United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (November 2017)

56 slides from United Overseas Bank's investor presentation, November 2017

  1. Slide 1: UOB Group

    UOB Group Steady Growth in Client Franchise Income, supported by Sound Balance Sheet November 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

  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 9M17 Founded in August 1935 by a group of Chinese ■ Total assets : SGD354b (USD261b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD35b (USD26b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD234b (USD172

  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 42% of PHILIPPINES 252 Group PBT 305 366 300 1 office 272 99 61 71 M

  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 still a challenge to quantify Brexit effects with EU & UK Export Mix of Selected Partners (2016) certainty at this stage.  The immediate impact on Asian economies is likely 19% to be limited and shallow, considering the low ex

  11. Slide 11: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17f 1Q18f 2Q18f 3Q18f 4Q18f US 10-Year 1.59 2.44 2.39 2.30 2.38 2.80 2.90 3.00 3.20 3.30 Treasury US Fed Funds 0.50 0.75 1.00 1.25 1.25 1.50 1.75 2.00 2.00 2.25 SG 3M SOR 0.67 1.01 0.86 0.75 1.01 1.30 1.40 1.50 1.50 1.65 MY Overnight Po

  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) 273 19.6 190 15.2 129 102 10.1 75 30 24 26 2.4 Singapore Thailand Indonesia Malaysia –2.0 –1.8 –1.7 1998 2017 (latest available) –5.9 Singapore Malaysia Thailand In

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

    Manufacturing Sector to Continue To Lead Singapore GDP in 2017  Advance 3Q17 GDP growth was at 4.6% yoy (1H17: MAS Maintained Neutral Stance in Oct 2017 +2.7%), supported mainly by robust expansion in the electronics and precision engineering clusters, and 129 Easing #1 Easing #2 Easing #3 No chang

  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 (Net interest margin and private-sector credit / GDP, in %)  Southeast Asian banks have healthy capital and funding levels 6.6 6.6 — Singapore banks have among the highest ca

  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 (3Q07 = 100) (%) HK, 323 7.8 EU, 8.2 MY, 208 4.4 US, 4.7 AU, 168 CH, 4.0 HK, 3.1 100 SG, 120 SG, 2.2 TH, 119 2.8 3Q07 3Q09 3Q11 3Q13 3Q15 3Q17 2006 2008 2010

  16. Slide 16: 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 (2020) (SGD b) (SGD b) CAGR c$53b Markets where UOB has a presence c$11b +6% Total Singapore Thailand c$2b c$2b c$37b c$7b +6% Hong Wealth Kong c$8b c$3b c$5

  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 Start LCR1 Phased-in Full NSFR2 Start SACCR3 Start FRTB4 Start TLAC5 Phased-in Full Basel IV6 Evolving IFRS 9 Start Banks need to be profitable

  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 Others Singapore Others Greater 11% 54% IDR 14% China SGD 2% 49% 13% THB 6% Indonesia 5% MYR 10% Thailand 6% Malaysia USD 11% 19% 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 44.7% 0.99% 85.8% Aa1 AA– AA– OCBC a1 42.3% 1.18

  23. Slide 23: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 24.0 23.1 23.1 21.3 21.0 19.0 18.7 (Common Equity 17.8 17.4 17.0 17.0 16.9 16.8 16.3 16.2 15.6 15.2 15.1 14.8 14.8 14.6 14.6 14.6 14.3 14.2 Tier 1 CAR; 14.0 14.0 13.8 13.6 13.4 13.3 13.1 13.0 12.4 12.1 11.9 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: Embarking on Journey of Sustainability Reporting

    Embarking on Journey of Sustainability Reporting Highly Material Factors Material Factors Important Factors 2016 Annual Report in accordance to Global Reporting Initiatives’ (GRI) G4 guidelines and select indicators from GRI’s Financial Services Sector Disclosures paper. 27

  28. Slide 28: Stable Asset Quality; High Allowances Coverage

    Stable Asset Quality; High Allowances Coverage Largely Stable NPL Ratio High Allowances Coverage 4,500 1.6% 1.6% 2.0% 1.5% 1.5% 1.5% 6,000 200% 4,000 112% 118% 118% 114% 108% 100% 3,500 1.0% 1.4% 5,000 1.2% 1.1% 1.2% 1.1% 615 1,159 0% 3,000 1,025 1,194 1,179 517 4,000 0.0% -100% 2,500 435 975 270 25

  29. Slide 29: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Portfolio quality broadly stable Countercyclical Approach to General Allowances ($m) – NPL ratio stable at 1.5% $16m added 204 – High general allowances-to-loans 460 16 359 278 ratio of 1.2% 105 – Begin to build up general allowances, when possible 2,620 1,964

