United Overseas Bank Limited · SGX:U11
United Overseas Bank — 1H 2019 Earnings Presentation
26 slides from United Overseas Bank's earnings presentation, Aug 2, 2019
Slide 1: UOB Group Financial Highlights
UOB Group For the First Half / Second Quarter Ended 30 June 2019 Financial Highlights Lee Wai Fai Group Chief Financial Officer 2 August 2019 Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation
Slide 2: Highlights
Highlights Half year record earnings of $2.22 billion 8% YoY Second quarter earnings of $1.17 billion 8% YoY; 11% QoQ Strong business momentum, solid balance sheet position • Total income rose 7% QoQ to $2.58 billion lifted by strong loan growth and higher trading and investment income • Return on e
Slide 3: Half year earnings at new high of $2.22 billion
Half year earnings at new high of $2.22 billion 1H19 1H18 YoY +/(-) $m $m $m % Net interest income 3,241 3,012 228 8 • Higher net interest income (NII) on strong loan growth. Net fee income 1,005 1,015 (10) (1) • Higher other non-NII as market sentiment rebounded since the start Other non-NII 74
Slide 4: Second quarter earnings grew 8% from a year ago
Second quarter earnings grew 8% from a year ago 2Q19 2Q18 YoY +/(-) $m $m $m % Net interest income 1,653 1,542 111 7 • Higher net interest income (NII) driven by loan growth of 9%. Net fee income 527 498 29 6 • Higher wealth management, credit card and loan-related fees. Other non-NII 403 302 10
Slide 5: QoQ earnings driven by broad-based growth in operating income
QoQ earnings driven by broad-based growth in operating income 2Q19 1Q19 QoQ +/(-) $m $m $m % Net interest income 1,653 1,587 66 4 • Net interest margin improved two basis points to 1.81%. Net fee income 527 479 48 10 • Broad-based growth in fee income. Other non-NII 403 340 62 18 • Increase in
Slide 6: Operating profit improved from stronger performance in Singapore and Greater China
Operating profit improved from stronger performance in Singapore and Greater China 10% At 10% constant FX rate 3% +/(-) 7% 1H19 Operating 1H19 1H18 +/(-) 59% Profit $m $m % % 11% Singapore 1,650 1,458 13 13 Regional: 863 855 1 1 Malaysia 308 331 (7) (5) 10% Thailand 194 196 (1) (4) 10% Indonesia 70
Slide 7: All business segments delivered healthy income growth
All business segments delivered healthy income growth 6% 1H19 1H18 +/(-) Segment Operating Profit $m $m % 38% Group Retail (GR) 1,061 1,021 4 1H19 56% Group Wholesale Banking (GWB) 1,569 1,476 6 Global Markets (GM) 161 145 10 6% Others * (5) (78) 94 -3% 40% Total 2,787 2,564 9 1H18 57% GR GWB GM Oth
Slide 8: QoQ NII lifted by loan repricing
QoQ NII lifted by loan repricing Net Interest Income (NII) and Margin 2.19% 2.18% 2.18% 2.22% 2.19% 2.15% 2.16% 2.19% 2.14% 1.82% 1.84% 1.83% 1.81% 1.80% 1.79% 1.81% 1.77% 1.80% 0.94% 0.87% 0.90% 0.87% 0.81% 0.89% 0.77% 0.77% 0.79% 6,220 5,528 866 1,599 1,608 1,587 1,653 651 1,542 1,470 188 211 230
Slide 9: QoQ higher fees and trading and investment income
