United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (November 2023)
52 slides from United Overseas Bank's investor presentation, November 2023
Slide 1: UOB Group: Resilient portfolio with diversified business drivers
UOB Group Resilient portfolio with diversified business drivers Nov 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
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 9M23 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD318b (USD234b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD382b (USD280b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 82.3% 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 9M23 performance by segment Myanmar 2 offices Greater China1 27 offices UOB SGD170b 3 Operating Assets under +21% Thailand Vietnam management YoY Open profit 153 offices 5 offices Malaysia Philippines Group SGD2.
Slide 8: Why UOB?
Why UOB? Integrated regional Balance growth with Stable management Strong fundamentals platform stability ▪ Proven track record in ▪ Truly regional bank with full ▪ Strong Common Equity Tier ▪ Over 50% of Group’s steering the bank through ownership and control of 1 capital adequacy ratio of earnings
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 2022 GDP growth 2023F GDP growth +5.2 +4.5 Tourism Rebound In Asia To Support Consumption Demand 2024F GDP growth +3.0 Amid Weaker Trade China +8.0 +6.0 +5.0 +3.1 +3.5 +2.6 Vietnam Thailand +8.7 +4.0 +4.6 +3.6 +3.0 Mal
Slide 11: Fed closing in on end of rate hiking cycle, cuts delayed till mid-2024
Fed closing in on end of rate hiking cycle, cuts delayed till mid-2024 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23F 1Q24F US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.83 3.87 3.47 3.84 4.30 4.30 4.30 US Fed Funds 0.25 0.25 0.25 0.25 0.50 1.75 3.25 4.50 5.00 5.25 5.50 5.75 5.75
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) 337 15.6 16.6 212 135 110 2.7 75 30 24 26 –0.2 –1.5 –0.3 –2.0 –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, 214 (% of GDP) AU,174* SG, 39 HK,160 AU, 24 CA,135 HK, 23 SG,130 CA, 22 US,16 2Q14 4Q15 2Q17 4Q18 2Q20 4Q21 2Q23 2018 2019 2020 2021 2022 2023F 2024F *late
Slide 14: Singapore to implement Basel IV by mid-2024
Singapore to implement Basel IV5 by mid-2024 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 -- Leverage
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: 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 19: Diversified loan portfolio
Diversified loan portfolio Housing loans Professionals and 24% Others Transport, private individuals 5% storage and 9% communication 4% General Industry commerce 11% Building & construction FIs, investment 27% and holding Manufacturing Large corporates Others companies 7% and institutions 15% 13% 54
Slide 20: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.90% 1.83%1 2.33%1 1.27% 1.68% balance sheet portfolio FY19 FY20 FY21 FY22 9M23 efficiency quality Current Account Saving Account Balances (SGD b) 7.4% CAGR2 174 198 175 184 141 Proactive Robust liability FY19 FY20
Slide 21: 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 22: 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 23: Net zero by 2050 commitment with focus on 6 priority sectors
In October 2022, we announced our commitment to achieving net zero by 2050, with a focus on 6 priority sectors Energy Built environment Net zero targets and commitments for six sectors We focused on two significant, high-emitting ecosystems, energy and built environment, spanning 6 sectors based on:
Slide 24: Progressing across all priority sectors, at least 7% below reference pathways
One year on, we are progressing across all priority sectors, and are at least 7% below the reference pathways 24 ## RESTRICTED ##
Slide 25: 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 1.2%1 82% Aa1 AA– AA– OCBC a1 38% 1.5% 80% 1 1 Aa1 AA– AA– DBS a1 39
Slide 26: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.2% 15.2% 14.9% 14.8% 14.2% 14.1% 14.1% 13.9% 13.5% 13.5% 13.0% 12.2% 12.2% 2 2 TD MBB HSBC OCBC CIMB DBS RBC SCB BOA Citi UOB CBA NAB Return on Average Equity 1 1 (annualised) 14.8% 10.9% 18.3% 14.2% 10.6% 18.6% 13.9% 10.4% 11.6% 7.3%
Slide 27: 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, Tier 1, BBB–)1 (A; A2; ▪ Deposit-funded and liquid balance sheet SGD 6% 33% 21% BBB+)1 15% 15% ▪ Traditional banking prese
Slide 28: Our Growth Drivers
Our Growth Drivers 28
Slide 29: 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 30: 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 31: 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, Indonesia, Singapore and ✓ ✓ 12 Thailand 21 Malaysia.