  30. Slide 30: Our Growth Drivers

    itt UOB Our Growth Drivers 30

  31. Slide 31: 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

  32. Slide 32: Wholesale Banking: Good Traction in Growing Customer Franchise

    Wholesale Banking: Good Traction in Growing Customer Franchise Wholesale Banking Business  Stable performance in 1H 2017, amidst cautious business climate Gross Loans ($bn) Total Income ($m) – Higher loans, with growing customer +10% +8% 4000 +3% 4.00% franchise YoY YoY 3500 YoY 3.50% 3000 0% 3.00%

  33. Slide 33: Group Transaction Banking: Stable Income Contributor

    Group Transaction Banking: Stable Income Contributor Trade Loans Deposits  Overall transaction banking income grew by 9% -6% CAGR +20% CAGR +42% YoY +2% YoY  Growth in trade revenue, driven by strong growth momentum in 35% 35% 33% 32% 33% 37% 39% 40% 39% 33% trade assets, despite competitive marke

  34. Slide 34: Retail Banking: Growing Income with Stable Asset Quality

    Retail Banking: Growing Income with Stable Asset Quality Group Retail1 Business  Housing loans in Singapore and in the region fared well Gross Loans ($bn) Total Income ($m) +9% – Asset quality remains stable +6% 4000 YoY 4.00% +7% YoY 3500 YoY 3000 +10% 3.00%  Business Banking a growing earnings d

  35. Slide 35: 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

  36. Slide 36: Customer-Centric Approach in Digital

    Customer-Centric Approach in Digital Rising Digital Adoption by Customers UOB’s Digital Roadmap Group’s Transaction volumes 58% 63% Jul 52% 2017 Launches UOB MyKey for use of 67% PayNow in social messaging apps Dec 2014 2015 2016 1H17 2016 Launches UOB Mighty Secure for Digital (Internet & mobile) u

  37. Slide 37: 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

  38. Slide 38: Latest Financials

    itt UOB Latest Financials 38

  39. Slide 39: 9M17 Financial Overview

    9M17 Financial Overview Net Profit After Tax1 (NPAT) Movement, 9M17 vs 9M16 (SGD m) 177 18 186 352 124 61 85 2,357 +8% 2,535 +9% +13% –2% +7% +27% >100.0% +17% 9M16 net Net interest Fee income Other non- Expenses Total Share of Tax and 9M17 net profit after income interest allowances profit of non-

  40. Slide 40: 3Q17 Financial Overview

    3Q17 Financial Overview Net Profit After Tax1 (NPAT) Movement, 3Q17 vs 2Q17 (SGD m) 52 34 31 21 41 5 2 845 +5% 883 +4% +7% –10% –2% +23% +20% +1% 2Q17 net Net interest Fee income Other non- Expenses Total Share of Tax and 3Q17 net profit after income interest allowances profit of non- profit after t

  41. Slide 41: 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% 3.00% 2.12% 2.26% 2.20% 2.13% 2.09% 2.14% 2.14% 2.15% 2.06% 8,000 2,000 2.00% 2.00% 1.72% 1.71% 1.77% 1.71% 1.69% 1.69% 1.73% 1.75% 1.79% 1,800 1.00% 1.00% 7,000 0.76% 0.82% 0.71% 0.82% 0.5

  42. Slide 42: Broad-based Increase in Loan Portfolio

    Broad-based Increase in Loan Portfolio QoQ YoY Sep-17 Jun-17 +/(–) Sep-16 +/(–) Gross Loans 1 SGD b SGD b % SGD b % By Geography Singapore 127 125 +1 120 +6 Regional: 84 79 +5 76 +10 Malaysia 26 26 – 26 +2 Thailand 14 14 +4 12 +17 Indonesia 11 12 –2 12 –3 Greater China 32 28 +13 26 +21 Others 23 23

  43. Slide 43: 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% 39.7% 38.6% 37.9% 5,000 1400 40.0% 37.1% 37.1% 40.0% 25.8% 23.5% 23.4% 24.0% 30.0% 26.2% 24.6% 1200 24.1% 24.0% 23.7% 30.0% 4,000 20.0% 20.0% 1000 3,122 3,071 10.0%

  44. Slide 44: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 600 1,931 551 2,000 1,883 531 508 517 18 1,749 74 93 492 1,731 25 500 23 21 68 59 258 263 20 114 68 66 66 273 67 35 1,500 268 121 134 39 400 37 36 113 33 111 122 498 482 134 102 114 490 300 124 1,000 504 136 143 416 403 110 126

