United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (July 2024)
54 slides from United Overseas Bank's investor presentation, July 2024
Slide 1: UOB Group: Resilient performance with healthy balance sheet
UOB Group Resilient performance with healthy balance sheet Jul 2024 Discla imer: The mater ial in th is presentat ion conta ins gener al b ackgro un d informat ion a bout Un ite d Oversea s Bank L im ite d (“UOB”) and its act ivit ies as at the d ate of the pre sentat ion. The informat ion is g iven
Slide 2: Agenda
1. Overview of UOB Group 2. Strong UOB Fundamentals 3. Appendix Agenda A. Macroeconomic Outlook B. Our Sustainable Development Target C. Our Growth Drivers D. Latest Financials 2
Slide 3: 1. Overview of UOB Group
1. Overview of UOB Group 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1Q24 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD323b (USD239b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD388b (USD288b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 82.0% 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 dollar ▪ Strong player in credit cards and ▪ Seamless access to regional 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 a
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint 1Q24 performance by segment Myanmar 1 branch Greater China1 20 branches UOB SGD179b 2 Assets under +11% Thailand Vietnam Open Income management YoY 5 branches 147 branches SGD1.4b Malaysia Philippines Group -1% YoY AUM from 55 bra
Slide 8: 2. Strong UOB Fundamentals
2. Strong UOB Fundamentals 8
Slide 9: Diversified loan portfolio
Professionals and private Housing loans individuals 24% Others 9% 5% Diversified loan portfolio Transport, storage and General commerce 11% Industry communication 4% FIs, investment and holding companies Building & 13% Manufacturing construction 7% 27% Large corporates and Others institutions 14% 56
Slide 10: Strong investment grade credit ratings
Strong investment grade credit ratings A regular issuer in key debt capital markets globally Aa1 / P-1 USD Tier 2, SGD GBP Additional Tier 1, 13% 7% 28% 13% 16% ▪ Capital good by global standards (BBB+; Baa1; BBB–)1 (A; A2; BBB+)1 ▪ Deposit-funded and liquid balance sheet Currency ▪ Traditional bank
Slide 11: Why UOB?
Why UOB? Integrated regional Balance growth with Stable management Strong fundamentals platform stability ▪ Proven track record in ▪ Truly regional bank with full ▪ Strong Common Equity Tier ▪ Over 50% of Group’s steering the bank through ownership and control of 1 capital adequacy ratio of earnings
Slide 12: Appendix
A. Macroeconomic Outlook B. Our Sustainable Development Target Appendix C. Our Growth Drivers D. Latest Financials 12
Slide 13: A. Macroeconomic Outlook
A. Macroeconomic Outlook 13
Slide 14: ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed
ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed External Trade Cycle Has Likely Bottomed ASEAN6: Trade Performance (12-month moving average) 2022 GDP growth 2023 GDP growth +5.2 +5.1 40 2024F GDP growth +3.0 20 0 China -20 +8.0 +6.0 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20
Slide 15: We Still Expect The Fed To Cut Rates In Late 3Q
We Still Expect The Fed To Cut Rates In Late 3Q 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24F 4Q24F US 10-Year Treasury 2.34 3.01 3.83 3.87 3.47 3.84 4.57 3.88 4.20 4.40 4.20 4.10 US Fed Funds 0.50 1.75 3.25 4.50 5.00 5.25 5.50 5.50 5.50 5.50 5.25 5.00 SG 3M SIBOR 0.79 1.91 3.17 4.25 4.19
Slide 16: Macro resilience across key Southeast Asian markets
