United Overseas Bank Limited · SGX:U11
United Overseas Bank — 9M 2018 Earnings Presentation
26 slides from United Overseas Bank's earnings presentation, Oct 26, 2018
Slide 1: UOB Group Financial Highlights
UOB Group For the Nine Months / Third Quarter Ended 30 September 2018 Financial Highlights Lee Wai Fai Group Chief Financial Officer 26 October 2018 Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the prese
Slide 2: Highlights
Highlights Resilient earnings supported by strong balance sheet 9M18 earnings of $3.09 billion 22% YoY 3Q18 earnings at $1.04 billion 17% YoY; 4% QoQ • Total income rose 9% to $6.9 billion led by strong growth in both net interest income and net fee and commission income • Assets quality stable with
Slide 3: New high nine months earnings surpassing $3 billion
New high nine months earnings surpassing $3 billion 9M18 9M17 YoY +/(-) $m $m $m % Net interest income 4,612 4,067 544 13 • Net interest income (NII) rose 13% lifted by higher net interest margin Net fee income 1,500 1,364 136 10 and healthy loan growth. • Higher net fee income driven by Other N
Slide 4: Third quarter earnings exceeding $1 billion
Third quarter earnings exceeding $1 billion 3Q18 3Q17 YoY +/(-) $m $m $m % Net interest income 1,599 1,408 191 14 • Higher net interest income driven by healthy loan growth and net interest margin uplift of 2bps. Net fee income 484 477 7 2 • Higher net fee income due to Other Non-NII 244 279 (35
Slide 5: Net earnings 4% lower QoQ
Net earnings 4% lower QoQ 3Q18 2Q18 QoQ +/(-) $m $m $m % Net interest income 1,599 1,542 57 4 Slight decline in net profit due to: • Lower contributions from Net fee income 484 498 (14) (3) associates due to non-recurring gains LQ Other Non-NII 244 302 (58) (19) • Allowances increased marginal
Slide 6: Higher NII lifted by stable margin and loan growth
Higher NII lifted by stable margin and loan growth Net Interest Income (NII) and Margin 2.20% 2.14% 2.20% 2.14% 2.14% 2.15% 2.14% 2.18% 2.22% 2.19% 1.71% 1.77% 1.83% 1.73% 1.75% 1.79% 1.81% 1.84% 1.83% 1.81% 0.77% 0.91% 0.38% 0.82% 0.93% 0.94% 0.87% 0.90% 5,528 0.60% 0.71% 1,599 1,542 4,991 651 1,46
Slide 7: Leverage strong capital position to drive loan growth on the back of rising interest rate environment
Leverage strong capital position to drive loan growth on the back of rising interest rate environment Well positioned to tap on opportunities for NII growth Strong capital base and improvement in RoRWA Steady loan momentum and healthy NIM 1.84 1.83 1.81 1.81 1.79 2.13 1.99 1.95 1.75 1.69 1.69 1.73 1
Slide 8: YoY Fee income continued to perform well
YoY Fee income continued to perform well Non-Interest Income (Non-NII) 3,035 2,799 260 263 800 758 756 771 761 749 63 86 728 902 2,289 70 58 57 68 58 201 877 198 187 216 240 221 186 589 243 1,873 1,659 509 517 498 484 1,500 439 448 477 2016 2017 9M18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Net Fee income
Slide 9: Cost/Income ratio improved QoQ to 43.4%
