United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (February 2017)

56 slides from United Overseas Bank's investor presentation, February 2017

  1. Slide 1: UOB Group: Stable Core Earnings in Slower Operating Environment; Strong Balance Sheet

    UOB Group Stable Core Earnings in Slower Operating Environment; Strong Balance Sheet February 2017 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 FY16 Founded in August 1935 by a group of Chinese ■ Total assets : SGD340b (USD235.1b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD33b (USD22.7 b1) grandfather of the present UOB Group CEO, Mr. ■ Gross loans : SGD226b (USD156.0b1) 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 37% of VIETNAM Group PBT THAILAND 33% of 1 office 157 offices Group PBT 324 367 301 300 PHILIPPINES 21 252 305 366 71 1

  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 central government debt underpins China

  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 3Q16 4Q16 1Q17f 2Q17f 3Q17f 4Q17f US Fed Funds 0.25 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.25 1.50 SG 3M SOR 1.24 1.70 0.81 0.81 0.67 1.01 0.80 1.00 1.15 1.35 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 Re

  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: Manufacturing Sector to Lead Singapore GDP in 2017, Services Remain Weak

    Manufacturing Sector to Lead Singapore GDP in 2017, Services Remain Weak  Singapore’s GDP grew 1.8% yoy in 4Q16, as the Neutral Stance Adopted since April 2016 manufacturing sector registered a strong 6.5% yoy growth, buoyed by the electronics & biomedical 133 SGD NEER clusters. However, the servic

  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 ratios in the reg

  15. Slide 15: Conducive Macro Conditions Underpin Singapore Property Market

    Conducive Macro Conditions Underpin Singapore Property Market Regional House Price Indices Low Unemployment vs Global Peers (4Q06 = 100) (%) HK, 327 7.7 EU, 8.2 MY, 215 4.4 US, 4.7 CH, 4.0 SG, 147 HK, 3.1 100 SG, 1.9 TH, 116 2.6 4Q06 4Q08 4Q10 4Q12 4Q14 4Q16 2006 2008 2010 2012 2014 2016 Note: For T

  16. Slide 16: 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

  17. Slide 17: 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

  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: 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

  20. Slide 20: Strong UOB Fundamentals

    tit UOB Strong UOB Fundamentals 20

  21. Slide 21: 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 stable year-on-year, despite slower economic

  22. Slide 22: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Singapore Others Others Greater 10% 56% IDR 12% SGD China 2% 50% 12% THB 6% Indonesia 5% MYR 10% Thailand 6% Malaysia USD 11% 20% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing

  23. Slide 23: 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 45.9% 0.95% 86.8% Aa1 AA– AA– OCBC a1 44.6% 1.03

  24. Slide 24: 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 20.1 19.5 19.1 18.3 17.1 (Common Equity 16.4 16.4 16.3 16.2 16.2 16.2 15.8 15.5 15.1 14.7 14.7 14.3 14.3 14.2 14.1 14.1 13.9 13.7 13.7 Tier 1 CAR; 13.1 13.1 13.0 12.5 12.4 12.4 12.2 11.5 11.0 1

  25. Slide 25: 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

  26. Slide 26: 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

  27. Slide 27: 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

  28. Slide 28: Stable Asset Quality; High Allowances Coverage

    Stable Asset Quality; High Allowances Coverage Largely Stable NPL Ratio High Allowances Coverage 4,500 1.6% 2.0% 1.4% 1.4% 1.4% 1.5% 6,000 200% 130.5% 133.2% 125.6% 118.0% 4,000 112.4% 100% 3,500 1.0% 1.4% 5,000 1.5% 1.5% 1.4% 1.2% 615 0% 3,000 1,025 530 4,000 651 586 517 0.0% -100% 2,500 350 751 77

  29. Slide 29: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Portfolio quality broadly stable Countercyclical Approach to General Allowances (SGDm) – NPL ratio up slightly at 1.5% 80 204 – High general allowances-to-loans ratio of 460 359 1.2% 358 – 32bps total credit costs maintained 2,709 1,964 SGD1.1bn  Proactive lia

  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: Steady Franchise Growth; Broader Portfolio Quality Sound

    Wholesale Banking: Steady Franchise Growth; Broader Portfolio Quality Sound Wholesale Banking Business  Wholesale Banking’s loans and income up in 2016 Gross Loans (SGDbn) Total Income (SGDm) +10% +6% +10% 4500 +10% +13% +3% 2.40% YoY YoY YoY 4000 YoY YoY YoY  Bottom line dampened by higher allowa

  33. Slide 33: Group Transaction Banking: Stable Income Contributor

    Group Transaction Banking: Stable Income Contributor Trade Loans Deposits  Cash management increasing in CAGR CAGR significance +12% +16% 33%  Healthy growth in trade loans 37% 35% with focus on increasing client 39% 40% 30% 33% 41% wallet share 59% 63% 61% 60% 70% 67% 65% 67%  Continue to draw h

