United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (September 2022)
52 slides from United Overseas Bank's investor presentation, September 2022
Slide 1: Resilient performance reflecting our diversified franchise
UOB Group Resilient performance reflecting our diversified franchise September 2022 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 ion. The info
Slide 2: Agenda
1. Overview of UOB Group 2. Macroeconomic Outlook Agenda 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials 2
Slide 3: Overview of UOB Group
Overview of UOB Group 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1H22 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD322b (USD231b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD358b (USD257b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 88.7% 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 a
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint with ~500 offices 1H22 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD138b2 Operating Assets under +1% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD0.8b AUM from Malaysia -1
Slide 8: 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 9: Macroeconomic Outlook
Macroeconomic Outlook 9
Slide 10: Asian growth to sustain into 2022
Asian growth to sustain into 2022 …despite risks from Russia-Ukraine conflict & China 2020 GDP growth pandemic +8.1 70 2021 GDP growth 55.6 53.1 60 51.7 52.5 2022F GDP growth +4.1 52 +2.2 50 +7.0 40 China +2.9 +2.6 30 ASEAN Mfg EM Services EM Mfg PMI DM Services DM Mfg PMI +3.2 PMI PMI PMI +1.6 1Q19
Slide 11: Monetary policy to tighten as inflation spikes
Monetary policy to tighten as inflation spikes 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22f 4Q22f 1Q23f 2Q23f US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.60 3.80 3.80 3.60 US Fed Funds 0.25 0.25 0.25 0.25 0.50 1.75 3.00 3.75 4.00 4.00 SG 3M SIBOR 0.44 0.43 0.43 0.44 0.79 1.91 2.65 2.80 3.10 3.10 SG 3
Slide 12: Sound fundamentals in Southeast Asia
Sound fundamentals in Southeast Asia Significantly Higher Foreign Reserves Improved Current Account Balances (USD billion) (% of GDP) 314 15.6 222 13.0 136 109 75 30 24 26 3.9 4.5 Singapore Thailand Indonesia Malaysia –0.1 –1.5 –2.0 –5.5 Dec 1998 Jun 2022 Singapore Malaysia Thailand Indonesia 1997 2
Slide 13: 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 (4Q11 = 100) (% of GDP) US, 187 HK, 186 SG, 40 AU, 163 HK, 29 CA, 140 AU, 26 SG, 123 CA, 25 US, 21 2Q12 2Q14 2Q16 2Q18 2Q20 2Q22 2012 2014 2016 2018 2020 2022F Sources: CEI
Slide 14: 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 15: 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 16: 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 17: Strong UOB Fundamentals
Strong UOB Fundamentals 17
Slide 18: 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 19: 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 20: Diversified loan portfolio
Diversified loan portfolio Professionals Housing loans and private 23% Others individuals 4% Transport, General 8% storage and commerce communication 12% Industry 5% FIs, investment Building & and holding construction Large companies 27% corporates Others 13% Manufacturing and 14% 8% institutions Gr
Slide 21: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.93% 1.90% 1.68% 1.53% balance 1.27% portfolio sheet FY18 FY19 FY20 FY21 1H22 quality efficiency Current Account Saving Account Balances (SGD b) 12.3% CAGR1 Proactive 174 198 196 Robust 130 141 liability capitalisa
Slide 22: 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 - 2020 2021-2022 • Launched the • Enhanced ESG • Strengthened due diligence • Established the Bank’s Env
Slide 23: 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 • Completed qualitative • Partnered an internationally • Conducted a pilot physical risk • Partnered wi
Slide 24: 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 44% 0.9% 89% Aa1 AA– AA– OCBC a1 45% 1.3% 84% Aa1 AA– AA– DBS a1 44% 1.0%
