United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (May 2021)
56 slides from United Overseas Bank's debt investor presentation, May 2021
Slide 1: UOB Group Fixed Income Investor Presentation
UOB Group Fixed Income Investor Presentation Broad-based growth a strong start to 2021 May 2021 Discla imer: The mater ial in th is pr ese ntat ion conta ins g enera l b ackgro und informat ion a bout Un it ed Overse as Ba nk L im ited (“UO B”) and its act ivit ies a s at the date of the presentat i
Slide 2: Agenda
1. Overview of UOB Group 2. Strong UOB Fundamentals Agenda 3. Resilience of the Singapore Housing Market & UOB’s Cover Pool 4. Latest Financials Appendix 2
Slide 3: Overview of UOB Group
Overview of UOB Group 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1Q21 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD293b (USD218b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD332b (USD247b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 87.0% Wee Ee Cheong ■
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 Singapore Best SME Bank in Singapore Strong player in Singapore Strong player in credit cards and Seamless access to regional dollar treasury inst
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
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint with ~500 offices 1Q21 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD136b Operating Assets under +10% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD0.6b AUM from Malaysia +2
Slide 8: 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 44% 0.9% 87% Aa1 AA– AA– OCBC a1 3
Slide 9: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR 15.9% 15.5% 15.3% 14.3% 14.3% 14.0% 13.6% 13.3% 13.0% 12.6% 12.5% 12.4% 11.7% HSBC OCBC MBB UOB DBS SCB TD CIMB BOA CBA1 RBC NAB1 Citi Return on Average Equity 9.0% 12.4% 8.1% 10.2% 15.4% 10.6% 14.3% 12.0% 12.3% 13.2% 18.6% 10.6% 1
Slide 10: 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
Slide 11: Strong UOB Fundamentals
Strong UOB Fundamentals 11
Slide 12: 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
Slide 13: 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
Slide 14: Diversified loan portfolio
Diversified loan portfolio Professionals Housing loans and private 24% Others individuals 6% 9% General Transport, commerce storage and 13% Industry communication 4% FIs, investment and holding Building & Large companies construction corporates Others 11% 25% and 11% Manufacturing institutions 8% Gr
Slide 15: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.63% 1.93% 1.90% 1.76% balance 1.27% portfolio sheet FY17 FY18 FY19 FY20 1Q21 quality efficiency Current Account Saving Account Balances (SGD b) 12% CAGR1 Proactive 174 178 Robust 124 130 141 liability capitalisati
Slide 16: Strong investment grade credit ratings
Strong investment grade credit ratings Debt Issuance History Debt Maturity Profile (SGD m) Aa1 / P-1 Issue Structure Call Amount Ratings (M/S/F) 2021 2022 2023 2024 2025 2026 2027 Capital good by global standards Date Deposit-funded and liquid balance sheet Jul-19 Perpetual 2026 SGD750m Baa1/BBB
Slide 17: Resilience of the Singapore Housing Market & UOB's Cover Pool
Resilience of the Singapore Housing Market & UOB’s Cover Pool 17
Slide 18: USD8,000,000,000 Global Covered Bond Programme
USD8,000,000,000 Global Covered Bond Programme Issuer United Overseas Bank Limited Issuer Long Term Rating Aa1 (stable) / AA- (stable) / AA- (negative) (Moody’s / S&P / Fitch) Issuer Short Term Rating P-1 / A-1+ / F1+ (Moody’s / S&P / Fitch) Programme Limit USD8,000,000,000 LCR Status / ECB Repo Eli
