United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (November 2018)

53 slides from United Overseas Bank's investor presentation, November 2018

  1. Slide 1: Resilient Earnings Supported by Strong Balance Sheet

    UOB Group Resilient Earnings Supported by Strong Balance Sheet November 2018 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 i

  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 9M18 Founded in August 1935 by a group of Chinese ■ Total assets : SGD383b (USD280b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD37b (USD27b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD255b (USD187

  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 2 offices 28 offices1 39% of 41% of Group profit Group profit VIETNAM before tax 469 THAILAND 1 office before tax 154 offices 324 367 301 419 432 PHILIPPINES

  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.  Base case sc

  11. Slide 11: Global Trade Tension Negative for Small Open Economies in Asia

    Global Trade Tension Negative for Small Open Economies in Asia Direct Vulnerability to US Exports: Indirect Vulnerability to US Exports via China: China, Japan, Vietnam and India Stand Out Taiwan, followed by Korea, Singapore & Malaysia 200 200 Hong Kong Hong Kong Singapore Singapore 160 160 Total e

  12. Slide 12: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18f 1Q19f 2Q19f US 10-Year Treasury 2.39 2.30 2.33 2.40 2.74 2.86 3.06 3.20 3.25 3.35 US Fed Funds 1.00 1.25 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 SG 3M SIBOR 0.95 1.00 1.12 1.50 1.45 1.52 1.64 1.95 2.05 2.30 SG 3M SOR 0.86

  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 18.5 205 15.3 75 118 105 9.1 30 24 26 2.9 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  3Q18 GDP growth slowed to 2.6% yoy (2Q18: +4.1%). MAS Normalised SGD NEER Further in Oct’18 Manufacturing slowed markedly to 4.5% yoy, while services growth was stable at 2.9% yoy. In 2019, GDP 131 MAS kept neutral stance at

  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 %) Thailand Singapore 20.5 95.1 Indonesia 90.4 Indonesia 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 (3Q08 = 100) (%) HK, 321 7.7 MY, 204 EU, 6.8 AU, 165 4.2 CH, 3.8 TH, 157 US, 3.7 100 SG, 121 HK, 3.0 2.4 SG, 2.1 3Q08 3Q10 3Q12 3Q14 3Q16 3Q18 2008 2010 2012

  17. Slide 17: 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) (SGD b) CAGR c$53b Markets where UOB has a presence c$11b +6% Total Singapore Thailand c$2b c$2b c$37b c$7b +6% Hong Wealth Kong c$8b c$3b c$5

  18. Slide 18: 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

  19. Slide 19: 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 LCR1 Phased-in Full NSFR2 Start SACCR3 Start FRTB4 Start TLAC5 Phased-in Full Basel IV6 Phased-in Full IFRS 9 Start Banks

  20. Slide 20: 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%

  21. Slide 21: Strong UOB Fundamentals

    tit UOB Strong UOB Fundamentals 21

  22. Slide 22: 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  Stable income over the last quarter amid the subdued busin

  23. Slide 23: 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

  24. Slide 24: 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 43.8% 1.11% 85.7% Aa1 AA– AA– OCBC a1 42.7% 1.24

  25. Slide 25: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 23.7 22.7 22.7 21.3 20.7 (Common Equity 18.3 17.9 17.4 17.3 16.6 16.5 16.3 16.3 16.2 16.1 15.9 15.2 15.1 15.0 14.7 14.4 14.4 14.3 14.2 Tier 1 CAR; 14.1 14.1 13.6 13.6 13.4 13.3 13.1 13.1 12.4 12.3 11.9 11.

  26. Slide 26: 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% 2.04%  Healthy portfolio quality – 11bps credit cost on NPL lower YoY FY16 FY17 1H18 – NPL ratio stable at 1.7% RWA SG

  27. Slide 27: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others Greater 12% Singapore IDR 15% SGD China 52% 2% 47% 15% THB 6% Indonesia 4% MYR Thailand 10% 6% Malaysia USD 11% 20% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professi

  28. Slide 28: 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 

  29. Slide 29: Sustainability Reporting a Multi-Year Journey, with Progress Recognised

    Sustainability Reporting a Multi-Year Journey, with Progress Recognised Created by the global index provider FTSE Russell, the FTSE4Good Index Series is Sustainalytics is the designed to measure the leading independent global performance of companies 2017: 49 provider of ESG1 and demonstrating stron

