United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (May 2022)
52 slides from United Overseas Bank's investor presentation, May 2022
Slide 1: Customer franchise and asset quality remain resilient
UOB Group Customer franchise and asset quality remain resilient May 2022 Discla imer: The mater ial in th is pr ese ntat ion conta ins g enera l b ackgro und informat ion a bout Un it ed Overse as Ba nk L im ited (“UO B”) and its act ivit ies a s at the date of the presentat ion. The informat io n i
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 1Q22 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD320b (USD236b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD362b (USD267b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 87.3% Wee 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 Strong player in credit cards and Seamless access to regional dollar 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 1Q22 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD140b2 Operating Assets under +3% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD0.5b AUM from Malaysia -1
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: Asian growth to sustain into 2022
Asian growth to sustain into 2022 …despite risks from Russia-Ukraine conflict & China 2020 GDP growth pandemic +8.1 70 2021 GDP growth +4.9 60 56.5 56.5 2022 GDP growth 51.7 46.2 49.2 +2.2 50 40 China +6.5 30 ASEAN Mfg EM Services EM Mfg PMI DM Services DM Mfg PMI +3.5 +2.8 +2.6 PMI PMI PMI +1.6 4Q1
Slide 11: Monetary policy to normalize as growth recovers
Monetary policy to normalize as growth recovers 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22f 2Q22f 3Q22f 4Q22f US 10-Year Treasury 0.68 0.91 1.74 1.47 1.49 1.51 2.34 2.60 2.65 2.70 US Fed Funds 0.25 0.25 0.25 0.25 0.25 0.25 0.50 1.25 1.75 2.25 SG 3M SIBOR 0.41 0.41 0.44 0.43 0.43 0.44 0.79 1.30 1.65 2.00 SG
Slide 12: Sound fundamentals in Southeast Asia
Sound fundamentals in Southeast Asia Significantly Higher Foreign Reserves Improved Current Account Balances (USD billion) (% of GDP) 427 15.6 15.7 245 75 141 116 30 24 26 3.7 2.1 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.0 –5.4 Dec 1998 Feb 2022 Singapore Malaysia Thailand Indonesia 1997 2
Slide 13: Singapore mortgages remains a low risk asset class
Singapore mortgages remains a low risk asset class Low Risk of Housing Bubble due to Cooling Measures High National Savings Rate (4Q11 = 100) HK, 217 (% of GDP) CH, 45 US, 206 SG, 39 CH, 203 HK, 25 AU, 185 AU, 25 SG, 119 US, 20 4Q11 4Q13 4Q15 4Q17 4Q19 4Q21 2012 2014 2016 2018 2020 2022F Sources: CE
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 Full -- MCRMR6 | Start --
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 in 2020 2 n/a 0% 0%
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 to 5% from 10% QRRE4 and Other Retail Wholesale credit Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable Others 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, steerin
Slide 19: Managing risks for stable growth
Managing risks for stable growth Prudent approach has been key to delivering Manage con- sustainable returns over the years centration risk Institutionalised framework through Group Risk Appetite Statement (GRAS): Maintain Nurture balance – Outlines risk and return objectives to guide core talen
Slide 20: Diversified loan portfolio
Diversified loan portfolio Professionals Housing loans 23% Others and private 5% Transport, individuals General 8% storage and commerce communication 13% Industry 4% FIs, Building & investment construction Large and holding 28% corporates Others companies 14% Manufacturing and 12% institutions 8% Gr
Slide 21: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.93% 1.90% 1.68% 1.36% balance 1.27% portfolio sheet FY18 FY19 FY20 FY21 1Q22 quality efficiency Current Account Saving Account Balances (SGD b) 10.9% CAGR1 Proactive 174 198 202 Robust 130 141 liability capitalisa
Slide 22: UOB's responsible financing journey: pragmatic and progressive
UOB’s responsible financing journey: pragmatic and progressive 2018 2019 2020 2021 Rolled out ESG risk classification Discontinued (i) new project Strengthened due diligence (i) Limited our thermal coal to better manage ESG risk in financing of coal-fired power process with enhanced checklis
