United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (May 2018)

52 slides from United Overseas Bank's investor presentation, May 2018

  1. Slide 1: UOB Group: Strong Business Performance and Balance Sheet Position

    UOB Group Strong Business Performance and Balance Sheet Position May 2018 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 n in summary form and do

  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 1Q18 Founded in August 1935 by a group of Chinese ■ Total assets : SGD364b (USD278b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD38b (USD29b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD241b (USD184

  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 VIETNAM Group PBT 469 THAILAND 1 office 154 offices 324 367 301 419 PHILIPPINES 305 366 300 29 1 office 99 61 71 218 MALAYSIA 15

  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: 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 central government debt underpins China

  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 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18f 3Q18f 4Q18f US 10-Year Treasury 1.59 2.44 2.39 2.30 2.33 2.40 2.74 2.80 3.00 3.20 US Fed Funds 0.50 0.75 1.00 1.25 1.25 1.50 1.75 2.00 2.00 2.25 SG 3M SIBOR 0.87 0.97 0.95 1.00 1.12 1.50 1.45 1.70 1.70 1.85 SG 3M SOR 0.67

  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) 283 19.5 215 15.3 172 75 109 128 105 8.1 30 2.2 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.8 –5.5 1998 2018 (latest available) Singapore Malaysia Thailand Ind

  14. Slide 14: Singapore GDP Growth Likely to Moderate in 2018

    Singapore GDP Growth Likely to Moderate in 2018  1Q18 GDP grew 4.3% yoy (4Q17: +3.6%) and was MAS Normalised SGD NEER in Apr’18 still supported mainly by expansion in the electronics and precision engineering clusters. Positive spillover 133 Easing #1 Easing #2 Easing #3 MAS kept neutral stance unc

  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 %) 21.7 Thailand Singapore 95.5 Indonesia Indonesia Thailand 8

  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 (1Q18 = 100) (%) HK, 279 MY, 219 6.9 EU, 7.3 5.0 US, 4.1 AU, 163 CH, 3.9 HK, 2.8 100 TH, 122 1.6 SG, 1.8 SG, 113 1Q08 1Q10 1Q12 1Q14 1Q16 1Q18 2007 2009 2011

  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  Healthy revenue growth momentum, with new highs in both ne

  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 44.2% 1.09% 86.7% Aa1 AA– AA– OCBC a1 44.2% 1.17

  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 21.0 20.7 19.4 18.8 (Common Equity 18.0 17.6 16.5 16.5 16.4 16.4 16.4 16.0 16.0 15.8 15.8 15.0 14.9 14.8 14.8 14.8 14.5 14.4 14.2 Tier 1 CAR; 14.0 13.7 13.6 13.6 13.1 13.0 12.7 12.4 12.4 12.

  26. Slide 26: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Improved balance sheet efficiency Optimising RWA to drive higher RoRWA1 – Result of ongoing efforts to optimise RWA RoRWA1 1.40% 1.51% 1.61% 1.69% 1.69%  Portfolio quality broadly stable – Uptick in NPL ratio to 1.8%; 4Q16 1Q17 2Q17 3Q17 4Q17 accelerated recog

  27. Slide 27: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Singapore Others Greater 11% 53% IDR 15% SGD China 2% 48% 14% THB Indonesia 6% 4% MYR Thailand 10% 6% Malaysia USD 12% 19% 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 Singapore Ranking 2017: 100 2017: 49 Best Inaugural Rank 11th 2017: 7th (Average) Sustainability 2016: 93 2016: 44 Report Rank 14th 2015: 27th (Laggard) (Mainboard), 2017 The Singapore Sustainability The SGTI is a collaboration

  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: Diversifying Income Mix to Grow RoRWA

    Wholesale Banking: Diversifying Income Mix to Grow RoRWA Income from Non-Loan: +7% CAGR1 Income from Transaction Banking: +9% CAGR1 % Non- % TB loan 47% 49% 52% income 32% 33% 36% income 1,822 1,811 1,707 2,365 2,263 2,334 S$m 1,611 1,729 1,855 S$m 470 449 501 629 726 798 FY15 FY16 FY17 FY15 FY16 FY

