United Overseas Bank Limited · SGX:U11
United Overseas Bank — FY2017 Earnings Presentation
31 slides from United Overseas Bank's earnings presentation, Feb 14, 2018
Slide 1: UOB Group Financial Highlights
UOB Group For the Financial Year Ended / Fourth Quarter 31 December 2017 Financial Highlights Lee Wai Fai Group Chief Financial Officer 14 February 2018 Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the p
Slide 2: 2017 and 4Q17 Highlights
2017 and 4Q17 Highlights Performance backed by healthy growth momentum and strong balance sheet Core dividends increased to 80 cents per annum 2017 NPAT of $3.39b 9% YoY 4Q17 NPAT of $855m 16% YoY; 3% QoQ Healthy revenue momentum • Higher net interest income from higher NIM and healthy loan gr
Slide 3: Performance backed by healthy growth momentum and strong balance sheet
Performance backed by healthy growth momentum and strong balance sheet 2017 2016 YoY $m $m $m +/(-) % Net interest income 5,528 4,991 537 11 Fee and commission income 2,161 1,931 231 12 Other non-interest income 1,162 1,140 22 2 Total income 8,851 8,061 790 10 Less: Total expenses 4,027 3,69
Slide 4: Growth in client franchise income
Growth in client franchise income 4Q17 4Q16 YoY $m $m $m +/(-) % Net interest income 1,461 1,276 185 15 Fee and commission income 585 531 54 10 Other non-interest income 262 222 40 18 Total income 2,307 2,028 278 14 Less: Total expenses 1,102 957 145 15 Operating profit 1,205 1,071 133 12
Slide 5: Net earnings decreased 3% due to higher performance-related staff costs
Net earnings decreased 3% due to higher performance- related staff costs and year-end seasonal expenses 4Q17 3Q17 QoQ $m $m $m +/(-) % Net interest income 1,461 1,408 52 4 Fee and commission income 585 551 34 6 Other non-interest income 262 279 (18) (6) Total income 2,307 2,238 68 3 Less: To
Slide 6: NII rose 11% YoY supported by healthy loan growth and higher margin
NII rose 11% YoY supported by healthy loan growth and higher margin from active balance sheet management Net Interest Income (NII) and Margin 2.06% 2.26% 2.20% 2.14% 2.09% 2.14% 2.14% 2.15% 2.14% 1.71% 1.77% 1.71% 1.77% 1.69% 1.73% 1.75% 1.79% 1.81% 0.82% 0.77% 0.50% 0.38% 0.82% 0.93% 5,528 0.55% 0.
Slide 7: Sustained momentum for fee income, up 12% YoY
Sustained momentum for fee income, up 12% YoY from strong performance in wealth management and fund management businesses Non-Interest Income (Non-NII) and Non-NII Ratio 38.9% 38.8% 38.1% 37.5% 37.1% 38.6% 37.9% 37.1% 36.7% 23.5% 23.4% 23.9% 24.4% 26.2% 24.0% 23.7% 24.6% 25.3% 3,323 3,122 3,071 260
Slide 8: Expense/income ratio increased QoQ with higher staff costs
Expense/income ratio increased QoQ with higher performance- related staff costs and year-end seasonal revenue-related expenses Operating Expenses and Expense / Income Ratio 44.7% 45.9% 45.5% 47.8% 43.1% 47.2% 45.1% 45.6% 43.5% 42.2% 43.4% 4,027 ^ 3,696 3,597 1,102 ^ 3,146 995 973 957 957 1,803 1,533
Slide 9: IT Investments Shifting Towards "Changing the Bank"
