United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (September 2016)
50 slides from United Overseas Bank's debt investor presentation, September 2016
Slide 1: UOB Group Fixed Income Investor Presentation
UOB Group Fixed Income Investor Presentation September 2016 Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It
Slide 2: Agenda
Agenda 1 Overview of UOB Group 2 Disciplined Balance Sheet Management 3 Resilience of the Singapore Housing Market and Our Cover Pool Appendix A: Overview of our Covered Bond Program Appendix B: Regulatory Developments Appendix C: Extract from Latest Results 2
Slide 3: Overview of UOB Group
itt UOB * 2 * 4 s - 2 - » il Overview of UOB Group
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1H16 Founded in August 1935 by a group of Chinese ■ Total assets : SGD321.6b (USD238.3b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD31.3b (USD23.2b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Gross loans : SGD212.3b (USD157
Slide 5: A Leading Singapore Bank with Established Franchise in Core Market Segments
A Leading Singapore Bank with Established Franchise in Core Market Segments Global Markets and Group Retail Group Wholesale Banking Investment Management Best Retail Bank in Singapore1 Best SME Banking1 Strong player in Singapore dollar treasury instruments Strong player in credit cards and
Slide 6: Strong Capitalisation and Low Gearing Ratio
Strong Capitalisation and Low Gearing Ratio Reported Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 19.7 19.7 20.6 19.5 17.9 17.9 17.5 17.3 16.3 16.2 16.1 (Common Equity 16.0 16.0 15.9 15.8 15.5 14.9 14.7 14.4 14.3 14.2 14.1 14.1 14.1 13.4 13.3 13.2 13.1 13.1 13.0 Tier 1 CAR; 12.5 12.2 12.1 12.1 11
Slide 7: 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 aa3 45.6% 0.97% 84.0% Aa1 AA– AA– OCBC aa3 45.2% 1.
Slide 8: One of The Few 'AA' Rated Banks Globally
One of The Few ‘AA’ Rated Banks Globally Ratings Aa1/Neg/P-1 AA– /Stable/A-1+ AA– /Stable/F1+ “Good capital position against backdrop of “Prudent management team… expect the bank to “Ratings reflect its strong domestic franchise, weakening asset quality” continue its emphasis on funding and ca
Slide 9: Disciplined Balance Sheet Management
Disciplined Balance Sheet Management 9
Slide 10: Disciplined Balance Sheet Management
Disciplined Balance Sheet Management Resilient balance sheet Assets – Stable NPL ratio: 1.4% Others Inner circle: 2008 – High general allowances-to-loans ratio 8% Outer circle: 2Q16 of 1.5% Investments 3% – Strong NPL coverage: 125.6% Government 11% 6% Strong funding and capital base 9% 55% Cust
Slide 11: Diversified Loan Portfolio
Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Singapore Others Others 56% 11% IDR 12% SGD 2% 52% Greater THB China 5% 11% Indonesia MYR 5% 11% Thailand 5% Malaysia USD 12% 18% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing
Slide 12: Selective Exposure in China
Selective Exposure in China Total = SGD19.4b Bank exposure in China or 6.0% of total assets 99% with <1 year tenor Around 75% accounted for by top 5 domestic banks and policy banks Bank, Trade exposures mostly with bank counterparties, SGD10.7b representing around half of bank exposure Debt, N
Slide 13: Minimal Immediate Impact from Brexit
Minimal Immediate Impact from Brexit Minimal Direct Impact on Asian Markets EU & UK Export Mix of Selected Partners (2015) It is a challenge to quantify Brexit effects with 19% certainty at this stage 17% 16% 16% The immediate impact on Asian economies is likely to be limited and shallow, consid
Slide 14: Exposure to Commodities
