United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (August 2014)

41 slides from United Overseas Bank's investor presentation, August 2014

  1. Slide 1: UOB Group: Strong Fundamentals with Record Earnings, Managing Risks for Stable Growth

    UOB Group Strong Fundamentals with Record Earnings, Managing Risks for Stable Growth August 2014 Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form an

  2. Slide 2: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 2

  3. Slide 3: UOB Overview

    UOB Overview Founding Key Statistics Founded in August 1935 by a group of Chinese businessmen ■ Total assets : SGD297.0b (USD237.9b) and Datuk Wee Kheng Chiang, grandfather of the present ■ Shareholder’s equity : SGD28.1b (USD22.5b) UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD193.1b (USD154.

  4. Slide 4: Leading Singapore Bank With Established Franchise In Core Market Segments

    Leading Singapore Bank With Established Franchise In Core Market Segments Group Retail Group Wholesale Banking Global Markets and Investment Management (GMIM)  Best Retail Bank in Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards

  5. Slide 5: Proven Track Record Of Execution

    Proven Track Record Of Execution  UOB Group’s management has demonstrated strong track record in steering the Group through various global events and crises. Achieved record NPAT of SGD3,008 million in 2013  Stability of management team ensures consistent execution of strategies  Disciplined mana

  6. Slide 6: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with 500+ Offices Profit before Tax and Intangibles by Region (SGD m) GREATER CHINA 24 offices + c.14% in 252 THAILAND Evergrowing Bank 21 157 offices 222 272 184 178 VIETNAM 31% of 156 118 146 1 office + c.20% in 105 180 MALAYSIA Gro

  7. Slide 7: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 7

  8. Slide 8: Singapore to Grow 3.5% in 2014, Amidst Current Economic Restructuring

    Singapore to Grow 3.5% in 2014, Amidst Current Economic Restructuring  Singapore’s electronics manufacturing sector expected to face considerable headwinds in 2014, although transport engineering, Slower-Than-Expected Pickup In External Sectors chemicals and biomedical manufacturing sectors are lik

  9. Slide 9: Resilient Key Markets: Not a Repeat of the Asian Financial Crisis

    Resilient Key Markets: Not a Repeat of the Asian Financial Crisis  The key Southeast Asian markets’ long-term growth and economic prospects remain stable despite recent market volatilities  Compared to 1997, they have: ‒ Significantly higher levels of foreign reserves ‒ Healthier current account a

  10. Slide 10: SEA Banking Sector: Strong Fundamentals Remain Intact

    SEA Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Robust Capital Positions  There has been a resurgence in loan demand after the deleveraging of (Tier 1 CAR, in %) ASEAN banks during the Global Financial Crisis — Singapore banks have stable loan-to-deposit ratios and healthy

  11. Slide 11: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 11

  12. Slide 12: Strong UOB Fundamentals

    Strong UOB Fundamentals Strong Management  Proven track record in steering the bank through various global events and crises with Proven Track Record  Stability of management team ensures consistent execution of strategies  Delivered record NPAT of SGD1,596m in 1H14, driven by healthy loans growt

  13. Slide 13: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography Gross Customer Loans by Currency 6% 9% 7% 2% 3% SGD Singapore 5% 5% Malaysia USD Thailand 13% MYR Indonesia THB 14% 55% Greater China IDR 65% Others Others 16% Gross Customer Loans by Maturity Gross Customer Loans by Industry Transport, st

  14. Slide 14: Competitive Against Peers

    Competitive Against Peers Bank Financial Strength Efficient Cost Management B B B Bank Financial Strength 92.0% 63.4% Cost/Income Ratio B- 64.4% 70.0% C C C 58.6% 56.8% 44.0% 54.7% 48.6% C- C- C- C- 42.4% 43.4% D+ 38.0% OCBC HSBC JPM CIMB Citi Maybank UOB DBS SCB Bank BCA BOA Bangkok Bank Citi OCBC

  15. Slide 15: Strong Capitalisation Levels and Low Leverage

    Strong Capitalisation Levels and Low Leverage Total CAR, Tier 1 CAR, Common Equity Tier 1 17.8 17.4 17.3 17.2 17.016.1 15.7 14.7 14.8 15.4 15.3 15.3 14.8 (Total CAR, 13.913.9 14.7 14.8 16.1 13.5 12.5 12.8 12.4 11.8 13.5 12.3 12.5 11.1 Tier 1 CAR, 11.3 12.0 11.1 11.4 10.5 11.0 9.6 10.6 9.8 Common Equ

  16. Slide 16: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Ratings Aa1 / Stable / P-1 AA-/Stable/A-1+ AA- / Stable / F1+  ‘…Strong and valuable business franchise’  Prudent management team… expect the bank  ‘Ratings reflect its strong domestic franchise,  ‘Long experience in serving to continue its emphasis on fund