Macro resilience across key Southeast Asian markets Significantly Higher Foreign Reserves Improved Current Account Balances (USD billion) (% of GDP) 368 19.8 15.6 223 140 114 75 1.2 1.3 30 24 26 –2.0 –1.5 –0.1 –5.4 Singapore Thailand Indonesia Malaysia Singapore Malaysia Thailand Indonesia Dec 1998
Slide 17: Singapore to implement Basel IV by mid-2024
Singapore to implement Basel IV5 by mid-2024 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 -- MCRMR6 | Start -- Leverage
Slide 18: 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 QRRE4 Wholesale credit to 5% from 10% and Other Retail Others Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%
Slide 19: 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 2 n/a 0% 0% 0% 0% D-
Slide 20: B. Our Sustainable Development Target
B. Our Sustainable Development Target 20
Slide 21: UOB's responsible financing journey: pragmatic and progressive
UOB’s responsible financing journey: pragmatic and progressive Overview of UOB Group’s Responsible Financing Journey Establishing Improving Strengthening and Evolving 2015 - 2016 2017 - 2018 2019 - 2022 2023 • Launched the Group • Enhanced ESG monitoring • Announced our net zero commitment. • Develo
Slide 22: TCFD Implementation - Climate Scenario Analysis
TCFD Implementation - Climate Scenario Analysis Qualitative Transition Risk Transition Risk Scenario Physical Risk Pilot Analysis Improved Methodology Assessment Analysis Pilot 2019 2020 2021 2022-2023 • Completed qualitative • Partnered an internationally • Conducted a pilot physical risk • Develop
Slide 23: Net zero by 2050, with a focus on 6 priority sectors
In October 2022, we announced our commitment to achieving net zero by 2050, with a focus on 6 priority sectors Energy Built environment Net zero targets and commitments for six sectors We focused on two significant, high-emitting ecosystems, energy and built environment, spanning 6 sectors based on:
Slide 24: One year on, progressing across all priority sectors
One year on, we are progressing across all priority sectors, and are at least 7% below the reference pathways 24 ## RESTRICTED ##
Slide 25: C. Our Growth Drivers
C. Our Growth Drivers 25 ## RESTRICTED ##
Slide 26: 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 environment ▪ Grow fee income to offset ▪ Disciplined approach in serve expanding regional remains uncerta
Slide 27: 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 ▪ Third largest population franchise among Singapore 685 723 6.0 banks 581 globally, after China a
Slide 28: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High Vietnam 8 2022 retail banking pool sizes 4 Philippines USD b Denotes UOB’s core markets in Southeast Asia Banking penetration Indonesia ✓ ✓ was launched growth potential ✓ in Thailand, 14 Indonesia, Singapore and Malaysia. ✓ 14 Thailand
Slide 29: 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 (2026) (SGD b) (SGD b) Markets where UOB has a presence c$79b CAGR c$23b c$59b +10% Singapore Thailand Vietnam c$4b c$1b c$2b c$15b c$13b +10% Malaysia Wealt
Slide 30: Retail growth drivers: digital acquisition and engagement
Consumers Scale Acquisition with Digital Boost UOB TMRW’s capabilities to target quality 8.1m >200k • Tapping on rising customers and drive synergies Retail customers, 78% are New-to-bank customers acquired in 1Q24 affluence and growing digitally enabled >50% digitally acquired digitalisation in Sou
Slide 31: Wholesale growth drivers: connectivity, specialisation, digitalisation