Slide 32: 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 33: Retail growth: scale acquisition with digital
Consumers Scale Acquisition with Digital Scale UOB TMRW across ASEAN to digitally acquire at >7.5m +28% • Tapping on rising low cost Retail customers, 77% are Year-on-year increase of new-to-bank customers affluence and growing digitally enabled acquired vs 9M22, 54% digitally acquired digitalisatio
Slide 34: Wholesale banking: strengthening regional connectivity
Strengthening +14% Wholesale Cross border income1; Connectivity Formed 24% of GWB income customers +35% Across our ASEAN Suppliers and distributors2 within footprint and global • Growing regional network Financial Supply Chain Management (FSCM) solution franchise, capturing cross-border Sector +21%
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 3Q23 financial overview
3Q23 financial overview Core Net Profit After Tax Movement, 3Q23 vs 2Q23 8 67 145 130 6 97 (SGD m) 321 1,507 1 1,479 1 -4% –0% +13% –25% –2% –35% –23% +40% 2Q23 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 3Q23 core net profit after tax income commission interest
Slide 37: 9M23 financial overview
9M23 financial overview Core Net Profit After Tax Movement, 9M23 vs 9M22 (SGD m) 1 777 707 1,492 8 350 2 63 +53% 4,5631 3,421 +26% +0% +97% +20% +84% +2% +7% 9M22 net Net interest Net fee and Other non- Operating Total Share of profit Tax, 9M23 core net profit after tax income commission interest ex
Slide 38: Performance by Geography
Performance by 9M23 9M22 YoY 3Q23 2Q23 QoQ (1) Core operating profit Geography Singapore $m 3,605 $m 2,621 +/(-)% 38 $m 1,188 $m 1,184 +/(-)% 0 ASEAN-4 1,300 1,018 28 389 446 (13) • 9M23 Core operating Malaysia 596 549 8 184 188 (2) profit surged to $6.2b Thailand 537 291 84 173 193 (10) Indonesia 1
Slide 39: Net Interest Income and Margin
2.62 2.75 Net Interest Income 2.09 2.34 2.61 2.62 2.64 and Margin 2.12 2.22 2.14 2.12 1.74 2.09 1.95 • Higher NII and NIM YoY 0.87 1.04 1.02 1.02 1.11 1.10 0.93 from higher interest rate 7,275 environment 1,154 5,783 • 3Q23 core franchise loan 832 2,234 2,560 372 2,409 2,437 2,429 margin expanded to
Slide 40: Fee Income
20 Fee Income 16 16 17 15 16 15 • 3Q23 Net fee income 1,658 1,666 near all-time high 239 232 • Credit card fees hit new 157 257 record while loan-related 591 552 fees rebounded 448 519 524 72 444 485 77 78 83 104 78 • Modest wealth fees 81 55 72 74 146 recovery amid cautious 131 125 156 142 investor
Slide 41: Trading & Investment Income
84 87 Trading & Investment 52 53 44 43 Income 38 • Customer-related treasury 1,328 income sustained momentum 474 478 746 • Trading and liquidity 370 272 375 296 management activities 627 177 178 continued to deliver good 102 203 performance 26 582 525 • Other T&I income affected 191 177 202 182 198
Slide 42: Core Expenses and Cost / Income Ratio
43.6 Core Expenses and 40.9 42.6 45.2 43.3 44.1 44.4 Cost / Income Ratio (1) 42.6 4,305 40.9 40.9 41.0 • CIR stable at 41.0%, as 3,598 462 + 5% expenses kept pace with 439 684 + 23% income growth 554 556 + 23% 1,418 1,440 1,448 1,416 1,357 130 157 167 • Continued discipline in 137 453 170 215 230 23