Slide 19: Covered Bond Structure
Covered Bond Structure ■ 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 hel
Slide 20: Singapore mortgages remains a low risk asset class
Singapore mortgages remains a low risk asset class Low Risk of Housing Bubble due to Cooling Measures High National Savings Rate (4Q10 = 100) (% of GDP) HK, 212 CN, 45 CN, 197 SG, 39 US, 170 HK, 25 AU, 145 AU, 25 SG, 114 US, 18 1Q11 1Q13 1Q15 1Q17 1Q19 1Q21 2011 2013 2015 2017 2019 2021F Sources: CE
Slide 21: UOB's cover pool profile
UOB’s cover pool profile Overview of Cover Pool (as of Mar’21) Current Loan Balances Mainly <SGD1m Number of Mortgage Accounts 17,341 4% 4% 4% 4% 3% 3% 3% 3% 3% Total Current Balance (SGD) 10.4 billion 7% 7% 6% 7% 6% 6% 6% 7% 7% (SGD ‘000) Average Current Loan Balance (SGD) 599,231 16% 16% 16% 15% >
Slide 22: Cover pool has been stable
Cover pool has been stable Primarily Apartments / Condominums Diversified Geographical Distribution 10% 10% 10% 11% 11% 11% 11% 11% 11% 5% 5% 5% 5% 5% 5% 4% 5% 5% Rest of Central 4% 4% 4% 4% 2% 4% 2% 4% 2% 4% 2% 4% 2% 4% 2% Others 2% 2% 2% 18% 18% 18% 17% 17% 17% 17% 16% 16% Region (RCR) 11% 11% 11%
Slide 23: Cover pool has been stable
Cover pool has been stable Majority Owner Occupied Loans Mainly for Purchases 28% 28% 28% 28% 28% 29% 29% 28% 28% Refinance, 19% Investment 72% 72% 71% 72% 72% 71% 71% 72% 72% Owner occupied Purchase, 81% Mar ' 19 Jun '19 Sep '19 Dec '19 Mar '20 Jun '20 Sep '20 Dec '20 Mar '21 Well Seasoned Portfoli
Slide 24: Latest Financials
Latest Financials 24
Slide 25: 1Q21 financial overview
1Q21 financial overview Net Profit After Tax Movement, 1Q21 vs 4Q20 (SGD m) 194 3 69 105 40 116 17 +46% 1,008 688 +1% +22% +49% +4% –49% –7% +47% 4Q20 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 1Q21 net profit after tax income commission interest expenses al
Slide 26: FY20 financial overview
FY20 financial overview Net Profit After Tax Movement, FY20 vs FY19 (SGD m) 528 35 291 288 1,119 47 210 4,343 –33% 2,915 –8% –2% –20% –6% >100% +91% –25% FY19 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- FY20 net profit after tax income commission interest exp
Slide 27: Net interest income rose with asset volumes, while net interest margin was stable
Net interest income rose with asset volumes, while net interest margin was stable Net interest 3.00% 3.00% 11,500 margin (%) * 2.14% 2.19% 2.16% 2.08% 3 1.91% 10,500 1.87% 1.83% 1.87% 1.90% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.77% 1.78% 1.71% 1.00% 1.57% 1.00% 1.48% 1.53% 1.57% 1.57% ▬ Inte
Slide 28: Non-interest income supported by diversified revenue engines, with record fees
Non-interest income supported by diversified revenue engines, with record fees 38.5% 1 % of total income 35.4% 34.6% 34.2% 40.0% 33.8% 35.6% 34.8% 32.8% 40.0% 31.8% 5,100 ▬ Non-interest income 1 ▬ Net fee income 20.0% 4,600 20.0% 22.7% 23.2% 25.7% 21.9% 21.6% 20.3% 21.8% 21.4% 19.7% 4,100 1 0.0% 0.0
Slide 29: Diverse fee base, with strong growth led by loan-related and wealth management
Diverse fee base, with strong growth led by loan- related and wealth management activities 850 2,500 2,412 730 Fee income (SGD m) 2,303 37 2,313750 4 2,161 63 13 75 297 620 Total 80 296 280 650 602 37 4 581 2,000 272 156 142 2 Others 154 72 4 74 550 509 71 148 41 5 37 182 558 506 33 Trade-rela
Slide 30: Lower CIR as we pace investments in staff and technology