QoQ higher fees and trading and investment income Non-Net Interest Income 3,035 2,896 260 282 902 930 647 91 800 819 761 70 1,749 86 728 57 161 58 311 607 187 216 271 186 82 582 59 1,873 1,967 517 498 484 479 527 467 1,005 2017 2018 1H19 1Q 2Q 3Q 4Q 1Q 2Q 2018 2019 Net Fee income ($m) Trading & Inve
Slide 10: Cost/Income ratio improved to 43.7%
Cost/Income ratio improved to 43.7% Expenses and Cost / Income Ratio 43.7% 43.9% 44.1% 44.2% 43.6% 43.4% 44.4% 44.6% 43.7% 4,003 3,739 1,129 1,073 1,022 1,011 1,556 987 984 1,515 455 413 381 403 384 387 2,203 868 2,447 2,224 660 675 606 619 626 597 1,335 2017 2018 1H19 1Q 2Q 3Q 4Q 1Q 2Q 2018 2019 St
Slide 11: Total credit costs for the quarter declined to 8 bps
Total credit costs for the quarter declined to 8 bps Total Allowances on Loans 22bp 61bp 19bp 18bp 16bp 20bp 13bp 13bp 12bp 13bp 28bp 11bp 15bp 15bp 12bp 660 11bp 11bp 8bp 390 131 122 113 177 81 65 55 2017 2018 1H19 1Q 2Q 3Q 4Q 1Q 2Q 2018 2019 Total Allowances on Loans Allowances for Impaired Loans
Slide 12: NPL ratio flat at 1.5%
NPL ratio flat at 1.5% NPL ($m) 4,138 4,208 4,185 3,994 4,055 4,030 NPL Ratio 1.7% 1.7% 1.6% 1.5% 1.5% 1.5% NPL ($m) 290 300 290 230 223 150 139 138 107 416 120 106 721 749 545 531 692 497 456 485 485 482 416 495 558 571 603 623 629 553 1,963 2,085 2,138 1,963 1,918 1,943 Mar Jun Sep Dec Mar Jun 201
Slide 13: NPA formation remained stable
NPA formation remained stable 2018 2019 1Q 2Q 3Q 4Q 1Q 2Q $m $m $m $m $m $m NPAs at start of period 4,389 4,323 4,404 4,374 4,166 4,215 Group wholesale and small enterprises New NPAs 235 252 275 370 230 357 Upgrades, recoveries and translations (206) (88) (229) (257) (139) (182) Write-offs (129) (10
Slide 14: NPA coverage remained adequate
NPA coverage remained adequate Total Allowances ($m) 3,913 3,935 3,935 3,636 3,732 3,523 NPA coverage (%) 1 91 89 90 87 89 84 Unsecured NPA coverage (%) 1 190 190 189 202 203 191 Total Allowances ($m) 2,048 2,029 1,978 1,935 1,998 1,937 1,991 1,944 1,984 47 49 1,651 1,684 1,494 2,001 1,980 Mar Jun S
Slide 15: Loan growth slowing in line with environment
Loan growth slowing in line with environment Jun-19 Jun-18 +/(-) Mar-19 +/(-) Gross Loans $b $b % $b % 40% Jun-19 Singapore 142 131 9 139 2 60% Regional: 101 94 8 101 0 Malaysia 29 29 0 29 (1) Thailand 18 16 15 18 3 Indonesia 11 11 4 11 (0) 42% Greater China 43 38 12 43 (0) Jun-18 58% Others 30 25 1
Slide 16: YoY deposits growth mainly from Singapore and Thailand
YoY deposits growth mainly from Singapore and Thailand 15% Jun-19 Jun-18 +/(-) Mar-19 +/(-) Customer Deposits $b $b % $b % 41% Singapore 203 192 6 206 (2) Jun-19 Regional: 79 74 7 76 4 44% Malaysia 30 30 (0) 30 0 Thailand 20 17 22 18 14 Indonesia 7 7 4 7 0 15% Greater China 21 20 7 21 2 Others 23 22
Slide 17: Stable liquidity position with average LCR at 147% and NSFR at 108%
Stable liquidity position with average LCR at 147% and NSFR at 108% Customer Loans and Deposits; LDR, LCR and NSFR 142% 142% 146% 147% 128% 127% 86.7% 85.7% 85.7% 88.2% 86.6% 88.5% 308 305 288 294 293 274 267 270 252 259 237 246 Mar Jun Sep Dec Mar Jun 2018 2019 Net Customer Loans ($b) Customer Depo