  17. Slide 17: Robust Risk Management Framework

    Robust Risk Management Framework  Operate under strict regulatory regime ; prudential standards in line with global best practices  Strong risk culture; do not believe in achieving short-term gains at the expense of long–term interests  Focused on businesses which we understand and are well-equip

  18. Slide 18: Managing Risks for Stable Growth

    Managing Risks for Stable Growth  Prudent approach has been key to Group Risk Appetite Statement (GRAS) delivering sustainable returns over the years Manage  Institutionalised framework concentration risk through GRAS – Outline risk and return objectives Maintain to guide strategic decision making

  19. Slide 19: Resilient Asset Quality; High Impairment Coverage

    Resilient Asset Quality; High Impairment Coverage Stable NPL Ratio Consistently High Impairment Coverage (In SGD m) (In SGD m) 298.9% 316.3% 305.1% 264.3% 270.6% 144.8% 150.5% 160.2% 149.2% 139.4% 1.2% 1.2% 1.2% 1.1% 1.1% 779 834 806 798 855 594 570 601 587 598 597 541 571 462 474 2,548 2,611 2,145

  20. Slide 20: Focusing on Preserving Balance Sheet Strength

    Focusing on Preserving Balance Sheet Strength  Building customer franchise Strengthening our Balance Sheet – Focusing on target segments within key markets Assets 11% 4% 5% 7% 9%  Focusing on stable funding base 6% 10% and optimising funding sources in 8% 55% 10% 64% 1H 2014 11% – Increased commer

  21. Slide 21: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 21

  22. Slide 22: Our Growth Drivers

    Our Growth Drivers Realise Full  Provides us with ability to serve expanding regional needs of our customers Potential of our  Improves operational efficiency, enhances risk management, seamless customer Integrated Platform experience and faster time to market  Global macro environment remains un

  23. Slide 23: Milestone in Regionalisation

    Milestone in Regionalisation ■ Harnessing potential of regional network through an integrated platform Full Rollout of Integrated Regional Platform – Completion of platform at end-2013 ■ Integrated regional platform to bring: – Improved productivity and operational efficiency – Quicker speed to mark

  24. Slide 24: Capitalising on Rising Intra-Regional Flows

    Capitalising on Rising Intra-Regional Flows ■ Robust growth in customer base and Growing Number of Intra-Regional Deals cross-border loans over last 3 years +148% ■ Strengthened in-market teams and capabilities to serve customers’ regionalisation needs +51% ■ Broadening and deepening product capabil

  25. Slide 25: Making Good Progress in Transaction Banking

    Making Good Progress in Transaction Banking ■ Offer end-to-end solutions Trade Loans Deposits ranging from cash, trade and +89% CAGR +10% supply chain financing across +14% 41% 33% our network CAGR 36% Overseas 30% 30% 33% +37% 48% 26% ■ Strong increase in trade loans, 41% 44% spurred by intra-regio

  26. Slide 26: Capturing Rising Asian Consumer Affluence

    Capturing Rising Asian Consumer Affluence  From FY2010 to June 2014, Growing Regional Wealth Management Profit Contribution — Grew wealth management AUM from $48bn to $76bn CAGR +23% 30% — Expanded customer base from +27% 100,000 to 183,000 27% 20% 26% 30% — Increased regional wealth Region 26% 31%

  27. Slide 27: Why UOB?

    Why UOB? Stable  Proven track record in steering the bank through various global events and crises Management  Stability of management team ensures consistent execution of strategies  Entrenched local presence. Ground resources and integrated regional network Integrated allow us to better address

  28. Slide 28: Agenda

    Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 28

  29. Slide 29: 1H14 Financial Overview

    1H14 Financial Overview Net Profit After Tax1 (NPAT) Movement, 1H14 vs 1H13 (SGD m) 132 255 65 121 48 1,596 1,505 102 56 +12.9% -7.3% +29.5% +8.5% +49.7% -44.7% -15.6% +6.1% 1H13 NPAT Net Interest Fee income Other non- Expenses Impairment Share of profit Tax & Minority 1H14 NPAT Income interest inco

  30. Slide 30: 2Q14 Financial Overview

    2Q14 Financial Overview Net Profit After Tax1 (NPAT) Movement, 2Q14 vs 1Q14 (SGD m) 122 7 788 15 31 17 808 4 72 +1.3% -0.9% +53.3% +4.2% -4.7% -38.8% 76.3% +2.5% 1Q14 NPAT Net Interest Fee income Other non- Expenses Impairment Share of profit Tax & Minority 2Q14 NPAT Income interest income Charges o

  31. Slide 31: Record NII driven by Healthy Loans Growth

    Record NII driven by Healthy Loans Growth Net Interest Income (NII) and Margin 2.41% 2.29% 2.13% 2.10% 2.10% 2.12% 2.06% 2.06% 2.05% 1.92% 1.87% 1.72% 1.72% 1.71% 1.71% 1.74% 1.73% 1.71% 0.97% 0.91% 0.87% 0.73% 0.77% 0.85% 0.90% 0.84% 0.76% 4,120 1,095 1,110 1,124 3,917 1,046 3,678 1,016 538 152 167