Lower CIR as we pace investments in staff and technology 1 50.0% 45.6%50.0% 6,50045.1% 46.0% 46.7% 43.7% 43.9% 44.6% 44.6% 43.8% ▬ Costs / Income 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 30.0% Operating expenses 4,18430.0% 4,500 1,086 1 4,003 1,089 (SGD m) 1,040 1,049 3,739 1,009 1,253 1 20.0% 1,1
Slide 31: A good start to the year with growth across our key markets
A good start to the year with growth across our key markets in Southeast Asia and North Asia 1Q21 4Q20 YoY 1Q20 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m % Singapore 724 651 +11 713 +2 Rest of Southeast Asia 342 307 +12 345 –1 Malaysia 182 164 +11 195 –7 Thailand 101 94 +7 93 +9 Indonesia
Slide 32: Strong loan growth, led by term and trade loans
Strong loan growth, led by term and trade loans in Singapore and North Asia Mar-21 Dec-20 QoQ Mar-20 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 151 143 +5 141 +7 Rest of Southeast Asia 63 63 –0 63 +0 Malaysia 30 30 +0 30 +0 Thailand 20 21 –2 20 +3 Indonesia 10 10 –1 11 –6 Vietnam 2
Slide 33: Exposure to Greater China
Exposure to Greater China As at 31 March 2021: Mainland China exposure Hong Kong SAR exposure 77.2 ($25.8b or 6% of total assets) ($37.8b or 9% of total assets) 73.5 71.8 Bank exposure ($11.7b) 6.2 69.2 68.3 Bank exposure ($2.8b) 6.2 7.3 ~70% to top five domestic banks Majority to foreign banks
Slide 34: Exposure to oil and gas sector
Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) 11.8 As of 31 March 2021, oil and gas (O&G) loans represented 4.0% 10.8 of total loans as compared with 4.7% at 30 June 2018 3.3 2.1 Around 80% of O&G exposure is to downstream players and 4.8 4.4 traders, which are mainly nation
Slide 35: Loan assistance programmes temper asset quality deterioration
Loan assistance programmes temper asset quality deterioration (SGD m) 1Q20 2Q20 3Q20 4Q20 1Q21 NPAs at start of period 4,297 4,590 4,628 4,301 4,608 Non-individuals: New NPAs 573 131 74 622 145 Upgrades and recoveries (101) (126) (216) (175) (250) Write-offs (208) (42) (63) (179) (26) 4,561 4,553 4,
Slide 36: Credit costs eased as macro outlook stabilises
Credit costs eased as macro outlook stabilises and pre-emptive provisions mostly taken in 2020 80bp 80bp 3,000 67bp 68bp Average Gross Loans 57bp 55bp 1 60bp 60bp (basis points) * 61bp 2,500 36bp ▬ Allowances for NPLs 40bp 40bp 1 28bp 29bp ▬ Total allowances for 16bp 18bp 20bp 20bp 2,000 31bp 34bp 1
Slide 37: High reserve coverage in anticipation of asset quality risk
High reserve coverage in anticipation of asset quality risk 111% 107% 112% 12 88% 96% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 39% 10 36% 36% 37% 37% 50% ▬ Allowances for NPAs / NPAs ▬ Allowance for non-impaired 0% 8,0 loans* / performing loans (%) 0.8% 0.9% 1.0% 1.0% 1.0% -50% Allowances
Slide 38: Strong capital and leverage ratios
Strong capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.1% 14.0% 14.0% 14.7% 14.3% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.4% 7.3% 7.4% 7.4% 7.5% ▬ Return on risk-weighted 5.00% assets (%) * 1.49% 1.21% 1.17% 1.22% 1.76% 232 232 231 225 236 Risk weighted assets
Slide 39: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 125% 90 119% 122% 121% ▬ Net stable funding ratio (%) 120% 109% 80 ▬ Group loan-deposit ratio (%) 100% 85.4% 85.8% 86.7% 85.4% 87.0% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 62.7% 62.5% 50 59.6% 58.0% 58.2% 40% 40 20% 330% Liquidity coverage ratio (%) * 3
Slide 40: 2020 dividend in line with MAS guidance
