United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (June 2023)
52 slides from United Overseas Bank's investor presentation, June 2023
Slide 1: UOB Group: Resilient earnings with strong balance sheet
UOB Group Resilient earnings with strong balance sheet June 2023 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 in
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 1Q23 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD316b (USD238b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD374b (USD281b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 83.3% 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 with ~500 offices 1Q23 performance by segment Myanmar 2 offices Greater China1 27 offices UOB SGD160b 3 Operating Assets under +14% Thailand Vietnam management YoY Open profit 153 offices 5 offices Malaysia Philippines Group SGD0.
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: Growth Seen Holding Up Across Asian Economies in 2023 Amid Growing External Risks
Growth Seen Holding Up Across Asian Economies in 2023 Amid Growing External Risks 2020 GDP growth 2022 GDP growth +5.6 Tourism Rebound In Asia To Support Consumption Demand 2023F GDP growth +2.2 +3.0 Amid Weaker Trade China +8.0 +6.0 +2.6 +3.1 +2.9 Thailand Vietnam –6.2 +8.7 +4.0 +3.6 Malaysia +0.7
Slide 11: Fed's monetary policy tightening has likely reached terminal rate
Fed’s monetary policy tightening has likely reached terminal rate in May 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23F 3Q23F 4Q23F US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.83 3.87 3.47 3.80 3.70 3.50 US Fed Funds 0.25 0.25 0.25 0.25 0.50 1.75 3.25 4.50 5.00 5.25 5.25 5.25 SG 3M SIBOR
Slide 12: 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) 312 15.6 15.5 224 145 116 2.6 75 1.2 30 24 26 –2.0 –1.5 –0.3 –5.5 Singapore Thailand Indonesia Malaysia Singapore Malaysia Thailand Indonesia Dec 1998
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 (2Q12 = 100) US, 206 (% of GDP) AU,177 SG, 40 HK, 163 CA, 137 AU, 24 SG, 129 HK, 21 CA, 21 US, 19 4Q12 4Q14 4Q16 4Q18 4Q20 4Q22 2018 2020 2022 2024 2026 2028F Sources: CEIC
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 -- MCRMR6 | Start -- Leve
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 2 n/a 0% 0% 0% 0% D-
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 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 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, with st
Slide 19: Managing risks for stable growth
Managing risks for stable growth ▪ Prudent approach has been key to delivering sustainable returns over the years Manage con- ▪ Institutionalised framework through Group centration risk Risk Appetite Statement (GRAS): – Outlines risk and return objectives to guide Maintain strategic decision-making
Slide 20: Diversified loan portfolio
Diversified loan portfolio Housing loans 24% Others Professionals and Transport, 6% private individuals storage and 9% communication 4% General Industry commerce Exposure to office property in 11% developed markets (ex-SG & Building & HK) at ~2% of group loans construction FIs, investment 27% and ho
Slide 21: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets 2.45%1 Focus on Healthy 1.90% 1.27% 1.68% 1.83%1 balance sheet portfolio FY19 FY20 FY21 FY22 1Q23 efficiency quality Current Account Saving Account Balances (SGD b) 7.4% CAGR2 174 198 175 179 141 Proactive Robust liability FY19 FY20
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 - 2021 2022 • Launched the Group • Enhanced ESG • Strengthened due diligence process • Announced our net
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 41%1 1.3%1 83% Aa1 AA– AA– OCBC a1 37% 1.6% 79% Aa1 AA– AA– DBS a1 38% 1.