Exposure to Commodities Oil and gas Other As of Traders/ Upstream commodity Total 30 June 16 downstream industries segments industries Total SGD4.9b SGD9.1b SGD8.8b SGD22.8b exposure1 Outstanding SGD4.0b SGD5.3b SGD6.6b SGD15.9b loans 4% of total loans 7.5% of total loans Total exposure, including
Slide 15: Resilient Asset Quality, High Allowances Coverage
Resilient Asset Quality, High Allowances Coverage NPL Stable at 1.4% NPL ratio 1.2% 1.3% 1.4% 1.4% 1.4% NPLs1 (SGD m) 2,504 2,551 2,882 2,841 3,056 206 344 401 176 Others 377 351 218 158 564 149 166 569 564 264 Greater China 335 372 289 238 249 250 451 Indonesia 386 423 378 401 Thailand Malaysia 1,1
Slide 16: Strong Funding & Liquidity Profile
Strong Funding & Liquidity Profile Strong Liquidity Coverage Ratios (LCR) Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 All-currency LCR (%) 152% 138% 142% 139% 167% SGD LCR (%) 165% 179% 217% 169% 224% Primarily Deposit Disciplined Funding with Healthy Loan/Deposit Ratios (LDR) Funded 91.9% 91.7% 91.9% 88.4%
Slide 17: Disciplined Wholesale Funding Strategy
Disciplined Wholesale Funding Strategy Wholesale Funding Strategy Diversification in Debt Instruments Issued Diversification among global markets Absolute amount of 4% Debts Issued as at Multiple funding instruments ranging from 30 June 2016 subordinated capital to senior to secured 25% 27% debt
Slide 18: 1H16 Financial Overview
1H 16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 1H16 vs 1H15 (SGD m) 71 12 50 92 43 42 16 1,563 +0.2% 1,566 +3.0% –1.2% +9.2% +5.3% –13.5% –96.0% +5.1% 1H15 net Net interest Fee income Other non- Expenses Total Share of Tax and 1H16 net profit after income interest allowances profit
Slide 19: Resilience of the Singapore Housing Market and Our Cover Pool
Resilience of the Singapore Housing Market and Our Cover Pool 19
Slide 20: Dynamics Behind the Singapore Housing Market
Dynamics Behind the Singapore Housing Market Majority Owner Occupied Low Unemployment vs. Global Peers Renter occupied Private landed 9% 6% % Private flats 14% 14.0 12.0 10.0 8.0 Owner occupied 91% HDB flats 6.0 80% 4.0 2.0 Eligible cover pool assets 0.0 1 HDB Website, “Our History” 2000 2003 2006 2
Slide 21: Prudent Policies for Sustainable Prices
Prudent Policies for Sustainable Prices Residential Property Price Indices 160 140 120 2013: Introduction of 100 TDSR 80 2011: Introduction of 1997: Asian Crisis 2008: Onset of 2010: Introduction ABSD 60 Credit Crisis of SSD 2001: Dot Com Bubble 2003: SARS Outbreak Collapses 40 2002: HDB building pr
Slide 22: Mortgage Debt Serving Ratio Remains Low
Mortgage Debt Serving Ratio Remains Low Low Mortgage Debt Service Ratio due to Low Interest Rates, High Income Growth and Smaller Units Note 1: Median Price of non-landed private residential from 1Q04 onwards Source: URA , CEIC, UOB Global Economics & Markets Research Estimates 22
Slide 23: Singapore Home Prices Remain Competitive
Singapore Home Prices Remain Competitive Global House Price Indices Regional House Price Indices 275 300 Singapore Australia Canada UK USA Singapore Hong Kong Korea Malaysia Thailand 250 225 250 200 175 200 150 125 150 100 75 100 50 25 50 Apr-06 Apr-07 Dec-01 Dec-02 Dec-03 Nov-04 Oct-05 Oct-06 Oct-0
Slide 24: Our Cover Pool Profile
Our Cover Pool Profile Overview of Cover Pool (as of June-16) Current Loan Balances Mainly <S$1m Number of Mortgage Loans 7,075 100% 2% 2% 2% 3% 3% 90% 3% 3% 3% 3% 3% Total Current Balance (SGD) 4,477,508,898 7% 7% 7% 6% 6% Average Current Loan Balance 80% (SGD ‘000) 632,863 17% 17% 17% 17% 17% (SGD
Slide 25: Cover Pool has Remained Stable
Cover Pool has Remained Stable Majority Owner Occupied Loans Mainly for Purchases 100% 90% 22% 22% 23% 23% 23% 80% Refinance, 8.3% 70% 60% Investment 50% Purchase, Owner 91.7% 40% occupied 78% 78% 77% 77% 77% 30% 20% 10% 0% Feb-16 Mar-16 Apr-16 May-16 Jun-16 Well Seasoned Portfolio (in months) Stabl