  30. Slide 30: Our Growth Drivers

    itt UOB Our Growth Drivers 30

  31. Slide 31: 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

  32. Slide 32: Wholesale Banking: Income Diversification Remains Key

    Wholesale Banking: Income Diversification Remains Key Non-loan income: +15% YoY in 1H18 Segment RoRWA1: +0.16% pt YoY in 1H18 Non-loan income % 52% 51% 52% 1,707 SGD m 918 850 2.04% 2.02% 2.18% 1,855 881 1,009 FY17 1H17 1H18 FY17 1H17 1H18 Non-loan income Loan income Transaction banking income: +17%

  33. Slide 33: Retail Banking: Steady Improvement in Performance

    Retail Banking: Steady Improvement in Performance Gross Loans (Group Retail1): +6% YoY in 1H18 Income3 (Group Retail1) +5% YoY in 1H18 SGD b SGD m 106 3,781 104 100 1,851 1,943 FY17 1H17 1H18 FY17 1H17 1H18 High Affluent2 income: +12% YoY in 1H18 Segment RoRWA4 +0.42% pt YoY in 1H18 SGD m 1,330 6.60

  34. Slide 34: Focusing on the Future

    Focusing on the Future The retail The new The new banking future business model Digital Bank Digital Banking or From “Cross-selling Making it Simple, Engaging and Digital Bank to Engaging" and Transparent  Digital banking (omni-channel)  The data-centric Digital Bank’s  Simple and the digital ban

  35. Slide 35: Achieving our Goals for Digital Bank

    Achieving our Goals for Digital Bank Powering the Digital Bank for Engagement Scaling our • Fast and modular 5 regional franchise • Next-gen credit assessment with • Next-gen UI capabilities Countries Avatec.ai (JV; April 2018) • 24/7 fast digital service Acquire Transact Target customers 3–5m Mobil

  36. Slide 36: Latest Financials

    itt UOB Latest Financials 36

  37. Slide 37: 9M18 Financial Overview

    9M18 Financial Overview Net Profit After Tax (NPAT) Movement, 9M18 vs 9M17 (SGD m) 544 136 111 308 322 18 45 +22% 3,092 2,535 +13% +10% –12% +11% –55% +20% +8% 9M17 net Net interest Net fee1 Other non- Expenses1 Total Share of Tax and 9M18 net profit after income income interest allowances profit of

  38. Slide 38: 3Q18 Financial Overview

    3Q18 Financial Overview Net Profit After Tax (NPAT) Movement, 3Q18 vs 2Q18 (SGD m) 57 14 58 11 5 28 3 1,077 –4% 1,037 +4% –3% –19% –1% +5% –53% +2% 2Q18 net Net interest Net fee Other non- Expenses Total Share of Tax and 3Q18 net profit after income income interest allowances profit of non- profit a

  39. Slide 39: 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% 2.26% 2.20% 2.14% 2.15% 2.14% 2.18% 2.22% 2.18% 8,500 2.06% 2,200 2.00% 2.00% 7,500 1.71% 1.77% 1.71% 1.77% 2,000 1.79% 1.81% 1.84% 1.83% 1.81% 1.00% 1.00% 0.82% 1,800 0.82% 0.

  40. Slide 40: Broad-based Increase in Loan Portfolio

    Broad-based Increase in Loan Portfolio QoQ YoY Sep-18 Jun-18 +/(–) Sep-17 +/(–) Gross Loans SGD b SGD b % SGD b % By Geography Singapore 133 131 +2 127 +5 Regional: 95 94 +2 84 +14 Malaysia 29 29 –0 26 +11 Thailand 16 16 +4 14 +13 Indonesia 11 11 +2 11 –1 Greater China 39 38 +2 32 +23 Others 27 25 +

  41. Slide 41: 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 37.2% 36.9% 35.9% 35.4% 1400 40.0% 34.9% 34.5% 34.1% 34.2% 40.0% 4,800 31.3% 30.0% 30.0% 4,300 1200 20.0% 20.0% 3,800 21.4% 21.0% 21.3% 21.9% 22.0% 22.8% 23.2% 21.3% 20.8% 100

  42. Slide 42: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,161 602 585 581 80 600 568 551 20 2,000 1,883 1,931 18 15 272 15 93 18 72 1,749 74 72 74 74 148 500 68 36 59 258 263 41 37 37 273 35 1,500 121 134 471 400 141 113 133 148 135 122 498 482 490 300 1,000 547 142 165 143 132 133 4