  45. Slide 45: 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% 47.2% 45.1% 45.6% 50.0% 43.1% 45.0% 43.5% 42.2% 5,000 1400 40.0% 40.0% 1200 4,000 3,696 30.0% 30.0% 3,597 995 973 1000 957 957 918 3,146 2,898 20.0% 20.0% 3,000 1,291 1,360 800 349

  46. Slide 46: 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

  47. Slide 47: Exposure to Commodities

    Exposure to Commodities Oil and gas As of Traders/ Other commodity Upstream Total 30 Sep 2017 downstream segments industries2 industries Total exposure1 SGD4.3b SGD12.1b SGD9.9b SGD26.3b Outstanding SGD3.7b SGD7.2b SGD6.9b SGD17.8b loans 5% of total loans 8% of total loans  Total exposure, includin

  48. Slide 48: Rise in New Non-Performing Assets in 3Q17 Confined to Oil and Gas Sector

    Rise in New Non-Performing Assets in 3Q17 Confined to Oil and Gas Sector 3Q16 4Q16 1Q17 2Q17 3Q17 SGD m SGD m SGD m SGD m SGD m NPA at start of period 3,164 3,632 3,480 3,543 3,587 New NPA 780 387 424 537 799 Upgrades, recoveries and (201) (320) (293) (255) (369) translations Write-offs (111) (219)

  49. Slide 49: Broader Portfolio Quality Remained Intact, with NPL Ratio Stable at 1.6%

    Broader Portfolio Quality Remained Intact, with NPL Ratio Stable at 1.6% NPL ratio 1.6% 1.5% 1.5% 1.5% 1.6% NPLs1 (SGD m) 3,496 3,328 3,399 3,466 3,748 4,000 272 Others 3,500 255 285 244 245 257 303 261 3,000 307 304 608 Greater China 565 641 2,500 638 623 386 Indonesia 293 2,000 370 392 360 563 466

  50. Slide 50: Moderate Rise in Specific Allowances; Total Credit Costs Stable

    Moderate Rise in 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 32bp 32bp 50bp 600 32bp 37bp 50bp 30bp 1400 32bp 500 32bp 32bp 32bp 30bp 32bp 1200 19bp 0bp 0bp 8bp 12bp 1000 400

  51. Slide 51: Countercyclical Approach in General Allowance Supports High Reserve Cover

    Countercyclical Approach in General Allowance Supports High Reserve Cover Total 150% 112% 118% 118% 114% 108% Allowances / Total NPL (%) 100% General 50% Allowances / Gross Loans 0% net of Specific 1.4% 1.2% 1.1% 1.2% 1.1% Allowances (%) -50% 4,500 4,000 Specific Allowances 3,500 975 1,219 1,409 1,3

  52. Slide 52: Exposure to China

    Exposure to China Total as of 30 Sep Bank exposure in China 2017 = SGD29.7b  99% with <1 year tenor or 8% of total assets  Around 80% accounted for by top 5 domestic banks and policy banks  Trade exposures mostly with bank counterparties, Bank, representing close to half of bank exposure SGD19.3b

  53. Slide 53: Stable Liquidity Position

    Stable Liquidity Position Customer Loans and Deposits; Loan/Deposit Ratios (LDR); and Liquidity Coverage Ratios (LCR) All-currency LCR (%) 148% 162% 154% 157% 142% SGD LCR (%) 213% 275% 232% 203% 196% 95.0% 89.7% 89.7% 89.9% 91.9% 87.8% SGD LDR (%) 85.0% 85.0% 86.8% 86.7% 86.1% 85.8% Group LDR (%) 7

  54. Slide 54: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.5% 7.4% 7.6% 7.8% 7.7% Leverage ratio 1 5.0% Total CAR 2 20.0% 16.6% 16.2% 17.3% 17.8% 17.8% 0% 18.0% 16.0% 3.5% 3.0% -20000% 3.1% 3.5% Tier 2 CAR 2 14.0% 3.1% 0.5% 0.5% 0.1% 0.1% 0.6% Tier 1 CAR 2 12.0% -40000% 10.0% 8.0% -60000% CET1 CAR 2 13.4% 13.0% 13.2% 13.

  55. Slide 55: Stable Dividend Payout

    Stable Dividend Payout 20 5 35 35 50 35 35 35 20 2014 2015 2016 1H17 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,201 1,444 1,135 581 Payout ratio (%) 37 45 37 35 Note: The Scrip Dividend Scheme was applied to UOB 80th Anniversary dividend fo

  56. Slide 56: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (November 2017) on 6ix