Slide 26: Cover Pool has Remained Stable
Cover Pool has Remained Stable Primarily Apartments/ Condominums Diversified Geographical Distribution 100.0% 100% 4.7% 4.6% 4.7% 4.7% 4.7% 5.1% 5.2% 5.2% 5.2% 5.2% 12% 12% 12% 11% 11% 90.0% 90% 4.1% 4.1% 4.2% 4.2% 4.2% 1.6% 1.6% 1.6% 1.5% 1.5% 80.0% 9.3% 9.3% 9.4% 9.4% 9.5% 80% 19% 19% 19% 19% 19%
Slide 27: Appendix A: Overview of our Covered Bond Program
Appendix A: Overview of our Covered Bond Program 27
Slide 28: Covered Bond Program Summary
Covered Bond Program Summary USD8,000,000,000 Global Covered Bond Programme Issuer United Overseas Bank Limited Issuer Long Term Rating Aa1 (neg) / AA- (stable) / AA- (stable) (Moody’s / S&P / Fitch) Issuer Short Term Rating P-1 (stable) / A-1+ (stable) / F1+ (stable) (Moody’s / S&P / Fitch) Program
Slide 29: Structure Diagram
Structure Diagram ■ Notwithstanding that CPF’s consent is required for the transfer or assignment of mortgages relating to CPF Loans, no such consent is required for a declaration of trust over mortgages relating to CPF Loans. The Seller is acting as the Assets Trustee and the CPF Loans are held on
Slide 30: Structural Features/Enhancements
Structural Features/Enhancements ► The Covered Bonds will be direct, unsecured and unsubordinated obligations of the Issuer Credit Structure (Dual Recourse) ► The CBG guarantees the payment of principal and interest under the Covered Bonds pursuant to the Covered Bond Guarantee and secured by the Co
Slide 31: Key Programme Rating Triggers
Key Programme Rating Triggers Moody’s Trigger S&P Trigger Trigger Event Descriptions Long- Short- Events Long- Short- Events ► The Pre-Maturity Test is performed daily for 12 months prior to term term term term the Maturity Date in relation to a hard bullet Covered Bond ► If UOB’s unsecured and unsu
Slide 32: Covered Bond Legal Frameworks
Covered Bond Legal Frameworks Singapore Australia Canada Germany United Kingdom Korea Legal Notice 648 under the Banking Amendment Canadian Covered Bond German Pfandbrief Act UK Regulated Covered Covered Bonds Act Framework / Banking Act (Covered Bonds) Act 2011 Law (June 2012) Bond Regulations of K
Slide 33: Covered Bond Legal Frameworks
Covered Bond Legal Frameworks Singapore Australia Canada Germany United Kingdom Korea Residential Residential mortgages Residential mortgages 60% LTV for both 80% LTV for residential 70% LTV for residential mortgages ≤80% LTV ≤80% LTV ≤80% LTV residential and mortgage loans mortgage loan
Slide 34: Key Features – Use of CPF funds in Residential Property Financing
Key Features – Use of CPF funds in Residential Property Financing What is CPF CPF Board and Priority of Use of CPF for housing loan (Central Provident Fund)? Payments CPF, established in 1955, is a CPF Members can use their savings (and Under the present regime, if the property is comprehensiv
Slide 35: Asset Coverage Test (ACT)
Asset Coverage Test (ACT) SGD Equivalent of the Aggregate Outstanding Adjusted Aggregate Loan Amount Nominal Amount of all Covered Bonds Tested monthly on every Test Date prior to the service of a Notice to Pay and for so long as any Covered Bonds remain outstanding Failure of meeting the ACT on
Slide 36: Amortisation Test
Amortisation Test SGD Equivalent of the Aggregated Outstanding Amortisation Test Aggregate Loan Amount Nominal Amount of the Covered Bonds Tested monthly on every Test Date following the service of a Notice to Pay but prior to the service of a CBG Acceleration Notice and for so long as Covered Bon
Slide 37: Equitable Assignment -v- Declaration of Assets Trust Structure