  34. Slide 34: Retail Banking: Growing Income with Stable Asset Quality

    Retail Banking: Growing Income with Stable Asset Quality  Housing loans a key driver for Retail Group Retail Business Banking’s1 loan growth in 2016; regional Gross Loans (SGDbn) Total Income (SGDm) housing loans +11% YoY +8% +3% +7% +9% +11% +9% – Asset quality remains stable YoY YoY YoY YoY YoY Y

  35. Slide 35: Digitalisation: Enriching Customer Experience

    Digitalisation: Enriching Customer Experience Examples of UOB’s digital initiatives Connectivity • Security token embedded in smartphone • Instant digital credit card issuance • Contactless ATM Ecosystem partners • hiLife and MGG • cloudBuy • BizSmart • FinLab • OurCrowd • Innoven Capital Innovation

  36. Slide 36: 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

  37. Slide 37: Latest Financials

    itt UOB Latest Financials 37

  38. Slide 38: FY16 Financial Overview

    FY16 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY16 vs FY15 (SGD m) 65 48 98 99 78 84 21 3,209 –3.5% 3,096 +1.3% +2.5% –7.9% +2.8% –11.6% –93.4% +3.2% FY15 net Net interest Fee income Other non- Expenses Total Share of Tax and FY16 net profit after income interest allowances profit o

  39. Slide 39: 4Q16 Financial Overview

    4Q16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 4Q16 vs 3Q16 (SGD m) 46 39 96 39 54 46 10 – 6.6% 791 739 +3.7% +7.8% –30.2% +4.2% –29.5% – >100.0% +5.4% 3Q16 net Net interest Fee income Other non- Expenses Total Share of Tax and 4Q16 net profit after income interest allowances profit

  40. Slide 40: Growth in Net Interest Income Largely Driven by Healthy Loan Growth

    Growth in Net Interest Income Largely Driven by Healthy Loan Growth Net Interest Income (NII) and Margin 9,000 2,200 3.00% 2.34% 2.36% 3.00% 2.12% 2.26% 2.20% 2.23% 2.13% 2.09% 2.06% 8,000 2,000 2.00% 2.00% 1.72% 1.71% 1.77% 1.71% 1.79% 1.78% 1.68% 1.69% 1.69% 1,800 1.00% 1.00% 7,000 0.76% 0.82% 0.5

  41. Slide 41: Loan Growth at 3.1% QoQ and 8.8% YoY in Constant Currency Terms

    Loan Growth at 3.1% QoQ and 8.8% YoY in Constant Currency Terms QoQ YoY Dec-16 Sep-16 +/(–) Dec-15 +/(–) Gross Loans 1 SGD b SGD b % SGD b % By Geography Singapore 125.5 120.4 +4.3 116.1 +8.1 Regional: 78.1 75.8 +3.0 72.8 +7.2 Malaysia 25.8 25.7 +0.4 24.6 +4.7 Thailand 13.2 12.4 +7.0 11.5 +15.2 Indo

  42. Slide 42: 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% 38.7% 38.9% 38.8% 38.1% 38.6% 40.2% 39.7% 5,000 1400 40.0% 35.3% 37.1% 40.0% 25.8% 23.5% 23.4% 24.0% 30.0% 26.2% 1200 23.1% 22.0% 23.4% 24.1% 30.0% 4,000 20.0% 20.0% 1000 3,122 3,071 10.0%

  43. Slide 43: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 1,931 531 93 492 25 1,731 1,749 74 500 480 475 1,800 59 16 20 68 114 258 263 433 21 1,600 64 67 273 27 66 39 268 121 134 400 33 1,400 35 63 113 31 111 1,200 498 482 31 134 300 114 124 490 135 1,000 504 110 800 110 41

  44. Slide 44: Staff Costs Tightly Managed as IT Investments Continue

    Staff Costs Tightly Managed as IT Investments Continue Operating Expenses and Expense / Income Ratio 43.1% 44.7% 45.9% 50.0% 46.3% 45.4% 45.8% 45.0% 47.2% 42.2% 50.0% 5,000 1400 40.0% 40.0% 30.0% 1200 30.0% 4,000 3,696 3,597 20.0% 964 20.0% 1000 927 957 894 918 3,146 10.0% 10.0% 2,898 3,000 1,291 1,

  45. Slide 45: IT Investments Geared towards Products and Digital Capabilities

    IT Investments Geared towards Products and Digital Capabilities IT investments over 2014-2016 (cSGD0.7b) Security, 4% Increase in Fee and Trading Capabilities Global Market Platform Customer flow income: +8%1 Regulatory, 17% Cash Management Product Data mobility/ capabilities, Transaction banking in