  33. Slide 33: Focus on Sectors with Highest Trade and Connectivity Flows

    Focus on Sectors with Highest Trade and Connectivity Flows One of 1st sectors launched: Financial Institution segment showing good progress Strong Income Diversified Building Regional Growth Product Mix Connectivity CAGR1 ​+29% ​48% ​40% 57% ​52% ​60% FY15 FY16 FY17 ​ roup G ​FIG2 2017 Income from W

  34. Slide 34: Retail Banking: Growth Momentum Gaining Traction

    Retail Banking: Growth Momentum Gaining Traction Gross Loans (Group Retail1): +7% CAGR2 Income (Group Retail1) +9% CAGR2 S$bn S$m 104 3,988 98 3,647 91 3,359 FY15 FY16 FY17 FY15 FY16 FY17 Wealth Management3 Income: +14% CAGR2 Segment RoRWA4 – 0.01% pt YoY AUM S$85b S$93b S$104b +35% 513 334 +14% 381

  35. Slide 35: Harnessing Technology & Innovation to Improve Productivity & Customer Experience

    Harnessing Technology & Innovation to Improve Productivity & Customer Experience UOB MIGHTY CONTACTLESS MIGHTY SECURE MIGHTY FX debuts PAYMENT for use on mobile Trade, Transact at general ticketing phone as security token and Travel at your machines FIRST IN SINGAPORE preferred FX rate. Nov ’15 ‘16

  36. Slide 36: Latest Financials

    itt UOB Latest Financials 36

  37. Slide 37: FY17 Financial Overview

    FY17 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY17 vs FY16 (SGD m) 213 22 313 537 133 104 136 3,096 +9% 3,390 +11% +13% +2% +9% +23% >100% +20% FY16 net Net interest Net fee1 Other non- Expenses1 Total Share of Tax and FY17 net profit after income income interest allowances profit o

  38. Slide 38: 1Q18 Financial Overview

    1Q18 Financial Overview Net Profit After Tax1 (NPAT) Movement, 1Q18 vs 4Q17 (SGD m) 61 6 16 10 8 18 40 +14% 978 855 +1% +2% –7% –4% –43% +29% –7% 4Q17 net Net interest Net fee1 Other non- Expenses1 Total Share of Tax and 1Q18 net profit after income income interest allowances profit of non- profit a

  39. Slide 39: Net Interest Income Rose on Growth in Loans and Margins

    Net Interest Income Rose on Growth in Loans and Margins Net Interest Income (NII) and Margin 2,200 3.00% 3.00% 2.26% 2.20% 2.14% 2.14% 2.14% 2.15% 2.14% 2.18% 8,500 2.06% 2,000 2.00% 2.00% 7,500 1.71% 1.77% 1.71% 1.77% 1.73% 1.75% 1.79% 1.81% 1.84% 1,800 1.00% 1.00% 0.82% 0.82% 0.93% 0.94% 6,500 0.7

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

    Broad-based Increase in Loan Portfolio QoQ YoY Mar-18 Dec-17 +/(–) Mar-17 +/(–) Gross Loans SGD b SGD b % SGD b % By Geography Singapore 129 128 +1 125 +3 Regional: 89 85 +5 81 +10 Malaysia 29 27 +7 26 +12 Thailand 16 15 +4 14 +14 Indonesia 10 11 –2 11 –8 Greater China 34 32 +5 30 +13 Others 24 23 +

  41. Slide 41: Steady Non-Interest Income Mix Underpins Diversity

    Steady Non-Interest Income Mix Underpins Diversity Non-Interest Income and as a % of Total Income 50.0% 50.0% 5,300 37.2% 36.9% 35.9% 35.4% 1400 36.5% 35.9% 40.0% 34.9% 34.5% 34.1% 40.0% 4,800 30.0% 30.0% 4,300 1200 20.0% 20.0% 3,800 21.4% 21.0% 21.3% 21.9% 21.4% 21.2% 22.0% 22.8% 23.2% 1000 10.0% 1

  42. Slide 42: Broad-based Focus in Fee Income, which Reached a New Record

    Broad-based Focus in Fee Income, which Reached a New Record Breakdown of Fee Income (SGD m) (SGD m) 2,161 602 585 80 600 20 1,931 551 18 2,000 1,883 517 272 508 18 72 1,749 74 93 72 500 23 21 68 59 263 148 36 258 66 41 66 35 273 134 1,500 121 36 471 400 37 141 113 133 122 498 482 102 114 490 300 1,0