2020 dividend in line with MAS guidance, scrip dividend applied but at no discount Net dividend per ordinary share (¢) 20 20 Special 20 55 50 Final 45 39 50 55 Interim 35 39 2017 2018 2019 2020 Payout amount (SGD m) 1,660 2,000 2,170 1,303 Payout ratio (%) 49 50 50 451 Payout ratio (excluding
Slide 41: Appendix
Appendix 41
Slide 42: Prudent policies for sustainable prices
Prudent policies for sustainable prices Residential Property Price Indices in Singapore 180 (1Q09 = 100, Updated till 1Q 21) 160 HDB Resale Price Index Private Residential Price Index 140 120 100 2013: Introduction of 2020: 80 TDSR COVID-19 2011: Pandemic 60 Introduction of 2017: 1997: Asian 2010: A
Slide 43: Projected economic rebound across Asia in 2021
Projected economic rebound across Asia in 2021 Trade volume returning to pre-COVID levels 2020 GDP growth +9.1 115 (Dec’19 = 100) 2021 GDP growth 100 +2.3 85 China 70 +6.7 Feb-19 Jun-19 Oct-19 Feb-20 Jun-20 Oct-20 Feb-21 +3.5 World trade Emerging Asia, ex China export +2.9 Advanced economies' export
Slide 44: Accommodative monetary policy stance
Accommodative monetary policy stance 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21f 3Q21f 4Q21f 1Q21f US 10-Year Treasury 1.92 0.67 0.66 0.68 0.91 1.74 1.90 1.95 2.00 2.10 US Fed Funds 1.75 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 SG 3M SIBOR 1.77 1.00 0.56 0.41 0.41 0.44 0.40 0.40 0.40 0.40 SG 3M SOR 1.54
Slide 45: Improved fundamentals in Southeast Asia
Improved fundamentals in Southeast Asia Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 382 15.6 14.6 246 75 137 109 30 24 26 3.8 0.5 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.3 –5.4 Dec 1998 Mar 2021 Singapore Malaysia Thailand Indonesia 1997
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
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 581 656 726 6.6 globally, after China a
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 (March 2019) 9
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 (2025) (SGD b) (SGD b) Markets where UOB has a presence c$66b CAGR c$14b Singapore Thailand c$51b +5% c$1b c$4b c$10b c$9b +5% Hong Wealth c$7b Kong c$3b Tra
Slide 50: Wholesale: Record income on regional franchise
Wholesale: Record income on regional franchise, capturing cross-border opportunities Strengthening Connectivity +7%1 +8%1 Cross-border Non-Singapore Across our ASEAN footprint income growth income growth and global network (accounted for 29% of Group Wholesale Banking income) Sector Specialisation B
Slide 51: Consumers: Tapping on rising affluence in Southeast Asia
Consumers: Tapping on rising affluence in Southeast Asia Omni-channel +5%pt SGD136b2 Experience Increase in digitally- Assets under Serving affluent customers engaged customers1 management (AUM) across various touchpoints 510% YoY Digital Bank: TMRW Specially for mobile-first 314k +24% Total TMRW cu
Slide 52: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN Sustainable financing SGD12b USD1.5b and bonds Total sustainability Issued Singapore’s first Sustainable growth in priority financing1 provided to sustainability bond and sectors driving ASEAN progress date global first dual-tranche sustainabi
Slide 53: 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 --
Slide 54: 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%
Slide 55: 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%
Slide 56: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — Debt Investor Presentation (May 2021) on 6ix