Equitable Assignment -v- Declaration of Assets Trust Structure Equitable Assignment (EA) Declaration of Assets Trust (DOT) • Method of Sale - By way of equitably assigning its rights • Method of Sale – the Seller will declare an asset trust over in the mortgage loans to CBG the mortgage loans in fav
Slide 38: Appendix B: Regulatory Developments
Appendix B: Regulatory Developments 38
Slide 39: Basel III Implementation
Basel III Implementation 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 Ja
Slide 40: Resolution Regime Overview
Resolution Regime Overview Resolution Regime in Asia Public Existing resolution Factors influencing How past resolution Country 1 discussion powers views on bail-in been handled Statutory bail-in proposed Role as an global financial hub; Crisis prevention tools; Singapore Yes to apply to only streng
Slide 41: Appendix C: Extract from Latest Results
Appendix C: Extract from Latest Results 41
Slide 42: 2Q16 Financial Overview
2Q 16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 2Q16 vs 1Q16 (SGD m) 76 33 44 62 6 64 42 766 +4.6% 801 –5.0% +9.6% +29.3% +3.6% +37.3% >100.0% +3.7% 1Q16 net Net interest Fee income Other non- Expenses Total Share of Tax and 2Q16 net profit after income interest allowances profit of
Slide 43: Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth
Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth Net Interest Income (NII) and Margin 9,000 2,500 3.00% 2.34% 2.36% 3.00% 2.29% 2.12% 2.26% 2.26% 2.27% 2.23% 2.06% 2,300 8,000 2.00% 2.00% 1.87% 2,100 1.79% 1.78% 1.72% 1.71% 1.77% 1.77% 1.77% 1.68% 1.00% 1.00% 7,000 1,900
Slide 44: 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% 39.7% 38.7% 38.9% 38.8% 40.8% 38.6% 40.2% 5,000 40.0%1400 37.0% 35.3% 40.0% 25.8% 23.5% 23.4% 30.0%1200 23.2% 24.2% 23.3% 23.1% 22.0% 23.4% 30.0% 4,000 20.0% 20.0% 1000 3,122 10.0% 850 10.0
Slide 45: Broad-based Focus in Fee Income
Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 1,749 74 485 480 475 1,800 1,731 500 465 59 22 16 433 21 114 258 20 1,600 1,508 64 64 273 27 66 268 121 400 66 1,400 120 113 30 35 63 29 31 256 111 1,200 498 31 107 490 300 111 136 135 114 1,000 504 110 800 446 416 2
Slide 46: Maintain Costs Discipline while Investing in Long-term Capabilities
Maintain Costs Discipline while Investing in Long-term Capabilities Operating Expenses and Expense / Income Ratio 5,000 50.0% 46.3% 45.8% 50.0% 44.7% 45.5% 45.4% 43.1% 1,400 43.4% 4,500 42.3% 42.2% 45.0% 45.0% 4,000 40.0%1,200 40.0% 3,597 3,500 35.0% 964 35.0% 3,146 1,000 927 877 904 894 3,000 2,898
Slide 47: Stable Total Credit Costs
Stable Total Credit Costs Allowances on Loans 996 50bps249 50bps 32bps 32bps 40bps 32bps 32bps 32bps 32bps 32bps 40bps 30bps 30bps 796 30bps199 30bps 30bps 31bps 20bps 25bps 20bps 22bps 23bps 19bps 10bps149 10bps 596 12bps 11bps 8bps 0bps 0bps 396 (10)bps99 (10)bps (20)bps 160 (20)bps 133 121 454 11
Slide 48: Loan Growth was 1.2% QoQ in Constant Currency Terms
Loan Growth was 1.2% QoQ in Constant Currency Terms QoQ YoY Gross loans breakdown: Jun-16 Mar-16 +/(–) Jun-15 +/(–) Inner circle: Mar-16 Gross Loans 1 SGD b SGD b % SGD b % Outer circle: Jun-16 Singapore 119.9 117.8 +1.8 115.0 +4.2 Others Regional: 72.8 72.4 +0.6 71.1 +2.4 9% Singapore Malaysia 25.4
Slide 49: Movements in Non-Performing Assets
Movements in Non-Performing Assets 2Q16 1Q16 2Q15 $m $m $m NPA at start of period 3,016 3,066 2,692 New NPA 802 344 372 Upgrades, recoveries and translations (548) (235) (263) Write-offs (106) (159) (96) NPA at end of period 3,164 3,016 2,705 49
Slide 50: Thank you
i} UOB Thank you
United Overseas Bank — Debt Investor Presentation (September 2016) on 6ix