  46. Slide 46: Higher Specific Allowances from O&G and Shipping; Total Credit Costs Stable

    Higher Specific Allowances from O&G and Shipping; Total Credit Costs Stable Allowances on Loans 57bp from 2000 800 100bp existing NPLs100bp 1800 700 53bp 45bp 76bp 1600 30bp 32bp 32bp 50bp 32bp 32bp 32bp 50bp 600 1400 32bp 25bp 32bp 32bp 19bp 500 22bp 23bp 1200 12bp 0bp 0bp 8bp 1000 400 800 (50)bp (

  47. Slide 47: Stable Liquidity Position

    Stable Liquidity Position Customer Loans and Deposits; Loan/Deposit Ratios (LDR); and Liquidity Coverage Ratios (LCR) All-currency LCR (%) 142% 139% 167% 148% 162% SGD LCR (%) 217% 169% 224% 213% 275% 100.0% 91.7% 91.9% SGD LDR (%) 88.1% 89.7% 89.7% 90.0% 80.0% 84.7% 85.0% 86.8% Group LDR (%) 84.0%

  48. Slide 48: NPL Ratio at 1.5%, with NPLs Mainly from Singapore and Indonesia

    NPL Ratio at 1.5%, with NPLs Mainly from Singapore and Indonesia NPL ratio 1.4% 1.4% 1.4% 1.6% 1.5% NPLs1 (SGD m) 2,882 2,841 3,056 3,496 3,328 3,600 255 245 3,100 303 206 307 Others 344 176 2,600 401 565 218 564 638 Greater China 158 293 2,100 569 564 264 360 466 Indonesia 1,600 249 250 451 487 386

  49. Slide 49: Inflows of Non-Performing Assets Have Eased

    Inflows of Non-Performing Assets Have Eased 4Q15 1Q16 2Q16 3Q16 4Q16 SGD m SGD m SGD m SGD m SGD m NPA at start of period 2,737 3,066 3,016 3,164 3,632 New NPA 626 344 802 780 387 Upgrades, recoveries and (233) (235) (548) (201) (320) translations Write-offs (64) (159) (106) (111) (219) NPA at end o

  50. Slide 50: Exposure to China

    Exposure to China Total as of 31 Dec Bank exposure in China 2016 = SGD23.2b  98% with <1 year tenor or 6.8% of total assets  Around 77% accounted for by top 5 domestic banks and policy banks  Trade exposures mostly with bank counterparties, Bank, representing slightly more than half of bank expos

  51. Slide 51: Exposure to Commodities

    Exposure to Commodities Oil and gas As of Traders/ Other commodity Upstream Total 31 Dec 16 downstream segments industries2 industries Total exposure1 SGD6.2b SGD11.5b SGD9.9b SGD27.6b Outstanding SGD5.3b SGD5.7b SGD7.0b SGD18.0b loans 5% of total loans 8% of total loans  Total exposure, including

  52. Slide 52: Exposure to Europe

    Exposure to Europe As of As a % of Non-bank Bank Debt securities Total 31 Dec 2016 total assets Europe SGD3.3b SGD4.7b SGD1.1b SGD9.1b 3.2% of which UK SGD2.4b SGD1.0b SGD0.2b SGD3.6b 1.3% Minimal direct impact from Brexit  Bulk of UK non-bank exposure is secured and denominated in GBP  Consumer m

  53. Slide 53: Countercyclical Approach in General Allowance Supports High Reserve Cover

    Countercyclical Approach in General Allowance Supports High Reserve Cover Total 150.0% 130.5% 133.2% 125.6% 112.4% 118.0% Allowances / Total NPL (%) 100.0% General 50.0% Allowances / Gross Loans 0.0% net of Specific 1.4% 1.5% 1.5% 1.4% 1.2% Allowances (%) -50.0% 4,500 4,000 Specific Allowances 3,500

  54. Slide 54: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.3% 7.0% 7.4% 7.5% 7.4% Leverage ratio 1 5.0% Total CAR 2 20.0% 15.6% 16.0% 15.9% 16.6% 16.2% 0% 18.0% 16.0% -20000% Tier 2 CAR 2 3.2% 2.7% 3.1% 3.1% 14.0% 2.6% 0.1% 0.1% 12.0% 0.1% -40000% Tier 1 CAR 2 10.0% 8.0% -60000% CET1 CAR 2 6.0% 13.0% 12.8% 13.1% 13.4% 13

  55. Slide 55: Stable Dividend Payout

    Stable Dividend Payout 20 5 5 35 35 50 50 35 35 20 20 2013 2014 2015 2016 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,182 1,201 1,444 1,135 Payout ratio (%) 39 37 45 37 Note: The Scrip Dividend Scheme was applied to the final and special div

  56. Slide 56: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (February 2017) on 6ix