United Overseas Bank Limited · SGX:U11

United Overseas Bank — Debt Investor Presentation (August 2020)

54 slides from United Overseas Bank's debt investor presentation, August 2020

  1. Slide 1: UOB Group: Maintaining strong balance sheet amid challenging economic conditions

    UOB Group Maintaining strong balance sheet amid challenging economic conditions August 2020 Discla imer : The mater ia l in th is presentat ion conta ins ge nera l backgrou n d informat ion ab out Un ited Overse as Bank L im ited (“UO B”) a nd its act ivities as at the date of the presentat ion. The

  2. Slide 2: Overview of UOB Group

    MM UOB Overview of UOB Group

  3. Slide 3: UOB Overview

    UOB Overview Founding Key Statistics for 1H20 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD281b (USD201b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD323b (USD231b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 85.8% Wee Ee Cheong ■

  4. Slide 4: 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 Singapore  Best SME Bank in Singapore  Strong player in Singapore  Strong player in credit cards and  Seamless access to regional dollar treasury inst

  5. Slide 5: 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

  6. Slide 6: Comprehensive regional banking franchise

    Comprehensive regional banking franchise Extensive regional footprint with ~500 offices 1H20 performance by segment Myanmar Greater China1 2 offices 29 offices UOB SGD129b Operating Assets under +9% Thailand Open profit management YoY 156 offices Vietnam 2 offices Group SGD1.0b AUM from Malaysia –2%

  7. Slide 7: Competitive against peers

    Competitive against peers Standalone Efficient Cost Competitive Well-Maintained Strength Management returns Liquidity Moody’s baseline Costs/income Return on average Loan/deposit Moody’s S&P Fitch credit assessment ratio assets (annualised) ratio Aa1 AA– AA– UOB a1 46% 0.7% 86% Aa1 AA– AA– OCBC a1 4

  8. Slide 8: Strong capital and leverage ratios

    Strong capital and leverage ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 21.5 20.7 19.7 (Common Equity 17.8 16.0 17.2 17.1 16.6 16.5 16.4 16.4 16.1 15.5 15.3 15.0 15.0 14.9 14.9 14.9 14.6 14.6 14.3 14.2 14.1 14.0 Tier 1 CAR; 13.7 13.6 13.0 12.9 12.7 12.5 12.3 12.0 11.7 11.7 11.

  9. Slide 9: Why UOB?

    Why UOB? Integrated regional Balance growth with Stable management Strong fundamentals platform stability  Proven track record in  Entrenched domestic  Sustainable revenue  Continue to diversify steering the bank through presence and deep local channels as a result of portfolio, strengthen vario

  10. Slide 10: Strong UOB Fundamentals

    ttt VOB Strong UOB Fundamentals 10

  11. Slide 11: Strong UOB fundamentals

    Strong UOB fundamentals Disciplined Strong management Consistent and management of Delivering on with proven track focused financial balance sheet regional strategy record management strengths  Proven track record in  Responsible yet prudent  Strong Common Equity  Holistic regional bank, steerin

  12. Slide 12: Managing risks for stable growth

    Managing risks for stable growth  Prudent approach has been key to delivering Manage con- sustainable returns over the years centration risk  Institutionalised framework through Group Risk Appetite Statement (GRAS): Maintain Nurture balance – Outlines risk and return objectives to guide core talen

  13. Slide 13: Diversified loan portfolio

    Diversified loan portfolio Professionals Housing loans and private 24% Others individuals 5% General 10% Transport, commerce storage and 13% Industry communication 4% FIs, investment Building & and holding Large construction corporates Others companies 25% 51% 11% 10% Manufacturing Greater 9% China

  14. Slide 14: Disciplined balance sheet management

    Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.93% 1.90% balance 1.51% 1.63% 1.35% portfolio sheet FY16 FY17 FY18 FY19 1H20 quality efficiency Current Account Saving Account Balances (SGD b) 10% CAGR1 Proactive 141 160 Robust 114 124 130 liability capitalisati

  15. Slide 15: Strong investment grade credit ratings

    Strong investment grade credit ratings Debt Issuance History Debt Maturity Profile (SGD m) Aa1 / P-1 Issue  Capital good by global standards Structure Call Amount Ratings (M/S/F) 2021 2022 2023 2024 2025 2026 Date  Deposit-funded and liquid balance sheet Jul-19 Perpetual 2026 SGD750m Baa1/BBB–/BBB

  16. Slide 16: Navigating COVID-19

    Navigating COVID-19 For our  Enabled ~13k staff working from home across the region Colleagues  Provided additional allowances and family care leave, flexible work arrangements and face masks  Equipped staff with relevant skills to thrive in ever-changing environment through upskilling programme