Slide 23: UOB's TCFD journey
UOB’s TCFD journey UOB’s TCFD Journey and Key Achievements Qualitative assessment Transition risk scenario analysis Findings • Completed qualitative assessment in 2019, • Partnered an internationally recognised environmental • Carbon-intensive segments formed less than referencing SASB’s Materiality
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 45% 0.8% 87% Aa1 AA– AA– OCBC a1 46% 1.2% 83% Aa1 AA– AA– DBS a1 44% 1.0%
Slide 25: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 16.1% 15.2% 15.2% 14.5% 14.1% 14.1% 14.0% 13.5% 13.1% 13.0% 12.0% 11.8% 11.4% MBB OCBC TD CIMB HSBC SCB DBS RBC UOB NAB1 BOA CBA1 Citi Return on Average Equity 9.8% 10.6% 15.7% 8.1% 6.5% 4.8% 13.1% 17.3% 8.8% 10.3% 11.0% 12.7% 9.0% (annua
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 Additional SGD RMB Tier 1, (BBB+; Baa1; Tier 2, (A; A2; Deposit-funded and liquid balance sheet 11% 0% EUR 11% BBB–)1 17% BBB+)1 GBP 33% Traditional banking p
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 Grow fee income to offset Disciplined approach in serve expanding regional environment remains competi
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 franchise Third largest population among Singapore banks 581 667 726 6.3 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 3 Philippines 2019 retail banking pool sizes USD b Indonesia ✓ Denotes UOB’s ✓ core markets in Banking penetration 21 Southeast Asia growth potential 12 Thailand UAE ✓ was launched 9 Malaysia 37 India in Thailand 9 (March 2019)
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 CAGR c$21b Vietnam c$55b Singapore Thailand +9% c$1b c$1b c$4b c$13b c$12b +10% Wealth Malaysia c$7b
Slide 32: Wholesale: Strong regional franchise to capture cross-border opportunities
Wholesale: Strong regional franchise to capture cross-border opportunities Strengthening Connectivity +11%1 2x Cross-border Growth in suppliers Across our ASEAN footprint income growth and distributors within and global network (formed 31%2 of financial supply chain Group Wholesale management soluti
Slide 33: Consumers: Tapping on rising affluence and digital adoption in Southeast Asia
Consumers: Tapping on rising affluence and digital adoption in Southeast Asia Driving Digital Adoption ~140k >80% Customers digitally Customers digitally acquired Scale UOB TMRW across ASEAN acquired across the across the region in 1Q22 in a cost-effective manner region by UOB TMRW in by UOB TMRW ar
Slide 34: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN Sustainable financing SGD18b1 Total sustainability Ecosystem solutions offering Sustainable growth in priority financing portfolio2 end-to-end financing for sectors driving ASEAN progress energy-efficiency projects and EVs Responsible investme
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 1Q22 financial overview
1Q22 financial overview Net Profit After Tax Movement, 1Q22 vs 4Q21 (SGD m) 8 8 76 38 66 10 18 1,017 -11% 906 +1% –1% –43% –3% +59% +55% +8% 4Q21 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 1Q22 net profit after tax income commission interest expenses allowan
Slide 37: 2021 financial overview
2021 financial overview Net Profit After Tax Movement, 2021 vs 2020 (SGD m) 896 20 240 353 415 154 129 +40% 4,075 2,915 +6% +21% –13% +3% –58% +20% +39% 2020 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 2021 net profit after tax income commission interest expe
Slide 38: Net interest margin improves for second straight quarter
Net interest margin improves for second straight quarter Net interest 3.00% 3.00% 11,500 margin (%) * 2.19% 2.16% 3 1.91% 1.89% 10,5001.90% 1.90% 1.87% 1.89% 1.90% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.78% 1.00% 1.57% 1.56% 1.00% 1.57% 1.56% 1.55% 1.56% 1.58% ▬ Interbank & 8,500 securities 0
Slide 39: Fee income remains resilient despite weaker trading and investment income
Fee income remains resilient despite weaker trading and investment income 38.5% 150 % of total income 34.7% 34.7% 34.6% 40.0% 34.2% 40.0% 31.1% 5,100 28.5% ▬ Non-interest income 130 ▬ Net fee income 20.0% 4,600 20.0% 24.1% 24.9% 24.1% 23.5% 23.8% 24.3% 20.8% 110 4,100 0.0% 0.0% 957 3,401 3,600 73 83
Slide 40: Loan-related fees hit a high as wealth management fees slowed
