United Overseas Bank Limited · SGX:U11

United Overseas Bank — DB Access Asia Conference 2017

55 slides from United Overseas Bank's conference presentation, May 2017

  1. Slide 1: UOB Group: Sound Operating Performance and Balance Sheet Position

    UOB Group Sound Operating Performance and Balance Sheet Position May 2017 Discla imer: Th is mater ial that follo ws is a prese ntat io n of genera l ba ckgrou nd informat ion ab out the Ba nk’s act ivities current at the date of the present at ion. It is informat ion g ive n in summary form and doe

  2. Slide 2: Agenda

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

  3. Slide 3: Overview of UOB Group

    Overview of UOB Group HtUOB

  4. Slide 4: UOB Overview

    UOB Overview Founding Key Statistics for 1Q17 Founded in August 1935 by a group of Chinese ■ Total assets : SGD342b (USD245.2b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD34b (USD24.2 b1) grandfather of the present UOB Group CEO, Mr. ■ Gross loans : SGD229b (USD164.0b1) Wee

  5. 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 Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards and  Seamless access to regional

  6. 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

  7. Slide 7: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with c.500 Offices Profit Before Tax by Region (SGD m) MYANMAR GREATER CHINA 2 offices 27 offices1 VIETNAM 39% of THAILAND 1 office Group PBT 155 offices 324 367 301 PHILIPPINES 252 305 366 300 1 office 272 99 61 71 MALAYSIA 178 159 1

  8. Slide 8: Macroeconomic Outlook

    Macroeconomic Outlook {itt VOB

  9. Slide 9: China's Growth Slower but Low Risk of Hard Landing

    China’s Growth Slower but Low Risk of Hard Landing  While China’s GDP growth rate is slowing, the annual increase in absolute GDP has been stable.  The Chinese economy has its underlying momentum, supported by rebalancing reforms and steady job market.  Low central government debt underpins China

  10. Slide 10: Brexit Impact on Asian Markets via Trade and Investment Channels

    Brexit Impact on Asian Markets via Trade and Investment Channels  It is a challenge to quantify Brexit effects with EU & UK Export Mix of Selected Partners (2015) certainty at this stage.  The immediate impact on Asian economies is likely 19% to be limited and shallow, considering the low export 1

  11. Slide 11: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17f 3Q17f 4Q17f 1Q18f US 10-Year 2.27 1.77 1.47 1.59 2.44 2.39 2.75 2.80 3.00 3.00 Treasury US Fed Funds 0.50 0.50 0.50 0.50 0.75 1.00 1.25 1.50 1.50 1.75 SG 3M SOR 1.70 0.80 0.81 0.67 1.01 0.88 1.15 1.35 1.40 1.60 MY Overnight Pol

  12. Slide 12: Southeast Asia: Resilient Key Markets

    Southeast Asia: Resilient Key Markets Significantly Higher Foreign Reserves Healthier Current Account Balances (USD billion) (% of GDP) 253 19.3 179 15.2 117 96 75 7.7 30 24 26 1.5 Singapore Thailand Indonesia Malaysia –2.0 –1.8 –2.3 1998 2017 (latest available) –5.9 Singapore Malaysia Thailand Indo

  13. Slide 13: Manufacturing Sector to Continue To Lead Singapore GDP in 2017

    Manufacturing Sector to Continue To Lead Singapore GDP in 2017  Advance 1Q17 GDP growth was at 2.5% yoy (4Q16: Neutral Stance Adopted since April 2016 +2.9%), supported mainly by robust expansion in the electronics and precision engineering clusters, and 133 some improvement in the services sector.