Slide 43: Non-Performing Assets
2022 2023 Non-Performing ($m) 3Q 4Q 1Q 2Q 3Q Assets NPAs at start of period 5,422 5,037 5,127 5,150 5,192 Non-individuals • Resilient asset quality New NPAs _ 214 395 301 364 267 with lower NPA Less: formation and NPL Upgrades and recoveries 448 322 80 137 298 unchanged at 1.6% Write-offs 60 121 218
Slide 44: Total Allowance on Loans
25 31 30 19 29 25 Total Allowance on 25 17 Loans 18 21 21 26 19 581 16 • Increase in 3Q23 net credit costs within expectation 454 13 • Total credit costs improved 596 173 238 151 to 19 bps from release of 441 192 36 general allowance 135 28 8 253 229 reserves 127 164 202 (14) (80) (78) 9M22 9M23 3Q
Slide 45: Allowance Coverage
34 33 34 Allowance Coverage 32 33 1.0 1.0 • Adequate reserve buffer 0.9 0.9 0.9 with prudent coverage for 4,931 5,002 4,931 5,134 5,109 379 379 performing loans at 0.9% 379 379 379 • NPA coverage remained 2,865 2,868 2,905 3,058 3,042 adequate at 102% or 205% taking collateral 1,687 1,755 1,647 1,69
Slide 46: Gross Loans
Gross Loans Sep-23 Jun-23 Sep-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Loans relatively Singapore 155 156 165 (1) (6) unchanged QoQ and YoY ASEAN-4 67 68 62 (1) 9 on constant currency Malaysia 32 32 29 (0) 9 basis Thailand 24 24 20 (0) 21 Indonesia 10 10 11 (2) (13) Vietnam 2 2 2 (3) 14 North Asia 56 55
Slide 47: Exposure to Greater China
Exposure to Greater China 75.8 69.2 70.5 71.6 71.7 10.6 9.7 9.4 10.5 11.3 Debt ($b) Non Bank ($b) ▪ ~$2.8b in loans to Chinese real 53.8 49.8 48.6 51.6 51.2 estate developers (1% of group Bank ($b) loans) 11.4 10.9 11.3 9.5 9.2 Sep Dec Mar Jun Sep 2022 2023 As at 30 Sep 2023: Bank exposure ($6.8b) •
Slide 48: Exposure to Commercial Real Estate - Office
Exposure to Commercial Real Commercial Real Estate - Office exposure is ~8% of loans Estate - Office By geography as % of loans 0.3% • Almost half of office 0.8% Others exposure is in Singapore 0.8% 0.8% United Kingdom 0.8% 0.8% • Overseas exposure Sep-23 Group 1.5% 1.3% United States loans: 8% back
Slide 49: Total Funding
Total Funding Sep-23 Jun-23 Sep-22 QoQ YoY $b $b $b +/(-)% +/(-)% Singapore 262 261 256 0 2 • Customer deposits up ASEAN-4 72 70 67 2 7 1% QoQ, alongside Malaysia 34 34 31 1 9 improved CASA ratio at Thailand 26 25 22 3 14 48.2% Indonesia 10 10 11 3 (12) Vietnam 2 2 2 8 7 North Asia 25 22 23 12 8 Gre
Slide 50: Liquidity Ratios
167 Liquidity Ratios 154 153 147 142 • Funding and liquidity positions remained 121 121 121 strong with LCR at 114 116 153% and NSFR at 121% 85.2 85.6 83.3 83.5 82.3 Sep Dec Mar Jun Sep 2022 2023 USD LDR (%) 64.2 60.0 60.7 62.9 60.7 All-currency LCR (%) Loan/Deposit Ratio (LDR) (%) Net Stable Fund R
Slide 51: Capital
Capital 12.8 13.3 14.0 13.6 13.0 • Healthy CET1 ratio at 13.0%, post FY23 interim 266 259 258 263 272 dividend payout Sep Dec Mar Jun Sep 2022 2023 Leverage ratio (%) 6.4 6.6 7.0 7.0 6.8 RWA ($b) CET1 ratio (%) 51
Slide 52: Right By You
@ Right By You
United Overseas Bank — Investor Presentation (November 2023) on 6ix