Strengthening 25% Wholesale Cross border income as % of Connectivity GWB income customers +5% Across our ASEAN Anchor customers within Financial footprint and global • Growing regional network Supply Chain Management solution1 franchise, capturing cross-border Sector +9% Specialisation Hospitality i
Slide 32: D. Latest Financials
D. Latest Financials 32 ## RESTRICTED ##
Slide 33: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.83% 2.29%1 2.27%1 1.27% 1.68% balance sheet portfolio FY20 FY21 FY22 FY23 1Q24 efficiency quality Current Account Saving Account Balances (SGD b) 2.8% CAGR2 174 198 175 189 196 Proactive Robust liability FY20 FY21
Slide 34: Exposure to Greater China
Exposure to Greater China 71.7 72.5 75.4 70.5 71.6 9.1 9.4 10.5 11.3 10.7 Debt ($b) ▪ ~$2.0b in loans to Chinese 50.7 developers (1% of group loans) 49.8 51.6 51.2 49.2 Non Bank ($b) Bank ($b) 11.3 12.6 15.6 9.5 9.2 Mar Jun Sep Dec Mar 2023 2024 As at 31 Mar 2024: Bank exposure ($12.2b) • ~ 45% of t
Slide 35: Exposure to Commercial Real Estate - Office
Exposure to Commercial Real Commercial Real Estate - Office exposure is 7.4% of loans Estate - Office By geography as % of loans 0.2% • Almost half of office 0.7% Others exposure is in Singapore 0.8% 0.8% United Kingdom 0.8% 0.8% • Overseas exposure Mar-24 Group 1.5% 1.3% United States loans: 7.4% b
Slide 36: Singapore mortgages remain a low-risk asset class
Singapore mortgages remain a low-risk asset class Low risk of housing bubble due to cooling measures High national savings rate (1Q14 = 100) US, 192.8 (% of GDP) CA, 184.9 SG, 40 AU, 166.9 HK, 24 SG, 133.3 AU, 24 HK, 127.7 CA, 24 US,17 1Q141Q151Q161Q171Q181Q191Q201Q211Q221Q23 2019 2020 2021 2022 202
Slide 37: Comparison against peers
Comparison against peers Standalone Cost Returns Liquidity Strength Management 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 42%1 1.2%1 82% Aa1 AA– AA– OCBC a1 37% 1.6% 80% 1 1 Aa1 AA– AA– DBS a1 37
Slide 38: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 16.2% 15.3% 15.2% 14.9% 14.7% 14.5% 13.9% 13.9% 13.6% 13.5% 13.4% 12.3% 12.2% 2 2 OCBC MBB HSBC RBC DBS CIMB UOB TD SCB Citi BOA CBA NAB Return on Average Equity 1 (annualised) 14.7% 10.8% 24.0% 13.1% 1 19.4% 10.7% 14.0% 14.1% 15.2% 6.6%
Slide 39: 1Q24 financial overview
1Q24 financial overview Core Net Profit After Tax Movement, 1Q24 vs 4Q23 (SGD m) 41 142 11 11 4 36 11 1 1 1,498 +5% 1,566 –2% +2% +32% +0% +7% +19% +12% 4Q23 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 1Q24 core net profit after tax income commission interest ex
Slide 40: FY23 financial overview
FY23 financial overview Core Net Profit After Tax Movement, FY23 vs FY22 (SGD m) 930 762 1 1,336 92 318 5 31 1 1 +26% 6,060 4,819 +16% +4% +85% +15% +53% –5% +3% FY22 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, FY23 core net profit after tax income commission in
Slide 41: Broad based growth by geography
Performance by QoQ YoY (Constant (Constant Geography 1Q24 4Q23 QoQ Rate) 1Q23 YoY Rate) Total Income $m $m +/(-)% +/(-)% $m +/(-)% +/(-)% • Broad based growth Singapore 1,958 1,891 4 4 2,052 (5) (5) across Singapore, ASEAN-4 928 934 (1) 1 948 (2) 3 ASEAN-4 and North Asia Malaysia 364 366 (0) 1 388 (
Slide 42: Net Interest Income and Margin
2.60 2.61 2.62 2.64 Net Interest Income 2.26 2.55 2.47 and Margin 2.09 1.86 2.14 2.12 2.09 2.02 2.02 • 1Q24 NII eased 2% mainly 0.91 1.02 1.11 1.10 1.11 0.93 0.94 due to a shorter quarter 9,679 • NIM stabilised at 2.02%, 8,343 1,529 with active balance sheet 1,203 management 2,409 2,437 2,429 2,404
Slide 43: Fee Income