  14. Slide 14: Southeast Asia Banking Sector: Strong Fundamentals Remain Intact

    Southeast Asia Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Higher NIM in Lightly Penetrated Markets  Southeast Asian banks have healthy capital and funding (Net interest margin and private-sector credit / GDP, in %) levels 6.7 — Singapore banks have among the highest capita

  15. Slide 15: Conducive Macro Conditions Underpin Singapore Property Market

    Conducive Macro Conditions Underpin Singapore Property Market Regional House Price Indices over Last 10 Years Low Unemployment vs Global Peers (4Q06 = 100) (%) HK, 327 7.7 EU, 8.2 MY, 215 4.4 US, 4.7 AU, 169 CH, 4.0 SG, 147 HK, 3.1 100 SG, 1.9 TH, 116 2.6 4Q06 4Q08 4Q10 4Q12 4Q14 4Q16 2006 2008 2010

  16. Slide 16: Revenue Potential from 'Connecting the Dots' in the Region

    Revenue Potential from ‘Connecting the Dots’ in the Region Estimated Size of Connectivity Revenue Potential Revenue in 2020 by Country Partners (SGD b) (SGD b) CAGR c$53b c$11b +6% Total Singapore Thailand c$2b c$2b c$37b c$7b +6% Hong Wealth Kong c$8b c$3b c$5b Malaysia Others Trade c$4b c$29b c$35

  17. Slide 17: Basel III across the Region

    Basel III across the Region BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15 Jan-15 Jan-15 Jan-13 Jan-14

  18. Slide 18: Banking Regulations Still Evolving

    Banking Regulations Still Evolving 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Basel III capital Phased-in Full ratios Leverage ratio Disclosure phase tbf7 LCR1 Phased-in Full NSFR2 tbf7 SACCR3 Start FRTB4 Start TLAC5 Phased-in Full Basel IV6 Evolving IFRS 9 Start Banks need to be profitable i

  19. Slide 19: Strong UOB Fundamentals

    tit UOB Strong UOB Fundamentals 19

  20. Slide 20: Strong UOB Fundamentals

    Strong UOB Fundamentals Strong  Proven track record in steering the bank through various global events and Management with crises Proven Track Record  Stability of management team ensures consistent execution of strategies Consistent and  Steady income growth trajectory year-on-year, despite an u

  21. Slide 21: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Singapore Others Others 55% SGD 10% IDR 13% 49% Greater 2% China THB 13% 6% Indonesia 5% MYR 10% Thailand 6% Malaysia USD 11% 20% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professi

  22. Slide 22: Competitive Against Peers

    Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA1 Liquidity Moody’s S&P Fitch Moody’s baseline Costs/income Return on average Loan/deposit credit assessment ratio assets1 ratio Aa1 AA– AA– UOB a1 45.1% 0.95% 86.7% Aa1 AA– AA– OCBC a1 43.3% 1.12

  23. Slide 23: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 23.4 22.4 22.4 21.3 20.1 19.3 (Common Equity 18.3 17.3 16.6 16.5 16.5 16.5 16.5 16.4 16.1 15.7 15.7 15.4 14.7 14.6 14.5 14.4 14.2 Tier 1 CAR; 14.0 13.8 13.7 13.6 13.6 13.3 13.2 12.9 12.8 12.5 12.5 11.5 11.3 1

  24. Slide 24: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Aa1/Stable/P-1 AA– /Stable/A-1+ AA– /Stable/F1+  ‘Very strong buffers of capital, loan loss  ‘Prudent management team…emphasis on funding  ‘Ratings reflect its strong domestic franchise, provisions and pre-provision income’ and capitalisation to buffer again

  25. Slide 25: Robust Risk Management Framework

    Robust Risk Management Framework  Operate under strict regulatory regime; prudential rules in line with global best practices  Strong risk culture; focus beyond long-term sustainability, beyond gains in short-term Robust  Focused on businesses which we understand and are well-equipped to manage R

  26. Slide 26: Managing Risks for Stable Growth

    Managing Risks for Stable Growth  Prudent approach has been key to delivering sustainable returns over the years Manage concentration risk  Institutionalised framework through Group Risk Appetite Maintain Statement (GRAS): Nurture core balance talent sheet – Outlines risk and return strength objec