Cost/Income ratio improved QoQ to 43.4% Operating Expenses and Cost / Income Ratio 44.0% 43.7% 43.8% 46.0% 43.2% 43.8% 44.2% 43.6% 43.4% 41.6% 3,739 3,425 1,027 1,022 1,011 3,019 987 1,515 925 900 887 1,375 419 381 403 384 1,169 360 379 357 2,050 2,224 1,850 608 606 619 626 526 547 543 2016 2017 9M1
Slide 10: Total credit costs increased to 18 bps
Total credit costs increased to 18 bps Total Allowances on Loans 125bp 61bp 45bp 49bp 37bp 14bp 32bp 12bp 13bp 18bp 32bp 28bp 12bp 32bp 30bp 32bp 693 17bp 11bp 11bp 15bp 660 184 184 188 259 113 104 81 65 2016 2017 9M18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Allowances on Loans Allowances for Impai
Slide 11: New NPA formation stayed at normalised level
New NPA formation stayed at normalised level 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 $m $m $m $m $m $m $m NPA at start of period 3,480 3,543 3,587 3,919 4,389 4,323 4,404 New NPA 424 537 799 1,167 416 436 475 Upgrades, recoveries and translations (293) (255) (369) (354) (310) (212) (398) Write-offs (68)
Slide 12: NPL ratio improved to 1.6%
NPL ratio improved to 1.6% NPL ($m) 3,399 3,466 3,748 4,211 4,138 4,208 4,185 NPL Ratio 1.5% 1.5% 1.6% 1.8% 1.7% 1.7% 1.6% NPL ($m) 303 290 300 290 132 150 139 138 272 244 694 692 721 749 257 285 304 261 608 439 485 482 416 623 641 386 585 603 623 629 370 392 563 487 518 2,058 1,918 1,943 1,963 1,67
Slide 13: Adequate NPA coverage
Adequate NPA coverage Total Allowances ($m) 4,132 4,062 4,190 3,990 3,913 3,935 3,935 NPA coverage (%) 117 113 107 91 91 89 90 Unsecured NPA coverage (%) 232 232 223 187 190 190 189 Total Allowances ($m) 2,619 2,635 2,610 1,976 2,014 1,978 1,935 1,998 1,937 1,991 1,944 1,513 1,580 1,427 Mar-17 Jun-1
Slide 14: Strong capital supported broad-based loan growth across the Group
Strong capital supported broad-based loan growth across the Group Sep-18 18% Sep-18 Sep-17 +/(-) Jun-18 +/(-) 36% Gross Loans $b $b % $b % 8% 42% Singapore 133 127 5 131 2 58% Regional: 95 84 14 94 2 31% 4% 3% Malaysia 29 26 11 29 (0) Thailand 16 14 13 16 4 Sep-17 Indonesia 11 11 (1) 11 2 Greater Ch
Slide 15: Stable liquidity position with LCR at 142% and NSFR at 110%
Stable liquidity position with LCR at 142% and NSFR at 110% Customer Loans and Deposits; LDR, LCR and NSFR 154% 157% 142% 135% 128% 142% 142% 86.7% 86.1% 85.8% 85.1% 86.7% 85.7% 85.7% 288 294 268 273 274 260 260 252 246 230 232 237 225 224 Mar‐17 Jun‐17 Sep‐17 Dec‐17 Mar‐18 Jun‐18 Sep‐18 Net Custome
Slide 16: Strong funding position in anticipation of further interest rate hikes
Strong funding position in anticipation of further interest rate hikes Sep-18 13% Sep-18 Sep-17 +/(-) Jun-18 +/(-) Customer Deposits $b $b % $b % 42% Singapore 197 184 7 192 3 Regional: 75 67 12 74 1 45% Malaysia 30 28 8 30 (1) Thailand 18 15 14 17 6 Indonesia 7 7 (1) 7 3 Sep-17 14% Greater China 20
Slide 17: All business segments performed well
All business segments performed well 9M18 5% ‐2% 9M18 9M17 +/(-) 39% Segment Operating Profit $m $m % Group Retail (GR) 1,528 1,503 2 58% Group Wholesale Banking (GWB) 2,248 2,028 11 Global Markets (GM) 174 161 8 9M17 4% Others * (69) (73) 6 ‐2% 42% Total 3,881 3,619 7 56% * Comprises Investment Man