  17. Slide 17: Latest Financials

    ttt VOB Latest Financials 17

  18. Slide 18: 2Q20 financial overview

    2Q20 financial overview Net Profit After Tax Movement, 2Q20 vs 1Q20 (SGD m) 137 70 60 46 110 54 5 855 –18% 703 –9% –14% +20% –4% +39% +26% –27% 1Q20 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 2Q20 net profit after tax income commission interest expenses allo

  19. Slide 19: 1H20 financial overview

    1H20 financial overview Net Profit After Tax Movement, 1H20 vs 1H19 (SGD m) 191 45 86 76 538 23 100 2,219 –30% 1,558 –6% –4% –12% –3% >100% >100% –23% 1H19 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 1H20 net profit after tax income commission interest expens

  20. Slide 20: Lower net interest income amid steep decline in benchmark rates

    Lower net interest income amid steep decline in benchmark rates across regional markets Net interest 3.50% 3.50% 11,500 margin (%) * 3 2.20% 2.14% 2.19% 10,5002.19% 2.16% 2.50% 2.18% 2.12% 2.08% 2.50% 1.87% ▬ Loans ▬ Overall 9,500 2 1.50% 1.50% 1.71% 1.77% 1.82% 1.78% 1.81% 1.77% 1.76% 1.71% ▬ Inter

  21. Slide 21: Non-interest income supported by diverse revenue engines

    Non-interest income supported by diverse revenue engines 1 % of total income 35.9% 35.4% 34.6% 40.0% 36.0% 35.4% 32.8% 33.8% 35.6% 40.0% 31.8% 5,100 ▬ Non-interest income 1 ▬ Net fee income 20.0% 4,600 20.0% 21.3% 21.9% 21.6% 21.1% 21.4% 20.3% 4,100 20.4% 19.6% 19.7% 1 0.0% 0.0% 3,467 930 922 3,600

  22. Slide 22: Movement restrictions beset customer activities, partly offset by higher loan-related fees

    Movement restrictions beset customer activities, partly offset by higher loan-related fees 700 652 621 620 2,412 12 2,500 Fee income (SGD m) 2,303 11 571 4 37 600 78 2,161 63 72 2 72 297 509  Total 80 296 38 38 77 41 1,931 5 2,000 272 156 500  Others 93 154 41 64 148 152 130 263 558 400 162 31 91

  23. Slide 23: Pacing operating expenses while keeping CIR broadly stable

    Pacing operating expenses while keeping CIR broadly stable 1 50.0% 44.6%50.0% 6,500 45.9% 45.1% 46.0% ▬ Costs / Income 44.0% 43.7% 43.9% 43.7% 44.2% 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 1,154 30.0% Operating expenses 4,500 1,129 30.0% 1,116 1 4,003 1,086 (SGD m) 1,040 3,739 3,425 1,253 323 1 

  24. Slide 24: Operating profit declined sharply in Singapore, overseas diversification provided stability

    Operating profit declined sharply in Singapore, overseas diversification provided some stability 1H20 1H19 YoY 2Q20 1Q20 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 1,316 1,650 –20 603 713 –15 Rest of Southeast Asia 663 586 +13 318 345 –8 Malaysia 351 308 +14 156 195 –20 T

  25. Slide 25: Steady loan growth from Singapore and North Asia

    Steady loan growth from Singapore and North Asia Jun-20 Mar-20 QoQ Jun-19 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 142 141 +0 142 +0 Rest of Southeast Asia 64 63 +2 61 +6 Malaysia 30 30 +0 29 +3 Thailand 21 20 +5 18 +14 Indonesia 11 11 +4 11 – Vietnam 2 2 –2 1 +35 Others 1 1 –2 1

  26. Slide 26: Exposure to Greater China

    Exposure to Greater China As at 30 June 2020: Mainland China exposure Hong Kong SAR exposure 78.1 77.2 ($29b or 7% of total assets) ($35b or 8% of total assets) 73.1 73.6 73.5 Bank exposure ($15b) 6.6 6.2 Bank exposure ($3b) 6.1 6.4 6.2  ~70% to top five domestic banks  Majority to foreign banks a

  27. Slide 27: Exposure to oil and gas sector

    Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) As of 30 June 2020, oil and gas (O&G) loans represented 3.5% of total loans as compared with 4.7% at 30 June 2018 A significant portion of upstream exposure is to national oil companies (NOCs) 3.3 2.6 and international oil companies,