Slide 25: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.9% 15.5% 15.1% 14.7% 14.5% 14.4% 14.0% 13.7% 13.4% 12.9% 12.7% 11.5% 11.4% 2 2 OCBC TD MBB HSBC CIMB DBS UOB SCB Citi BOA RBC NAB CBA Return on Average Equity 1 (annualised) 14.7% 16.1% 10.7% 25.5% 10.2% 18.6% 14.9% 11.9% 9.5% 12.5% 12
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 GBP USD Additional (BBB+; Baa1; Tier 2, (A; A2; Tier 1, BBB–)1 ▪ Deposit-funded and liquid balance sheet SGD 9% 32% 20% BBB+)1 15% 15% ▪ Traditional banking prese
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 environment ▪ Grow fee income to offset ▪ Disciplined approach in serve expanding regional remains uncerta
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 ▪ Third largest population franchise among Singapore 667 726 6.3 banks 581 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 2019 retail banking pool sizes 3 Philippines USD b Denotes UOB’s core markets in Southeast Asia Banking penetration Indonesia ✓ was launched growth potential ✓ in Thailand (March 2019) and ✓ 12 Thailand 21 Indonesia (August 202
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 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 32: Retail growth drivers: digital acquisition and engagement
Consumers Scale Acquisition with Digital Scale UOB TMRW across ASEAN to digitally acquire at >7m >225k • Tapping on rising low cost Retail customers 77% are New to bank customers acquired in 1Q23, affluence and growing digitally enabled 59% digitally acquired digitalisation in Southeast Asia Deepen
Slide 33: Wholesale banking: strengthening regional connectivity
+19% Wholesale Strengthening Cross border income1; customers Connectivity Formed 24% of GWB income +30% Across our ASEAN Suppliers and distributors2 within footprint and global • Growing regional network Financial Supply Chain Management (FSCM) solution franchise, capturing cross-border Sector +41%
Slide 34: Latest Financials
Latest Financials 34
Slide 35: 1Q23 financial overview
1Q23 financial overview Core Net Profit After Tax Movement, 1Q23 vs 4Q22 1 (SGD m) 278 22 16 3 4 151 66 1 1 1,577 1,398 +13% –6% +14% +98% +2% +92% –11% +1% 4Q22 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 1Q23 core net profit after tax income commission interes
Slide 36: 2022 financial overview
2022 financial overview Core Net Profit After Tax Movement, 2022 vs 2021 (SGD m) 1,955 214 45 703 1 54 21 372 1 +18% 4,819 4,075 +31% –9% +4% +16% –8% –17% +43% FY21 net Net interest Net fee and Other non- Operating Total Share of profit Tax, FY22 core net profit after tax income commission interest
Slide 37: Performance by Geography
Performance by 1Q23 4Q22 QoQ 1Q22 YoY Geography (1) Core operating profit $m $m +/(-)% $m +/(-)% Singapore 1,233 1,204 2 697 77 • Continued momentum in ASEAN-4 465 401 16 319 46 quarterly growth across Malaysia 224 195 15 171 31 Singapore, ASEAN-4 and Thailand 171 135 27 100 72 the developed markets
Slide 38: Net Interest Income and Margin
2.26 2.75 Net Interest Income and 1.89 2.34 2.61 Margin 1.90 2.02 1.86 2.22 2.14 1.56 1.95 • 1Q23 NII eased 6%, partly 1.58 1.67 0.91 0.72 1.11 1.02 1.02 due to a shorter quarter, as 8,343 0.75 0.80 well as lower net interest 1,203 margin 6,388 2,560 2,409 835 2,234 372 393 • NIM moderated to 2.14%
Slide 39: Fee Income
24 19 24 Fee Income 21 16 16 • Net fee income rose 14% 15 2,357 QoQ 2,143 395 • Wealth management fees 185 355 recovered from improved 231 572 567 552 investor sentiments 768 519 536 94 87 485 86 86 42 • Loan-related fees 59 87 81 55 160 137 74 rebounded while credit 123 147 116 card fees sustained
Slide 40: Trading & Investment Income
85 368 74 Trading & Investment Income 81 87 829 52 43 785 • Customer-related treasury 128 203 income at new high, supported by hedging 474 demand 370 272 • Good performance from 583 701 214 178 203 trading and liquidity 44 41 26 management activities 173 191 177 202 161 (117) 2021 2022 1Q 2Q 3Q 4Q 1
