Assignment -v- Declaration of Assets Trust Structure
Equitable Assignment -v- Declaration of Assets Trust Structure Equitable Assignment (EA) Declaration of Assets Trust (DOT) • Method of Sale - By way of equitably assigning its rights • Method of Sale – the Seller will declare an asset trust over in the mortgage loans to CBG the mortgage loans in fav
Slide 52: Key Programme Rating Triggers
Key Programme Rating Triggers Moody’s Trigger S&P Trigger Trigger Event Descriptions Long- Short- Events Long- Short- Events ► The Pre-Maturity Test is performed daily for 12 months prior to term term term term the Maturity Date in relation to a hard bullet Covered Bond ► If UOB’s unsecured and unsu
Slide 53: Covered Bond Legal Framework Comparisons
Covered Bond Legal Framework Comparisons Singapore Australia Canada Germany United Kingdom Korea Legal Notice 648 under the Banking Amendment Canadian Covered Bond German Pfandbrief Act UK Regulated Covered Covered Bonds Act Framework / Banking Act (Covered Bonds) Act 2011 Law (June 2012) Bond Regul
Slide 54: Covered Bond Legal Framework Comparisons
Covered Bond Legal Framework Comparisons Singapore Australia Canada Germany United Kingdom Korea Residential Residential mortgages Residential mortgages 60% LTV for both 80% LTV for residential 70% LTV for residential mortgages ≤80% LTV ≤80% LTV ≤80% LTV residential and mortgage loans mo
Slide 55: Thank you
i} UOB Thank you
United Overseas Bank — Debt Investor Presentation (February 2016) on 6ix