  28. Slide 28: Lower NPA formation with stable NPL ratio

    Lower NPA formation with stable NPL ratio (SGD m) 2Q19 3Q19 4Q19 1Q20 2Q20 NPAs at start of period 4,215 4,185 4,350 4,297 4,590 Non-individuals: New NPAs 357 180 437 573 131 Upgrades and recoveries (182) (38) (400) (101) (126) Write-offs (229) (26) (81) (208) (42) 4,161 4,301 4,307 4,561 4,553 Indi

  29. Slide 29: Pre-emptive provisioning in anticipation of asset quality weaknesses

    Pre-emptive provisioning in anticipation of asset quality weaknesses 80bp 80bp 2,000 67bp 61bp Average Gross Loans 1,800 60bp 45bp 60bp (basis points) * 1,600 36bp ▬ Allowances for NPLs 40bp 40bp 23bp 24bp ▬ Total allowances for 15bp 17bp 1,400 20bp 32bp 28bp 20bp 8bp 31bp Loans 1,200 21bp 23bp 16bp

  30. Slide 30: Reserve coverage strengthened with additional allowances

    Reserve coverage strengthened with additional allowances Coverage ratios (%) * 230% 10 210% 202% 206% ▬ Total allowances / unsecured 191% 200% 9,0 NPAs ▬ Total allowances / NPAs 88% 96% 8,0 84% 85% 87% 100% ▬ Allowances for NPAs / NPAs 7,0 0% 38% 6,0 36% 37% 36% 36% Allowances (SGD m) 4,434 5,0 4,03

  31. Slide 31: Strong capital and leverage ratios

    Strong capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 13.9% 14.3% 14.1% 14.0% 13.7% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.5% 7.6% 7.7% 7.4% 7.3% ▬ Return on risk-weighted 5.00% assets (%) * 2.02% 1.92% 1.77% 1.49% 1.21% 230 232 226 232 232  Risk weighted assets

  32. Slide 32: Sound funding and liquidity positions

    Sound funding and liquidity positions 119% 80 120% 108% 107% 111% 109% ▬ Net stable funding ratio (%) 70 100% 88.5% 89.3% 85.4% 85.4% 85.8% ▬ Group loan-deposit ratio (%) 80% 60 ▬ USD loan-deposit ratio (%) 60% 70.1% 72.2% 50 61.2% 62.7% 59.6% 40% 40 342% 330% 20% 312% 315% 305% Liquidity coverage r

  33. Slide 33: 2020 interim dividend in line with MAS guidance, scrip dividend at no discount

    2020 interim dividend in line with MAS guidance, scrip dividend applied at no discount Net dividend per ordinary share (¢) 20 20  Special 20 55 50  Final 45 50 55  Interim 35 39 2017 2018 2019 1H20 Payout amount (SGD m) 1,660 2,000 2,170 651 Payout ratio (%) 49 50 50 n.m.1 Payout ratio (excluding

  34. Slide 34: Macroeconomic Outlook

    ttt VOB Macroeconomic Outlook 34

  35. Slide 35: Pandemic-led synchronised downturn in region

    Pandemic-led synchronised downturn in region Gradual resumption in growth in 2H20 Unemployment revisiting levels in past crises GDP Growth (%) Unemployment Rate (%) YoY % 2020f 2021f 1Q20 2Q20f 3Q20f 4Q20f SG MY TH ID Singapore –4.0 4.5 –0.3 –12.6 –3.7 –1.2 Asian financial Trough 1.4 2.9 0.9 4.7 Mal

  36. Slide 36: Large-scale stimulus and extensive relief measures

    Large-scale stimulus and extensive relief measures Singapore Malaysia Thailand Indonesia Vietnam Hong Kong China Size of fiscal stimulus / GDP 19.2% 20.0% 15.0% 3.9% 3.5% 10.0% 3.3% Year-to-date decline in 134bp/ 125bp 75bp 100bp 150bp 199bp 30bp policy/short-term rates 139bp1 Debt moratorium   

  37. Slide 37: Accommodative monetary policy stance

    Accommodative monetary policy stance 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20f 4Q20f 1Q21f 2Q21f US 10-Year Treasury 2.41 2.01 1.66 1.92 0.67 0.66 0.80 1.05 1.30 1.30 US Fed Funds 2.50 2.50 2.00 1.75 0.25 0.25 0.25 0.25 0.25 0.25 SG 3M SIBOR 1.94 2.00 1.88 1.77 1.00 0.56 0.47 0.45 0.45 0.45 SG 3M SOR 1.93

  38. Slide 38: Improved fundamentals in Southeast Asia

    Improved fundamentals in Southeast Asia Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 312 15.6 15.7 242 132 103 75 30 24 26 5.6 1.7 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –2.7 –5.4 1998 Jun 2020 Singapore Malaysia Thailand Indonesia 1997 202