Slide 25: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.6% 14.9% 14.7% 14.5% 14.2% 13.9% 13.6% 13.2% 13.1% 12.5% 12.2% 11.9% 11.8% MBB OCBC TD CIMB DBS SCB HSBC RBC UOB NAB 1 BOA Citi CBA1 Return on Average Equity 9.4% 11.0% 15.8% 10.5% 13.3% 9.9% 9.7% 17.9% 9.9% 11.3% 10.5% 15.1% 12.7% (an
Slide 26: Strong investment grade credit ratings
Strong investment grade credit ratings Aa1 / P-1 A regular issuer in key debt capital markets globally Capital good by global standards Additional GBP Tier 1, (BBB+; Baa1; Tier 2, (A; A2; Deposit-funded and liquid balance sheet SGD 9% USD 10% BBB–) 1 22% BBB+)1 Traditional banking presence in
Slide 27: Our Growth Drivers
Our Growth Drivers 27
Slide 28: 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 29: 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 581 667 726 6.3 globally, after China a
Slide 30: 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 9 (March 2019)
Slide 31: 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 CAGR c$21b Vietnam c$55b Singapore Thailand +9% c$1b c$1b c$4b c$13b c$12b +10% Wealth Malaysia c$7b
Slide 32: Wholesale: Growing regional franchise, capturing cross-border opportunities
Wholesale: Growing regional franchise, capturing cross-border opportunities Strengthening Connectivity +13%1 +69%2 Cross-border Suppliers and Across our ASEAN footprint income growth distributors within and global network (formed 29%2 of Financial Supply Chain Group Wholesale Management (FSCM) Banki
Slide 33: Consumers: Tapping on rising affluence and growing digitalisation
Consumers: Tapping on rising affluence and growing digitalisation in Southeast Asia Driving Digital Adoption ~500k ~S$3b1 New customers to be Deposits from digitally- Scale UOB TMRW across digitally acquired across acquired customers in the ASEAN, reduce cost to serve the region by UOB region and de
Slide 34: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN Sustainable financing S$21b1 S$11.7b3 Total sustainability Total AUM in ESG- Sustainable growth in priority sectors financing portfolio2 driving ASEAN progress and integrating focused investments sustainability into wealth management products
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 2Q22 financial overview
2Q22 financial overview Net Profit After Tax Movement, 2Q22 vs 1Q22 (SGD m) 172 126 41 6 46 177 5 +11% 906 1,113 +10% –1% +170% +12% –23% –21% +19% 1Q22 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 2Q22 net profit after tax income commission interest expenses
Slide 37: 1H22 financial overview
1H22 financial overview Net Profit After Tax Movement, 1H22 vs 1H21 (SGD m) 442 62 222 95 68 19 105 +0.4% 2,011 2,018 +14% –5% –37% +4% –18% –26% +24% 1H21 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 1H22 net profit after tax income commission interest expens
Slide 38: Net interest margin improved alongside rising interest rates and steady loan growth
Net interest margin improved alongside rising interest rates and steady loan growth Net interest 3.00% 3.00% 11,500 margin (%) * 2.19% 2.16% 2.02% 3 1.91% 1.89% 10,5001.90% 1.87% 1.89% 1.90% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.78% 1.67% 1.00% 1.57% 1.56% 1.00% 1.56% 1.55% 1.56% 1.58% ▬ Int
Slide 39: Non-interest income supported by diversified revenue engines
Non-interest income supported by diversified revenue engines 150 % of total income 34.7% 34.7% 34.6% 40.0% 34.2% 40.0% 31.1% 31.1% 5,100 28.5% ▬ Non-interest income 130 ▬ Net fee income 20.0% 4,600 20.0% 24.1% 24.1% 23.5% 23.8% 24.3% 21.0% 20.8% 110 4,100 0.0% 0.0% 3,401 3,600 Non-interest 3,141 839
Slide 40: Loan-related and credit card fees at new high
Loan-related and credit card fees at new high; wealth fees slowed on dampened market sentiment 3,000 850 2,706 Fee income 19 750 (SGD m) 679 2,500 310 663 653 667 669 2,226 5 5 6 6 Total 139 650 5 82 13 75 78 82 81 281 37 Others 2,000 550 31 34 38 33 142 698 Trade-related 183 164 170 506 450 1