IT Investments Shifting Towards “Changing the Bank” Focus Centralisation & Standardisation Connectivity and Digital for 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% 36% Run the Cash Management
Slide 10: Higher specific allowance in 4Q17 due to accelerated recognition of NPL
Higher specific allowance in 4Q17 due to accelerated recognition of NPL and further collateral haircuts on O&G and shipping exposures Allowance on Loans 61bp 125bp 45bp 73bp from existing 32bp 32bp 32bp 28bp NPLs 76bp 1,407 49bp 19bp 37bp 12bp 32bp 32bp 32bp 17bp 30bp 32bp 969 744 428 392 277 214 23
Slide 11: New NPA formation peaked in 4Q17
New NPA formation peaked in 4Q17 due to accelerated recognition of NPA, mainly from the O&G and shipping sectors... 4Q16 1Q17 2Q17 3Q17 4Q17 $m $m $m $m $m NPA at start of period 3,632 3,480 3,543 3,587 3,919 New NPA 387 424 537 799 1,167 Upgrades, recoveries and translations (320) (293) (255) (369)
Slide 12: …accordingly, NPL ratio increased to 1.8%
…accordingly, NPL ratio increased to 1.8% NPL ($m) 3,328 3,399 3,466 3,748 4,211 NPL Ratio 1.5% 1.5% 1.5% 1.6% 1.8% Special Mention ($m) 3,339 3,043 2,714 2,337 2,114 NPL ($m) 303 132 272 244 694 257 285 245 304 261 307 608 439 623 641 638 386 585 370 392 360 563 487 487 518 2,058 1,675 1,291 1,358
Slide 13: New O&G and shipping NPLs mainly from manufacturing and transport
New O&G and shipping NPLs for the year mainly from manufacturing and transport industries 4,211 NPL ($m) 3,748 479 3,399 3,466 251 3,328 677 323 440 622 484 295 666 283 637 618 485 283 587 276 284 594 638 451 513 434 316 321 358 317 428 210 216 242 1,254 1,209 965 996 1,000 Dec‐16 Mar‐17 Jun‐17 Sep‐
Slide 14: Exposure in O&G upstream industries reduced QoQ
Exposure in O&G upstream industries reduced QoQ 28.2 Total Commodities 27.6 exposure 26.3 26.2 23.6 9.9 10.5 9.9 9.4 9.2 Total O&G exposure 11.5 12.5 12.1 13.0 $17.7b $17.7b 10.1 $16.4b $16.8b $14.4b 6.2 5.2 4.3 4.3 3.8 Dec‐16 Mar‐17 Jun‐17 Sep‐17 Dec‐17 Oil and Gas ‐ Upstream Industries ($’b) Other
Slide 15: Reversal of excess general allowance of $0.6 billion in 4Q17
Reversal of excess general allowance of $0.6 billion in 4Q17, factoring the requirement under SFRS(I) 9 $2.6b -$0.6b $2.0b Actual ECL - Actual General Stage 1 & 2 General Allowance Allowance 3Q17 Reversal 4Q17 1 Jan 2018 15
Slide 16: Strong NPL coverage at 91% or 195% after collateral
Strong NPL coverage at 91% or 195% after taking collateral into account Total Loan Allowance ($m) 3,928 4,013 3,947 4,047 3,816 General Allowance / Gross Loan net of Specific 1.2% 1.1% 1.2% 1.1% 0.8% Allowance Ratio (%) 262% 244% 241% 236% 195% 118% 118% 114% 108% 91% 1,219 1,409 1,327 1,452 1,855 2
Slide 17: Stable liquidity position
Stable liquidity position Customer Loans and Deposits; LDR and LCR 86.8% 86.7% 86.1% 85.8% 85.1% 268 273 255 260 260 225 230 232 222 224 Dec‐16 Mar‐17 Jun‐17 Sep‐17 Dec‐17 Net Customer Loans ($b) Customer Deposits ($b) Loan/Deposit Ratio (LDR) (%) SGD LDR (%) 89.7 87.8 89.9 91.9 92.3 USD LDR (%) 74.