  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 Expense / Income Ratio 6,500 50.0% 1,800 50.0% 46.0% 44.0% 43.7% 43.8% 44.2% 43.0% 45.0% 1,600 43.2% 45.0% 5,500 40.6% 41.6% 40.0% 1,400 40.0% 4,500 35.0% 1,200 35.0% 3,739 3,425 1,027 3,356 987 3,500 30.0% 1,0

  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 (c$0.6b) (c$1.2b) Total IT investments Global Market Platform: Customer flow income +12%1 28% Cash Management Platform:

  45. Slide 45: New NPA Formation Down to Normalised Levels amid Benign Credit Conditions

    New NPA Formation Down to Normalised Levels amid Benign Credit Conditions (SGD m) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 NPA at start of 3,066 3,106 3,164 3,632 3,480 3,543 3,587 3,919 4,389 period New NPA 344 802 780 387 424 537 799 1,167 416 Upgrades, recoveries and (235) (548) (201) (320) (

  46. Slide 46: NPL ratios Declined Mildly to 1.7%

    NPL ratios Declined Mildly to 1.7% NPL ratio 1.5% 1.5% 1.6% 1.8% 1.7% NPLs (SGD m) 3,399 3,466 3,748 4,211 4,138 4,500 Others 4,000 303 290 132 150 272 3,500 694 Greater China 285 244 692 257 3,000 304 261 608 439 Indonesia 485 623 641 2,500 386 585 603 Thailand 392 2,000 370 563 487 518 Malaysia 1,

  47. Slide 47: Lower Credit Costs amid Benign Credit Conditions

    Lower Credit Costs amid Benign Credit Conditions Allowances on Loans 2,000 600 150bp 125bp 150bp 1,800 500 100bp 100bp 1,600 61bp 45bp 49bp 1,400 37bp 32bp 32bp 50bp 400 30bp 50bp 1,200 12bp 32bp 28bp 32bp 32bp 32bp 1,000 19bp 0bp 300 17bp 0bp 12bp 11bp 800 200 (50)bp (50)bp 600 400 626 655 693 660

  48. Slide 48: Adequate NPL Reserve Coverage Ratios

    Adequate NPL Reserve Coverage Ratios 300% Total ECL* or Allowances / 244% 241% 236% Unsecured NPL (%) 250% 195% 200% 178% Total ECL* or Allowances / 118% 150% 114% 108% NPL (%) 91% 81% 100% Stage 3 ECL* or Specific 50% Allowance / Total NPL (%) 0% 42% 38% 39% 44% 43% 4,500 4,000 Stages 1 and 2 ECL*

  49. Slide 49: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.6% 7.8% 7.7% 8.0% 8.2% Leverage ratio 1 5.0% 4 Total CAR 2 17.3% 17.8% 17.8% 18.7% 18.8% 0% 19.0% 4 17.0% 2.5% 2.4% -20000% 3.5% 3.0% 1.1% 1.5% 4 Tier 2 CAR 2 15.0% 3.5% 0.5% 0.5% -40000% 13.0% 0.6% Tier 1 CAR 2 11.0% 4 -60000% CET1 CAR 2 13.8% 14.3% 15.1% 14.9%

  50. Slide 50: Stable Liquidity and Funding Position

    Stable Liquidity and Funding Position 111% Net stable funding 1.15 ratio (%) 1.05 92.3% 94.2% SGD loan-deposit ratio 0.95 89.9% 91.9% (LDR) (%) 87.8% 0.85 Group LDR (%) 86.7% 86.1% 85.8% 85.1% 86.7% 0.75 75.7% USD LDR (%) 0.65 66.5% 65.3% 66.2% 63.9% 0.55 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 250% 200%

  51. Slide 51: Higher Dividends for 2017

    Higher Dividends for 2017 20 20 5 45 35 35 50 35 35 35 20 2014 2015 2016 2017 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,201 1,444 1,135 1,661 Payout ratio (%) 37 45 37 49 Payout ratio (excluding 35 35 37 39 special/one-off dividends) (%) N

  52. Slide 52: Thank You

    Thank You tt UOB RIGHT BY YOU

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