  27. Slide 27: Stable Asset Quality; High Allowances Coverage

    Stable Asset Quality; High Allowances Coverage Largely Stable NPL Ratio High Allowances Coverage 4,500 1.6% 2.0% 1.4% 1.4% 1.5% 1.5% 6,000 200% 133.2% 125.6% 118.0% 118.1% 4,000 112.4% 100% 3,500 1.0% 1.5% 5,000 1.5% 1.4% 1.2% 1.1% 615 0% 3,000 1,025 1,194 4,000 530 586 517 0.0% -100% 2,500 350 751

  28. Slide 28: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Portfolio quality broadly stable Countercyclical Approach to General Allowances (SGDm) – NPL ratio up slightly at 1.5% 80 204 – High general allowances-to-loans ratio of 460 359 1.2% 358 – 32bps total credit costs maintained 2,709 1,964 SGD1.1bn  Proactive lia

  29. Slide 29: Our Growth Drivers

    itt UOB Our Growth Drivers 29

  30. Slide 30: Our Growth Drivers

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

  31. Slide 31: Wholesale Banking: Steady Franchise Growth; Broader Portfolio Quality Sound

    Wholesale Banking: Steady Franchise Growth; Broader Portfolio Quality Sound Wholesale Banking Business  Wholesale Banking’s loans and income up in 2016 Gross Loans (SGDbn) Total Income (SGDm) +10% +6% +10% 4500 +10% +13% +3% 2.40% YoY YoY YoY 4000 YoY YoY YoY  Bottom line dampened by higher allowa

  32. Slide 32: Group Transaction Banking: Stable Income Contributor

    Group Transaction Banking: Stable Income Contributor Trade Loans Deposits  Cash management increasing in CAGR CAGR significance +12% +16% 33%  Healthy growth in trade loans 37% 35% with focus on increasing client 39% 40% 30% 33% 41% wallet share 59% 63% 61% 60% 70% 67% 65% 67%  Continue to draw h

  33. Slide 33: Retail Banking: Growing Income with Stable Asset Quality

    Retail Banking: Growing Income with Stable Asset Quality  Housing loans a key driver for Retail Group Retail Business Banking’s1 loan growth in 2016; regional Gross Loans (SGDbn) Total Income (SGDm) housing loans +11% YoY +8% +3% +7% +9% +11% +9% – Asset quality remains stable YoY YoY YoY YoY YoY Y

  34. Slide 34: Digitalisation: Enriching Customer Experience

    Digitalisation: Enriching Customer Experience Examples of UOB’s digital initiatives Connectivity • Security token embedded in smartphone • Instant digital credit card issuance • Contactless ATM Ecosystem partners • hiLife and MGG • cloudBuy • BizSmart • FinLab • OurCrowd • Innoven Capital Innovation

  35. Slide 35: Why UOB?

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

  36. Slide 36: Latest Financials

    itt UOB Latest Financials 36

  37. Slide 37: FY16 Financial Overview

    FY16 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY16 vs FY15 (SGD m) 65 48 98 99 78 84 21 3,209 –3.5% 3,096 +1.3% +2.5% –7.9% +2.8% –11.6% –93.4% +3.2% FY15 net Net interest Fee income Other non- Expenses Total Share of Tax and FY16 net profit after income interest allowances profit o

  38. Slide 38: 1Q17 Financial Overview

    1Q17 Financial Overview Net Profit After Tax1 (NPAT) Movement, 1Q17 vs 4Q16 (SGD m) 89 0 55 55 25 28 23 739 +9.3% 807 +2.2% –4.2% +40.0% +0.0% +42.8% >100.0% +14.2% 4Q16 net Net interest Fee income Other non- Expenses Total Share of Tax and 1Q17 net profit after income interest allowances profit of