Slide 18: Loans up 5% YoY and 1% QoQ to $236b
Loans up 5% YoY and 1% QoQ to $236b Dec-17 Dec-16 +/(-) Sep-17 +/(-) Dec-17 18% Gross Loans $b $b % $b % 36% 8% 44% Singapore 128 126 2 127 0 56% Regional: 85 78 9 84 2 Malaysia 27 26 5 26 3 4% 3% 31% Thailand 15 13 13 14 4 Indonesia 11 12 (10) 11 (5) Dec-16 Greater China 32 27 19 32 2 Others 23 22
Slide 19: Funding increased by 6% or $17b YoY
Funding increased by 6% or $17b YoY with proactive liquidity and balance sheet management Dec-17 14% Dec-17 Dec-16 +/(-) Sep-17 +/(-) Customer Deposits $b $b % $b % 43% Singapore 185 179 4 184 1 Regional: 69 63 9 67 3 43% Malaysia 28 27 3 28 2 Thailand 16 13 17 15 1 Indonesia 7 8 (6) 7 (1) Dec-16 14
Slide 20: Total operating profit increased 11% YoY mainly from Group Retail and Central Treasury
Total operating profit increased 11% YoY mainly from Group Retail and Central Treasury 2017 4% 2017 2016 +/(-) ‐1% Segment Operating Profit $m $m % 41% Group Retail (GR) 1,981 1,820 9 56% Group Wholesale Banking (GWB) 2,713 2,747 (1) Global Markets (GM) 185 264 (30) Others * (56) (466) 88 2016 ‐11%
Slide 21: Regional operating profit rose 11% YoY in constant currency terms
Regional operating profit rose 11% YoY in constant currency terms 2017 10% At constant 8% FX rate 3% Operating 2017 2016 +/(-) +/(-) 7% 59% Profit $m $m % % 13% Singapore 2,834 2,568 10 10 2016 Regional: 1,535 1,400 10 11 Malaysia 621 603 3 7 9% Thailand 350 316 11 7 7% 4% Indonesia 156 170 (8) (8)
Slide 22: Strong capital position through capital management initiatives
Strong capital position through capital management initiatives Capital Adequacy Ratios (CAR) 1.69% 1.69% 1.61% 1.51% 1.40% 18.7% 17.3% 17.8% 17.8% 16.2% 2.5% Total 3.5% 3.0% 3.5% 3.1% Tier 2 16.2 13.8% 14.3% 14.8% Tier 1 13.1% Dec‐16 Mar‐17 Jun‐17 Sep‐17 Dec‐17 RoRWA (%) Tier 2 CAR Tier 1 CAR RWA ($
Slide 23: Core dividends increased to 80 cents per annum
Core dividends increased to 80 cents per annum 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 2014 2015 2016 2017 Payout amount ($m) 1,201 1,444 1,135 1,661 Payout ratio (%) 37 45 37 49 Payout ratio (%) (excluding sp
Slide 24: Appendix
Appendix : Netting of Fee Expenses Performance of Major Territories - Singapore - Malaysia - Thailand - Indonesia - Greater China
Slide 25: Netting of fee expenses wef 2018
Netting of fee expenses wef 2018 If directly attributable expenses were netted against the related fees for 2017, Fee income/ Total income ratio would decrease to 21.9% while Expense/Income ratio would improve to 43.7% Non- Interest Income Operating Expenses 38.7% 38.9% 38.8% 38.1% 37.5% 44.7% 45.9%
Slide 26: Singapore – Key Financials
Singapore – Key Financials 2017 2016 +/(-) 4Q17 3Q17 +/(-) $m $m % $m $m % Net interest income 3,065 2,683 14 832 787 6 Fee & commission income 1,318 1,144 15 347 334 4 Other non-interest income 707 763 (7) 143 172 (17) Total income 5,090 4,590 11 1,321 1,293 2 Less: Expenses 2,255 2,022 12 626 532
Slide 27: Malaysia – Key Financials
Malaysia – Key Financials 2017 2016 +/(-) 4Q17 3Q17 +/(-) RM'm RM'm % RM'm RM'm % Net interest income 2,125 1,997 6 523 542 (4) Fee & commission income 725 660 10 213 172 24 Other non-interest income 306 299 2 88 67 31 Total income 3,156 2,956 7 824 781 6 Less: Expenses 1,223 1,149 6 352 296 19 Oper
Slide 28: Thailand – Key Financials
Thailand – Key Financials 2017 2016 +/(-) 4Q17 3Q17 +/(-) THB'm THB'm % THB'm THB'm % Net interest income 15,587 14,371 8 4,055 4,019 1 Fee & commission income 6,353 5,948 7 1,761 1,623 9 Other non-interest income 982 830 18 271 284 (5) Total income 22,922 21,149 8 6,087 5,926 3 Less: Expenses 14,32
Slide 29: Indonesia – Key Financials
Indonesia – Key Financials 2017 2016 +/(-) 4Q17 3Q17 +/(-) IDR'b IDR'b % IDR'b IDR'b % Net interest income 3,298 3,302 (0) 836 810 3 Fee & commission income 818 774 6 206 201 2 Other non-interest income 441 513 (14) 107 121 (12) Total income 4,557 4,589 (1) 1,149 1,132 2 Less: Expenses 3,038 2,944 3
Slide 30: Greater China – Key Financials
Greater China – Key Financials 2017 2016 +/(-) 4Q17 3Q17 +/(-) $m $m % $m $m % Net interest income 397 384 3 103 98 5 Fee & commission income 129 113 14 38 39 (4) Other non-interest income 232 152 53 57 53 8 Total income 757 648 17 198 190 4 Less: Expenses 349 337 4 94 87 8 Operating profit 408 311
Slide 31: Thank You
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