Fee Income 19 16 17 17 16 16 15 • Good performance in loan-related fees and 2,235 2,143 pickup in wealth 307 318 • Credit card fees 231 382 591 569 580 552 normalised from last 524 72 74 82 77 quarter’s seasonal high 573 595 83 104 90 81 125 72 146 164 156 142 151 1,021 951 237 269 244 227 218 2022
Slide 44: Trading & Investment Income
85 Trading & Investment 43 53 51 42 38 Income 45 • Record customer-related 1,690 treasury income from increased retail bond sales and strong hedging 924 521 demands 474 478 829 375 362 • Robust performance from 128 272 296 303 trading and liquidity 177 178 management activities 701 766 202 182 198 1
Slide 45: Core Expenses and Cost / Income Ratio
43.3 41.5 Core Expenses and 44.1 44.4 46.8 44.6 43.3 Cost / Income Ratio (1) 5,778 43.2 41.9 40.9 40.9 41.0 5,016 • 1Q24 core CIR improved 1,365 1,255 to 41.9% on the back of 905 enlarged income base 1,440 1,448 1,416 1,473 1,475 770 357 351 310 347 353 • Expense growth mainly to 230 233 220 221 231
Slide 46: Non-Performing Assets
2023 2024 Non-Performing ($m) 1Q 2Q 3Q 4Q 1Q Assets NPAs at start of period 5,127 5,150 5,192 5,011 4,946 Non-individuals • Stable asset quality with New NPAs _ 301 364 267 389 249 lower new NPA Less: formation. NPL ratio Upgrades and recoveries 80 137 298 288 183 unchanged at 1.5% Write-offs 218 65
Slide 47: Total Allowance on Loans
30 29 25 25 26 22 23 Total Allowance on 26 25 25 Loans 20 21 19 20 • Total credit costs improved to 784 23bps from decline in 628 specific allowance on lower NPL formation 238 151 202 807 192 36 186 694 28 28 202 229 212 164 158 (66) (24) (9) (78) 2022 2023 1Q 2Q 3Q 4Q 1Q 2023 2024 Credit costs on l
Slide 48: Allowance Coverage
34 33 32 32 32 Allowance Coverage 1.0 1.0 0.9 0.9 0.9 • Reserve buffer remained 5,134 5,109 4,976 4,993 adequate with prudent 4,931 379 379 379 379 379 coverage for performing loans at 0.9% 2,905 3,058 3,042 3,007 3,000 • Healthy NPA coverage at 99% or 204% taking 1,647 1,697 1,688 1,590 1,614 colla
Slide 49: Gross Loans
Gross Loans Mar-24 Dec-23 Mar-23 QoQ YoY $b $b $b +/(-)% +/(-)% • Loans grew 1% QoQ and Singapore 157 158 155 (1) 1 3% YoY on constant ASEAN-4 69 69 68 (1) 0 currency basis Malaysia 31 32 33 (1) (5) Thailand 25 25 24 (3) 4 • Loans growth largely from Indonesia 10 10 10 4 4 Vietnam 2 2 2 2 8 selectiv
Slide 50: Total Funding
Total Funding Mar-24 Dec-23 Mar-23 QoQ YoY $b $b $b +/(-)% +/(-)% • Customer deposits up Singapore ASEAN-4 267 74 264 73 254 73 1 1 5 1 1% QoQ and 4% YoY Malaysia 34 34 34 0 2 Thailand 27 27 26 1 3 • Healthy growth in Indonesia 10 10 11 3 (4) CASA and CASA ratio Vietnam 2 2 2 8 4 surpassed 50% mark
Slide 51: Liquidity Ratios
167 Liquidity Ratios 154 153 157 160 • Liquidity and funding positions remained 121 121 121 121 comfortably above 120 regulatory requirements 83.3 83.5 82.3 82.2 82.0 Mar Jun Sep Dec Mar 2023 2024 USD LDR (%) 60.7 62.9 60.7 56.5 59.7 All-currency LCR (%) Loan/Deposit Ratio (LDR) (%) Net Stable Fund
Slide 52: Capital
Capital 14.0 13.6 13.0 13.4 13.9 • CET1 ratio rose to 13.9% from profit accretion while 263 272 276 276 258 RWA remained stable Mar Jun Sep Dec Mar 2023 2024 Leverage ratio (%) 7.0 7.0 6.8 6.9 7.0 RWA ($b) CET1 ratio (%) 52
Slide 53: Dividends
170 Dividends 135 120 85 • Committed to consistent and Net dividend 75 Per ordinary share (¢) 60 sustainable returns to 78 shareholders Interim Final 39 • 85 Proposed final 60 60 dividend of 85 cents 39 per share 2020 2021 2022 2023 Payout amount ($m) 1,304 2,011 2,263 2,844 Payout ratio (%) 45 ^ 49
Slide 54: Right By You
@ Right By You
United Overseas Bank — Investor Presentation (July 2024) on 6ix