Slide 18: Strong capital and leverage ratio
Strong capital and leverage ratio Capital Adequacy Ratios (CAR) and RoRWA 2.13% 2.02% 1.95% 1.99% 1.88% 1.68% 18.8% 18.4% 17.4% 17.0% 17.0% 17.2% 14.9% 14.5% 14.1% 13.9% 13.9% 13.9% Mar Jun Sep Dec Mar Jun 2018 2019 Tier 2 CAR Tier 1 CAR CET1 (%) RoRWA RWA ($b) 202 206 213 221 230 230 Leverage ratio
Slide 19: Dividends
Dividends 20 20 50 45 35 50 55 35 35 2016 2017 2018 1H19 Net dividend Interim Final Special per ordinary share (¢) 2016 2017 2018 1H19 Payout amount ($m) 1,135 1,660 2,000 918 Payout ratio (%) 37 49 50 41 Payout ratio (%) (excluding special/one-off dividends (%) 37 39 42 41 19
Slide 20: Appendix: Performance of Major Territories
Appendix : Performance of Major Territories - Singapore - Malaysia - Thailand - Indonesia - Greater China China exposure
Slide 21: Singapore – Key Financials
Singapore – Key Financials 1H19 1H18 +/(-) 2Q19 1Q19 +/(-) $m $m % $m $m % Net interest income 1,887 1,719 10 970 918 6 Net fee income 587 619 (5) 305 283 8 Other non-interest income 427 258 66 228 199 15 Total income 2,901 2,596 12 1,503 1,400 7 Less: Expenses 1,251 1,138 10 645 608 6 Operating pro
Slide 22: Malaysia – Key Financials
Malaysia – Key Financials 1H19 1H18 +/(-) 2Q19 1Q19 +/(-) RM'm RM'm % RM'm RM'm % Net interest income 1,084 1,069 1 538 546 (1) Net fee income 269 314 (14) 141 128 10 Other non-interest income 205 182 13 104 101 3 Total income 1,558 1,565 (0) 783 775 1 Less: Expenses 622 582 7 320 302 6 Operating pr
Slide 23: Thailand – Key Financials
Thailand – Key Financials 1H19 1H18 +/(-) 2Q19 1Q19 +/(-) THB'm THB'm % THB'm THB'm % Net interest income 8,663 8,258 5 4,355 4,308 1 Net fee income 2,538 2,392 6 1,299 1,239 5 Other non-interest income 672 539 25 361 311 16 Total income 11,873 11,189 6 6,015 5,858 3 Less: Expenses 7,371 6,503 13 3,
Slide 24: Indonesia – Key Financials
Indonesia – Key Financials 1H19 1H18 +/(-) 2Q19 1Q19 +/(-) IDR'b IDR'b % IDR'b IDR'b % Net interest income 1,687 1,664 1 827 860 (4) Net fee income 389 366 6 196 193 2 Other non-interest income 378 231 64 198 180 10 Total income 2,454 2,261 9 1,221 1,233 (1) Less: Expenses 1,720 1,527 13 866 854 1 O
Slide 25: Greater China – Key Financials
Greater China – Key Financials 1H19 1H18 +/(-) 2Q19 1Q19 +/(-) $m $m % $m $m % Net interest income 198 207 (4) 106 92 15 Net fee income 104 85 22 55 49 12 Other non-interest income 179 150 19 95 85 12 Total income 481 442 9 256 226 13 Less: Expenses 191 184 4 99 92 8 Operating profit 290 258 12 157
Slide 26: Exposure to China
Exposure to China Bank exposure as of 30 June 2019 Non-bank exposure as of 30 June 2019 • Bank exposure accounted for 56% of total exposure to • Target customers include top-tier state-owned China enterprises, large local corporates and foreign • Top 5 domestic banks and 3 policy banks accounted for