  43. 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 5,500 50.0% 50.0% 46.0% 5,000 44.0% 43.7% 1,400 44.2% 43.6% 43.0% 45.0% 43.4% 45.0% 40.6% 41.6% 4,500 1,200 40.0% 40.0% 4,000 3,739 1,027 1,022 1,011 3,425 35.0% 987 3,500 3,356 1,000 35.0%

  44. Slide 44: IT Investments Shifting Towards "Changing the Bank"

    IT Investments Shifting Towards “Changing the Bank” Connectivity and Digital for Focus Centralisation and Standardisation Growth Cumulative 2009 to 2013 2014 to 2017 IT investments (cSGD0.6 b) (cSGD1.2 b) Total IT investments Global Market Platform: Customer flow income +12%1 28% Cash Management Pla

  45. Slide 45: Exposure to China

    Exposure to China Bank exposure as of 30 September 2018 Non-bank exposure as of 30 September 2018 • Bank exposure accounted for 65% 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 in

  46. Slide 46: Stable New NPA Formation

    Stable New NPA Formation (SGD m) 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 NPA at start of 3,164 3,632 3,480 3,543 3,587 3,919 4,389 4,323 4,404 period New NPA 780 387 424 537 799 1,167 416 436 475 Upgrades, recoveries and (201) (320) (293) (255) (369) (354) (310) (212) (398) translations Write-o

  47. Slide 47: NPL Ratio Improved to 1.6%

    NPL Ratio Improved to 1.6% NPL ratio 1.6% 1.8% 1.7% 1.7% 1.6% NPLs (SGD m) 3,748 4,211 4,138 4,208 4,185 4,400 Others 303 300 290 290 3,900 132 139 150 138 272 Greater China 694 3,400 244 692 721 749 Indonesia 2,900 608 439 485 482 416 Thailand 2,400 386 585 629 603 623 1,900 563 Malaysia 1,400 2,05

  48. Slide 48: Credit Costs Inching up to More Normalised Level

    Credit Costs Inching up to More Normalised Level Allowances for Loans 2,000 600 150bp 125bp 150bp 1,800 500 100bp 100bp 1,600 61bp 1,400 45bp 37bp 32bp 32bp 50bp 400 50bp 12bp 13bp 18bp 1,200 32bp 28bp 32bp 1,000 19bp 0bp 300 17bp 11bp 15bp 0bp 12bp 11bp 800 200 (50)bp (50)bp 600 400 626 655 693 660

  49. Slide 49: Adequate NPL Reserve Coverage Ratios

    Adequate NPL Reserve Coverage Ratios 250% 236% Total Allowances / 195% Unsecured NPLs200% (%) 178% 178% 177% 150% Total Allowances / NPLs 108% (%) 91% 81% 80% 80% 100% 50%/ Allowances for NPLs NPLs (%) 39% 44% 43% 42% 43% 0% 4,500 4,000 3,500 Allowances for performing loans 3,000 2,595 1,961 (SGDm)

  50. Slide 50: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.7% 8.0% 8.2% 7.7% 7.4% Leverage ratio 1 5.0% Total CAR 2 17.8% 18.7% 18.8% 18.4% 17.4% 0% 19.0% 17.0% 2.5% 2.4% 2.4% -20000% 3.0% 1.1% 1.5% 2.3% Tier 2 CAR 2 15.0% 1.5% 1.0% 0.5% -40000% 13.0% Tier 1 CAR 2 11.0% -60000% CET1 CAR 2 14.3% 15.1% 14.9% 14.5% 14.1% 9.

  51. Slide 51: Stable Liquidity and Funding Position

    Stable Liquidity and Funding Position 111% 110% 110% Net stable funding 1.15 ratio (%) 1.05 94.2% 94.8% SGD loan-deposit ratio 91.9% 92.3% 91.6% 0.95 (LDR) (%) 0.85 Group LDR (%) 85.8% 85.1% 86.7% 85.7% 85.7% 0.75 USD LDR (%) 0.65 65.3% 66.2% 64.5% 63.9% 63.5% 0.55 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18

  52. Slide 52: Higher Interim Dividend for 2018

    Higher Interim Dividend for 2018 20 20 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 1,661 835 Payout ratio (%) 45 37 49 41 Payout ratio (excluding 35 37 39 41 special/one-off dividends) (%) N

  53. Slide 53: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (November 2018) on 6ix