Slide 41: Core Expenses and Cost / Income Ratio
44.1 43.3 Core Expenses and Cost / 44.8 43.8 42.6 45.2 43.3 Income Ratio (1) 42.6 40.9 5,016 • CIR improved to 40.9% 4,313 569 + 11% 1,418 1,440 on the back of strong 770 1,357 512 + 21% 130 157 1,184 170 income growth and 638 215 230 686 + 22% 1,058 151 disciplined spending 118 197 561 183 233 200
Slide 42: Non-Performing Assets
2022 2023 Non-Performing ($m) 1Q 2Q 3Q 4Q 1Q Assets NPAs at start of period 5,077 5,289 5,422 5,037 5,127 Non-individuals • Asset quality remained New NPAs _ 462 661 214 395 301 resilient and portfolio Less: well-collateralized with Upgrades and recoveries 207 363 448 322 80 SP/NPA stable at 32% Wri
Slide 43: Total Allowance on Loans
31 20 22 25 Total Allowance on Loans 22 19 20 17 18 21 21 21 628 19 16 • General allowance set 598 64 aside to maintain prudent levels of provisioning 694 173 534 173 192 146 7 135 28 8 253 148 166 164 127 (2) (66) (80) 2021 2022 1Q 2Q 3Q 4Q 1Q 2022 2023 Credit costs on loans - Specific (basis point
Slide 44: Allowance Coverage
34 33 32 Allowance Coverage 31 30 • Adequate reserve buffer 0.9 0.9 0.9 0.9 1.0 with prudent coverage for 4,986 4,934 4,931 5,002 4,931 performing loans at 1.0% 379 379 379 379 379 • NPA coverage stable at 2,969 2,912 2,865 2,868 2,905 96% or 212% taking collateral into account 1,638 1,643 1,687 1,7
Slide 45: Gross Loans
Gross Loans Mar-23 Dec-22 Mar-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Lower loans QoQ as Singapore 155 160 162 (3) (4) corporates pared down ASEAN-4 68 69 63 (0) 9 their borrowings while Malaysia 33 33 30 (1) 11 trade and mortgage were Thailand 24 23 21 1 13 stable Indonesia 10 10 10 (4) (8) Vietnam 2 2
Slide 46: Exposure to Greater China
Exposure to Greater China 77.2 77.1 75.8 69.2 70.5 12.2 11.8 10.6 9.7 9.4 Debt ($b) ▪ ~$3b in loans to Chinese developers (1% of group loans) Non Bank ($b) 51.5 52.5 53.8 48.6 49.8 Bank ($b) 13.5 12.8 11.4 10.9 11.3 Mar Jun Sep Dec Mar 2022 2023 As at 31 Mar 2023: Bank exposure ($8.6b) • ~40% of tot
Slide 47: Oil and Gas (O&G) Exposure to Other Commodities
Oil and Gas (O&G) Exposure to Other Traders / Commodities Mar 23 Upstream downstream Commodity Total industries1 Segments2 Segment industries Outstanding S$1.9b S$7.7b S$8.3b S$17.9b • As of 31 March 2023, loans outstanding loans to the Percentage of commodities segment total loans 3% 3% 6% remain m
Slide 48: Total Funding
Total Funding Mar-23 Dec-22 Mar-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Continue to focus on Singapore 254 249 248 2 2 stable funding ASEAN-4 73 71 65 3 12 Malaysia 34 34 32 (1) 6 • Customer deposits up Thailand 26 26 23 3 17 Indonesia 11 10 10 12 11 2% QoQ, alongside Vietnam 2 1 1 56 87 improvement in
Slide 49: Liquidity Ratios
154 147 141 142 Liquidity Ratios 129 • Funding and liquidity 116 121 114 positions strengthened 113 111 further with LCR at 88.7 154% and NSFR at 87.3 85.2 85.6 83.3 121% Mar Jun Sep Dec Mar 2022 2023 USD LDR (%) 66.3 72.3 64.2 60.0 60.7 All-currency LCR (%) Loan/Deposit Ratio (LDR) (%) (1) Net Stab
Slide 50: Capital
Capital 13.1 13.1 12.8 13.3 14.0 • Strong CET1 ratio at 14.0% 268 263 266 259 258 Mar Jun Sep Dec Mar 2022 2023 Leverage ratio (%) 6.9 6.6 6.4 6.6 7.0 RWA ($b) CET1 ratio (%) 50
Slide 51: Dividends
Dividends 130 135 120 20 Net dividend 75 • Committed to per ordinary share (¢) 55 78 60 consistent and Interim Special sustainable returns to 39 Final shareholders 55 60 60 39 2019 2020 2021 2022 Payout amount ($m) 2,171 1,304 2,011 2,261 Payout ratio (%) 50 45 ^ 49 49 Payout ratio (excl special div
Slide 52: Right By You
@ Right By You
United Overseas Bank — Investor Presentation (June 2023) on 6ix