  39. Slide 39: Net Interest Income Rose on Growth in Loans and Margins

    Net Interest Income Rose on Growth in Loans and Margins Net Interest Income (NII) and Margin 9,000 2,200 3.00% 2.36% 3.00% 2.12% 2.26% 2.20% 2.23% 2.13% 2.09% 2.14% 2.06% 8,000 2,000 2.00% 2.00% 1.72% 1.71% 1.77% 1.71% 1.78% 1.68% 1.69% 1.69% 1.73% 1,800 1.00% 1.00% 7,000 0.76% 0.82% 0.50% 1,600 0.0

  40. Slide 40: Loans up 9% YoY and 2% QoQ

    Loans up 9% YoY and 2% QoQ QoQ YoY Mar-17 Dec-16 +/(–) Mar-16 +/(–) Gross Loans 1 SGD b SGD b % SGD b % By Geography Singapore 125.1 125.5 –0.4 117.8 +6.2 Regional: 80.6 78.1 +3.2 72.4 +11.4 Malaysia 25.6 25.8 –0.7 25.5 +0.3 Thailand 13.7 13.2 +3.4 11.4 +20.2 Indonesia 11.4 11.9 –3.7 10.9 +4.7 Great

  41. Slide 41: Steady Non-Interest Income Mix Underpins Diversity

    Steady Non-Interest Income Mix Underpins Diversity Non-Interest Income (Non-NII) and Non-NII Ratio 50.0% 50.0% 38.7% 38.9% 38.8% 38.1% 40.2% 39.7% 38.6% 5,000 1400 40.0% 35.3% 37.1% 40.0% 25.8% 23.5% 23.4% 24.0% 30.0% 26.2% 1200 22.0% 23.4% 24.1% 24.0% 30.0% 4,000 20.0% 20.0% 1000 3,122 3,071 10.0%

  42. Slide 42: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 1,931 531 508 93 492 25 1,731 1,749 74 500 475 23 1,800 59 20 68 114 258 263 433 21 66 1,600 67 273 27 66 39 268 121 134 37 400 33 1,400 63 113 31 111 1,200 498 482 31 134 114 300 114 124 490 1,000 504 110 800 110 41

  43. Slide 43: Staff Costs Tightly Managed as IT Investments Continue

    Staff Costs Tightly Managed as IT Investments Continue Operating Expenses and Expense / Income Ratio 44.7% 45.9% 50.0% 45.4% 45.8% 47.2% 45.1% 50.0% 43.1% 45.0% 42.2% 5,000 1400 40.0% 40.0% 1200 4,000 3,696 30.0% 30.0% 3,597 1000 927 957 957 894 918 3,146 2,898 20.0% 20.0% 3,000 1,291 1,360 800 329

  44. Slide 44: IT Investments Geared towards Products and Digital Capabilities

    IT Investments Geared towards Products and Digital Capabilities IT investments over 2014-2016 (cSGD0.7b) Security, 4% Increase in Fee and Trading Capabilities Global Market Platform Customer flow income: +8%1 Regulatory, 17% Cash Management Product Data mobility/ capabilities, Transaction banking in

  45. Slide 45: Exposure to Commodities

    Exposure to Commodities Oil and gas As of Traders/ Other commodity Upstream Total 31 Mar 2017 downstream segments industries2 industries Total exposure1 SGD5.2b SGD12.5b SGD10.5b SGD28.2b Outstanding SGD4.6b SGD7.3b SGD7.5b SGD19.4b loans 5% of total loans 8.5% of total loans  Total exposure, inclu

  46. Slide 46: Formation of Non-Performing Assets Has Eased in 4Q16

    Formation of Non-Performing Assets Has Eased in 4Q16 1Q16 2Q16 3Q16 4Q16 1Q17 SGD m SGD m SGD m SGD m SGD m NPA at start of period 3,066 3,016 3,164 3,632 3,480 New NPA 344 802 780 387 424 Upgrades, recoveries and (235) (548) (201) (320) (293) translations Write-offs (159) (106) (111) (219) (68) NPA