Loan-related fees hit a high as wealth management fees slowed on dampened market sentiment 3,000 850 2,706 Fee income 19 750 711 (SGD m) 679 2,500 310 4 663 653 667 2,226 75 5 5 6 Total 139 650 5 82 13 37 75 78 82 281 37 Others 2,000 550 31 34 38 142 698 182 Trade-related 183 164 170 506 450 1
Slide 41: Stable CIR as we pace investments in staff and technology
Stable CIR as we pace investments in staff and technology 1 50.0% 44.6% 45.6% 50.0% 6,500 45.0% 44.8% ▬ Costs / Income 43.9% 44.1% 43.8% 43.7% 43.7% 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 30.0% Operating expenses 4,184 4,31330.0% 4,500 1,089 1 4,003 1,057 1,072 1,095 1,058 (SGD m) 1,253 1,073 1
Slide 42: Southeast Asian markets showing recovery
Southeast Asian markets showing recovery 1Q22 4Q21 QoQ 1Q21 YoY +/(–) +/(–) Operating profit SGD m SGD m % SGD m % Singapore 666 724 –8 724 –8 Rest of Southeast Asia 320 298 +7 342 –7 Malaysia 171 148 +15 182 –6 Thailand 100 106 –6 101 –1 Indonesia 45 40 +13 59 –23 Vietnam 3 2 +22 -1 >100 Others 1 1
Slide 43: Healthy growth led by corporate and institutional loans
Healthy growth led by corporate and institutional loans Mar-22 Dec-21 Mar-21 QoQ YoY +/(–) +/(–) Gross Loans SGD b SGD b SGD b % % Singapore 162 158 151 +3 +8 Rest of Southeast Asia 64 63 63 +1 +2 Malaysia 30 30 30 –1 –1 Thailand 21 21 20 – +3 Indonesia 10 10 10 +3 +1 Vietnam 2 2 2 +12 +10 Others 1
Slide 44: Exposure to Greater China
Exposure to Greater China As at 31 March 2022: Mainland China exposure Hong Kong SAR exposure ($26.8b or 6% of total assets) ($41.5b or 9% of total assets) 74.8 76.1 76.1 77.2 Bank exposure ($9.2b) Bank exposure ($2.0b) 71.8 7.6 10.2 12.2 Accounts for ~35% of Mainland Majority to foreign banks 7
Slide 45: Exposure to Commodities
Exposure to Commodities Oil and Gas (O&G) Other Commodity Mar 22 Traders / downstream Total Upstream industries Segments2 industries1 Outstanding loans S$2.0b S$9.7b S$9.7b S$21.4b % of total loans 4% 3% 7% As of 31 March 2022, outstanding loans to commodities remain modest and represented 7% of tot
Slide 46: NPA formation normalizes from previous quarter
NPA formation normalizes from previous quarter (SGD m) 1Q21 2Q21 3Q21 4Q21 1Q22 NPAs at start of period 4,608 4,544 4,547 4,772 5,077 Non-individuals: New NPAs 145 360 251 670 462 Upgrades and recoveries (250) (158) (73) (172) (207) Write-offs (26) (202) (42) (205) (36) 4,477 4,544 4,683 5,065 5,296
Slide 47: Total allowances for loans higher due to higher general allowance write-back
Total allowances for loans higher due to higher general allowance write-back last quarter 80bp 80bp 3,000 Average Gross Loans 57bp 1 60bp 60bp (basis points) * 2,500 ▬ Allowances for NPLs 40bp 1 40bp 29bp 20bp 20bp 22bp 19bp ▬ Total allowances for 16bp 18bp 20bp 20bp 20bp 2,000 1 loans 24bp 18bp 19b
Slide 48: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 112% 110% 106% 12 96% 94% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 10 37% 35% 34% 31% 31% 50% ▬ Specific allowances / NPAs ▬ General allowance on loans* / 0% 8,0 performing loans (%) 1.0% 1.0% 1.0% 1.0% 0.9% -50% 5,075 5,007 5,052 6,0
Slide 49: Capital and leverage ratios
Capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.3% 14.2% 13.5% 13.5% 13.1% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.5% 7.4% 7.1% 7.2% 6.9% ▬ Return on risk-weighted 5.00% assets (%) * 1.76% 1.68% 1.71% 1.59% 1.36% 253 259 268 236 241 Risk weighted assets (SGD b)
Slide 50: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 123% 125% 90 121% 116% 113% ▬ Net stable funding ratio (%) 120% 80 ▬ Group loan-deposit ratio (%) 100% 87.0% 86.9% 85.1% 87.0% 87.3% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 62.5% 62.6% 61.6% 66.3% 50 60.4% 40% 360% 343% 40 20% 321% Liquidity coverage rat
Slide 51: Dividends in line with higher earnings and strong capital position
Dividends in line with higher earnings and strong capital position Net dividend per ordinary share (¢) 20 20 Special 60 55 50 Final 39 50 55 60 Interim 39 2018 2019 2020 2021 Payout amount (SGD m) 2,000 2,171 1,304 2,009 Payout ratio (%) 50 50 451 49 Payout ratio (excluding special 42 42 451 4
Slide 52: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — Investor Presentation (May 2022) on 6ix