  32. Slide 32: Non-Interest Income Lifted by Trading & Invt Income

    Non-Interest Income Lifted by Trading & Invt Income Non-Interest Income (Non-NII) and Non-NII Ratio 39.7% 38.7% 38.6% 35.5% 38.2% 40.3% 37.1% 37.1% 36.7% 25.8% 23.1% 23.2% 22.7% 26.6% 24.4% 25.0% 23.6% 21.8% 2,578 2,600 760 2,021 870 647 1,070 628 618 642 703 1,402 350 191 211 212 228 578 1,508 1,73

  33. Slide 33: Fee Income Stable Quarter-on-Quarter

    Fee Income Stable Quarter-on-Quarter Breakdown of Fee Income (SGD m) (SGD m) 1,731 1,508 268 1,318 66 256 111 62 435 436 410 249 107 407 414 442 11 17 100 824 10 12 11 68 70 389 72 66 69 23 26 30 27 27 26 370 134 53 103 113 101 99 93 420 200 208 321 172 112 101 101 97 98 129 211 114 43 37 39 32 38 2

  34. Slide 34: Disciplined Cost Management

    Disciplined Cost Management Operating Expenses and Expense / Income Ratio 44.2% 43.8% 43.0% 43.1% 42.4% 43.0% 43.1% 42.3% 41.7% 2,898 2,747 2,450 1,186 1,151 1,047 1,542 762 755 787 726 715 631 315 301 331 303 288 1,597 1,712 1,403 911 423 427 447 454 456 2011 2012 2013 1H14 2Q13 3Q13 4Q13 1Q14 2Q14

  35. Slide 35: Total Loans Charge-off Rate Relatively Stable

    Total Loans Charge-off Rate Relatively Stable Impairment Charges on Loans 30bps 30bps 30bps 32bps 30bps 30bps 30bps 32bps 32bps 10bps 30bps 19bps 12bps 8bps 9bps 11bps 2bps (0)bps 93 454 51 41 163 136 91 11 -2 2011 2012 2013 1H14 2Q13 3Q13 4Q13 1Q14 2Q14 Individual Impairment Charges on Loans (SGD m

  36. Slide 36: Healthy Loans Growth

    Healthy Loans Growth QoQ YoY 1H14 2Q14 1Q14 +/(-) 2Q13 +/(-) Gross Loans SGD b SGD b % SGD b % 8% 5% Singapore 126.1 123.1 2.5 113.7 10.9 3% Regional: 56.7 55.1 2.9 49.4 14.6 5% Malaysia 26.5 25.9 2.6 24.4 8.6 14% Thailand 10.0 9.9 0.6 9.2 9.3 65% Indonesia 5.7 5.9 (3.3) 5.9 (2.6) Greater China 14.4

  37. Slide 37: Stable Liquidity Position

    Stable Liquidity Position Customer Loans, Deposits and L/D Ratio 87.8% 85.3% 84.0% 85.5% 83.4% 206.5 214.5 216.6 216.1 199.3 189.7 178.9 185.3 169.9 173.5 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Net Customer Loans (SGD b) Customer Deposits (SGD b) Loans / Deposits (L/D) Ratio (%) Note: Definition of ‘Cus

  38. Slide 38: Robust Credit Quality; NPL Ratio Stable at 1.2%

    Robust Credit Quality; NPL Ratio Stable at 1.2% NPL ($m) 2,152 2,107 2,074 2,077 2,309 NPL Ratio 1.2% 1.2% 1.1% 1.1% 1.2% 524 613 589 531 537 30 149 43 30 29 29 141 124 88 105 256 203 211 210 201 431 392 411 414 397 812 919 748 771 781 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Singapore Malaysia Thailand I

  39. Slide 39: Strong Impairment Coverage

    Strong Impairment Coverage Consistently High Impairment Coverage 298.9% 316.3% 305.1% 264.3% 270.6% 144.8% 150.5% 160.2% 149.2% 139.4% 834 779 806 798 865 2,548 2,611 2,244 2,323 2,145 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Collective Impairment ($m) Individual Impairment ($m) Cumulative Impairment / To

  40. Slide 40: Capital Ratios Remained Strong

    Capital Ratios Remained Strong Basel III 17.2% 16.3% 16.6% 17.7% 17.8% Total CAR 3.7% 3.9% 3.6% 3.4% 3.4% Tier 2 CAR 13.6% 14.0% 13.9% 12.9% 13.2% Tier 1 / CET1 CAR Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 SGD b Common Equity Tier 1 Capital 21 21 22 23 23 Tier 1 Capital 21 21 22 23 23 Total Capital 26 26

  41. Slide 41: Stable Dividend Payout

    Stable Dividend Payout 5 10 50 40 40 20 20 20 20 2011 2012 2013 1H14 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 944 1,102 1,182 320 Payout ratio (%) 41 39 39 20 41

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