  47. Slide 47: NPL Ratio Stable at 1.5%, with NPLs Mainly from Singapore and Indonesia

    NPL Ratio Stable at 1.5%, with NPLs Mainly from Singapore and Indonesia NPL ratio 1.4% 1.4% 1.6% 1.5% 1.5% NPLs1 (SGD m) 2,841 3,056 3,496 3,328 3,399 3,600 255 245 257 3,100 303 206 307 304 Others 176 2,600 401 565 638 623 158 564 Greater China 293 2,100 370 564 264 360 466 Indonesia 1,600 250 451

  48. Slide 48: Easing Specific Allowances; Total Credit Costs Stable

    Easing Specific Allowances; Total Credit Costs Stable Allowances on Loans 57bp from 36bp from 2000 800 existing NPLs existing NPLs 100bp 100bp 1800 700 76bp 1600 45bp 53bp 49bp 30bp 32bp 32bp 50bp 600 32bp 32bp 50bp 1400 32bp 500 32bp 32bp 32bp 1200 25bp 23bp 19bp 0bp 0bp 8bp 12bp 1000 400 800 300 (

  49. Slide 49: Countercyclical Approach in General Allowance Supports High Reserve Cover

    Countercyclical Approach in General Allowance Supports High Reserve Cover Total 150.0% 133.2% 125.6% 112.4% 118.0% 118.1% Allowances / Total NPL (%) 100.0% General 50.0% Allowances / Gross Loans 0.0% net of Specific 1.5% 1.5% 1.4% 1.2% 1.1% Allowances (%) -50.0% 4,500 4,000 Specific Allowances 3,500

  50. Slide 50: Exposure to China

    Exposure to China Total as of 31 Mar Bank exposure in China 2017 = SGD25.0b  98% with <1 year tenor or 7.3% of total assets  Around 77% accounted for by top 5 domestic banks and policy banks  Trade exposures mostly with bank counterparties, Bank, representing slightly more than half of bank expos

  51. Slide 51: Exposure to Europe

    Exposure to Europe As of As a % of Non-bank Bank Debt securities Total 31 Mar 2017 total assets Europe SGD3.5b SGD3.5b SGD1.0b SGD8.0b 2.3% of which UK SGD2.4b SGD0.8b SGD0.2b SGD3.4b 1.0% Minimal direct impact from Brexit  Bulk of UK non-bank exposure is secured and denominated in GBP  Consumer m

  52. Slide 52: Stable Liquidity Position

    Stable Liquidity Position Customer Loans and Deposits; Loan/Deposit Ratios (LDR); and Liquidity Coverage Ratios (LCR) All-currency LCR (%) 139% 167% 148% 162% 154% SGD LCR (%) 169% 224% 213% 275% 232% 95.0% 88.1% 91.9% 89.7% 89.7% 87.8% SGD LDR (%) 85.0% 85.0% 86.8% 86.7% 84.0% Group LDR (%) 75.0% 8

  53. Slide 53: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.4% 7.5% 7.4% 7.6% 7.0% Leverage ratio 1 5.0% Total CAR 2 20.0% 16.0% 15.9% 16.6% 16.2% 17.3% 0% 18.0% 16.0% 3.5% -20000% Tier 2 CAR 2 3.2% 2.7% 3.1% 3.1% 14.0% 0.6% 0.1% 0.1% 0.1% Tier 1 CAR 2 12.0% -40000% 10.0% 8.0% -60000% CET1 CAR 2 6.0% 12.8% 13.1% 13.4% 13.

  54. Slide 54: Stable Dividend Payout

    Stable Dividend Payout 20 5 5 35 35 50 50 35 35 20 20 2013 2014 2015 2016 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,182 1,201 1,444 1,135 Payout ratio (%) 39 37 45 37 Note: The Scrip Dividend Scheme was applied to the final and special div

  55. Slide 55: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — DB Access Asia Conference 2017 on 6ix