Slide 41: Stable CIR as we pace investments in staff and technology
Stable CIR as we pace investments in staff and technology 1 50.0% 44.6% 45.6% 50.0% 6,500 45.0% 44.8% ▬ Costs / Income 43.9% 44.1% 43.7% 43.7% 43.8% 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 1,184 30.0% Operating expenses 4,184 4,31330.0% 4,500 1 4,003 1,057 1,072 1,095 1,058 (SGD m) 1,253 1,073 29
Slide 42: Steady growth across Singapore and North Asia franchise
Steady growth across Singapore and North Asia franchise 1H22 1H21 YoY 2Q22 1Q22 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 1,542 1,422 +9 845 697 +21 Rest of Southeast Asia 638 678 –6 318 320 –1 Malaysia 333 355 –6 162 171 –6 Thailand 193 201 –4 93 100 –7 Indonesia 104 11
Slide 43: Broad based growth across geographies
Broad based growth across geographies Jun-22 Mar-22 QoQ Jun-21 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 163 162 – 153 +7 Rest of Southeast Asia 64 64 +1 62 +4 Malaysia 30 30 – 29 +2 Thailand 21 21 –2 20 +5 Indonesia 11 10 +8 11 +6 Vietnam 2 2 –5 2 +1 Others 1 1 –3 1 +36 North Asia
Slide 44: Exposure to Greater China
Exposure to Greater China 74.8 76.1 76.1 77.2 77.1 7.6 10.2 10.8 12.2 11.8 Debt ($b) ~$3b in loans to Chinese 48.2 developers (1% of group Non Bank ($b) 49.5 48.8 51.5 52.5 loans & low borrower Bank ($b) concentration) 19.0 16.4 16.5 13.5 12.8 Jun Sep Dec Mar Jun 2021 2022 As at 30 Jun 2022: Bank
Slide 45: Exposure to Commodities
Exposure to Commodities Oil and Gas (O&G) Other Commodity Jun 22 Traders / downstream Total Upstream industries Segments2 industries1 Outstanding loans S$2.5b S$9.0b S$10.3b S$21.8b % of total loans 4% 3% 7% As of 30 June 2022, outstanding loans to commodities remain modest and represented 7% of tot
Slide 46: New NPA formation rose due to a major but non-systemic corporate account
New NPA formation rose due to a major but non- systemic corporate account; NPL ratio stable (SGD m) 2Q21 3Q21 4Q21 1Q22 2Q22 NPAs at start of period 4,544 4,547 4,772 5,077 5,289 Non-individuals: New NPAs 360 251 670 462 661 Upgrades and recoveries (158) (73) (172) (207) (363) Write-offs (202) (42)
Slide 47: Steady credit costs as asset quality remains benign
Steady credit costs as asset quality remains benign 80bp 80bp 3,000 Average Gross Loans 57bp 1 60bp 60bp (basis points) * 2,500 ▬ Allowances for NPLs 40bp 1 40bp 21bp 20bp 20bp 20bp 22bp 19bp ▬ Total allowances for 16bp 18bp 20bp 20bp 2,000 1 loans 24bp 22bp 17bp 18bp 19bp 20bp 19bp 0bp 15bp 0bp 12b
Slide 48: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 110% 106% 12 96% 94% 91% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 10 35% 34% 31% 31% 30% 50% ▬ Specific allowances / NPAs ▬ General allowance on loans* / 0% 8,0 performing loans (%) 1.0% 1.0% 1.0% 0.9% 0.9% -50% 5,007 5,052 6,0 Allowa
Slide 49: Capital and leverage ratios
Capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.2% 13.5% 13.5% 13.1% 13.1% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.4% 7.1% 7.2% 6.9% 6.6% ▬ Return on risk-weighted 5.00% assets (%) * 1.68% 1.71% 1.59% 1.36% 1.69% 253 259 268 263 241 Risk weighted assets (SGD b)
Slide 50: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 123% 125% 90 116% 113% ▬ Net stable funding ratio (%) 120% 111% 80 ▬ Group loan-deposit ratio (%) 100% 86.9% 85.1% 87.0% 87.3% 88.7% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 72.3% 62.6% 61.6% 66.3% 50 60.4% 40% 360% 343% 40 20% 321% Liquidity coverage rat
Slide 51: Dividends in line with stable earnings and strong capital position
Dividends in line with stable earnings and strong capital position Net dividend per ordinary share (¢) 20 Special 60 55 Final 39 55 60 60 Interim 39 2019 2020 2021 2022 Payout amount (SGD m) 2,171 1,304 2,011 1,005 Payout ratio (%) 50 451 49 50 Payout ratio (excluding special 42 451 49 50 divi
Slide 52: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — Investor Presentation (September 2022) on 6ix