  39. Slide 39: Resilience of the Singapore Housing Market

    Resilience of the Singapore Housing Market 39

  40. Slide 40: Singapore mortgages remains a low risk asset class

    Singapore mortgages remains a low risk asset class Regional House Price Indices over Last 10 Years High National Savings Rate (1Q10 = 100) HK, 264 (% of GDP) SG, 44 MY, 205 CN, 43 TH, 163 AU, 143 HK, 23 SG, 122 AU, 21 US, 19 1Q10 1Q12 1Q14 1Q16 1Q18 1Q20 2010 2012 2014 2016 2018 2020F Sources: CEIC,

  41. Slide 41: Appendix A: Regulatory Developments

    Appendix A: Regulatory Developments 41

  42. Slide 42: Global regulators delayed capital rules by a year

    Global regulators delayed capital rules by a year Year ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 Basel III Phased-in Full capital ratios IFRS 9 | Start LCR1 Phased-in Full NSFR2 | Start SACCR3 | Start date (pending) TLAC4 Phased-in Full Basel IV5 Phased-in Full -- MCRMR6 | Start --

  43. Slide 43: Basel III across the region

    Basel III across the region BCBS Singapore Malaysia Thailand Indonesia Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% Capital Conservation Buffer 2.5% 2.5% 2.5% 2.5% 2.5% Countercyclical Buffer in 2020 2 n/a 0% 0%

  44. Slide 44: Impact of Basel IV likely to be manageable

    Impact of Basel IV1 likely to be manageable Retail credit LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for to 5% from 10% QRRE4 and Other Retail Wholesale credit Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable Others to 40% from 45% commitments raised to 10%

  45. Slide 45: Appendix B: Our Growth Drivers

    Appendix B: Our Growth Drivers 45

  46. Slide 46: Our growth drivers

    Our growth drivers Realise full potential Sharpen regional Reinforce fee income Long-term growth of our integrated focus growth perspective platform  Provides us with ability to  Global macro  Grow fee income to offset  Disciplined approach in serve expanding regional environment remains competi

  47. Slide 47: Southeast Asia's immense long-term potential

    Southeast Asia’s immense long-term potential Population GDP1 Southeast Asia’s … that UOB is uniquely (Million persons) (USD trillion) immense growth placed to capture prospects… • Most diverse regional franchise • Third largest population among Singapore banks 581 654 726 6.6 globally, after China a

  48. Slide 48: Strong retail presence in high potential regional markets

    Strong retail presence in high potential regional markets High Vietnam 8 3 Philippines 2019 retail banking pool sizes USD b Indonesia ✓ Denotes UOB’s ✓ core markets in Banking penetration 21 Southeast Asia growth potential 12 Thailand UAE ✓ was launched 9 Malaysia 37 India in Thailand (Mar 2019) 9 a

  49. Slide 49: 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 (2021) (SGD b) (SGD b) Markets where UOB has a presence CAGR c$53b Thailand c$46b Singapore c$12b +7% c$1b c$4b c$10b c$7b +2% Wealth Hong c$7b Kong Trade c$

  50. Slide 50: Corporates: Growing our regional franchise, capturing cross-border opportunities

    Corporates: Growing our regional franchise, capturing cross-border opportunities Strengthening Connectivity 28%1 +5%2 Cross-border income’s Non-Singapore Across our ASEAN footprint contribution to Group income Asia’s Best Bank and global network Wholesale Banking for SMEs (2020) income Sector Specia

  51. Slide 51: Consumers: Tapping on rising affluence in Southeast Asia

    Consumers: Tapping on rising affluence in Southeast Asia Omni-channel > 50% SGD129b1 UOB Mighty, Experience Digitally-engaged Assets under ATMs and customers at end- management (AUM) contact centre Serving affluent customers ranked top in June 2020 at end-June 2020 across various touchpoints custome

  52. Slide 52: Reaping benefits from our technology investments

    Reaping benefits from our technology investments +14% +12% +2.4X UOB Mighty App Personal Internet Banking PayNow Transactions (PIB) Transactions Transactions +12% +3.5X +8.9X Business Internet Banking Application Programming PayNow Corporate Plus (BIBPlus) Transactions Interface (API) Calls Transact

  53. Slide 53: Our sustainability milestones

    Our sustainability milestones UOB pledges support for the Taskforce on Climate-related Financial Disclosures, while UOB Asset Management, UOB Venture Management and UOB Global Capital become official signatories of the United Nations-supported Principles for Responsible Investment. Supporting sustai

  54. Slide 54: Thank You

    Thank You tt UOB RIGHT BY YOU

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