Slide 18: Regional operating profit up 11% YoY in constant currency
Regional operating profit up 11% YoY in constant currency 9M18 10% At constant 10% FX rate 3% Operating 9M18 9M17 +/(-) +/(-) 7% 57% Profit $m $m % % 13% Singapore 2,201 2,139 3 3 Regional: 1,283 1,147 12 11 9M17 9% Malaysia 493 466 6 1 8% Thailand 297 255 17 13 4% Indonesia 105 121 (13) (5) 7% Grea
Slide 19: Strong capital and leverage ratio
Strong capital and leverage ratio Capital Adequacy Ratios (CAR) 18.7% 18.8% 18.4% 17.3% 17.8% 17.8% 17.4% 14.7% 14.9% 14.5% 13.8% 14.1% 12.8% 13.3% Mar‐17 Jun‐17 Sep‐17 Dec‐17 Mar‐18 Jun‐18 Sep‐18 Tier 2 CAR Tier 1 CAR Fully‐loaded CET1 (%) RWA ($b) 211 209 206 199 202 206 213 Leverage ratio (%) 7.6
Slide 20: Appendix
Appendix : Performance of Major Territories ‐ Singapore ‐ Malaysia ‐ Thailand ‐ Indonesia ‐ Greater China China exposure
Slide 21: Singapore – Key Financials
Singapore – Key Financials 9M18 9M17 +/(-) 3Q18 2Q18 +/(-) $m $m % $m $m % Net interest income 2,631 2,233 18 912 887 3 Net fee income 908 840 8 289 302 (4) Other non-interest income 372 564 (34) 114 154 (26) Total income 3,911 3,637 8 1,315 1,342 (2) Less: Expenses 1,710 1,498 14 572 581 (1) Operat
Slide 22: Malaysia – Key Financials
Malaysia – Key Financials 9M18 9M17 +/(-) 3Q18 2Q18 +/(-) RM'm RM'm % RM'm RM'm % Net interest income 1,635 1,602 2 566 543 4 Net fee income 450 445 1 136 145 (6) Other non-interest income 265 218 22 83 78 6 Total income 2,350 2,265 4 785 766 2 Less: Expenses 880 804 9 298 291 2 Operating profit 1,4
Slide 23: Thailand – Key Financials
Thailand – Key Financials 9M18 9M17 +/(-) 3Q18 2Q18 +/(-) THB'm THB'm % THB'm THB'm % Net interest income 12,568 11,532 9 4,310 4,189 3 Net fee income 3,655 3,496 5 1,263 1,158 9 Other non-interest income 802 711 13 263 283 (7) Total income 17,025 15,739 8 5,836 5,630 4 Less: Expenses 9,907 9,463 5
Slide 24: Indonesia – Key Financials
Indonesia – Key Financials 9M18 9M17 +/(-) 3Q18 2Q18 +/(-) IDR'b IDR'b % IDR'b IDR'b % Net interest income 2,487 2,462 1 823 861 (4) Net fee income 576 561 3 210 188 12 Other non-interest income 393 334 18 162 102 59 Total income 3,456 3,357 3 1,195 1,151 4 Less: Expenses 2,349 2,187 7 822 776 6 Ope
Slide 25: Greater China – Key Financials
Greater China – Key Financials 9M18 9M17 +/(-) 3Q18 2Q18 +/(-) $m $m % $m $m % Net interest income 320 294 9 113 103 10 Net fee income 123 86 44 37 40 (8) Other non-interest income 216 175 24 67 87 (23) Total income 659 555 19 217 231 (6) Less: Expenses 273 250 9 88 91 (3) Operating profit 387 304 2
Slide 26: Exposure to China
Exposure to China Bank exposure as of 30 September 2018 Non-bank exposure as of 30 September 2018 • Bank exposure accounted for 65% of total • Target customers include top-tier state-owned exposure to China enterprises, large local corporates and foreign • Top 5 domestic banks and 3 policy banks inv