United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (March 2022)
52 slides from United Overseas Bank's investor presentation, March 2022
Slide 1: Sustained growth reflecting our diversified franchise
UOB Group Sustained growth reflecting our diversified franchise February 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 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 2021 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD311b (USD230b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD353b (USD261b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 87.0% 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 2021 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD139b2 Operating Assets under +4% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD2.0b AUM from Malaysia -2
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 expected to sustain into 2022
Asian growth expected to sustain into 2022 Sustained recovery in manufacturing and services sectors 2020 GDP growth +8.1 60 Purchasing Manager's Index (PMI) 56.3 2021 GDP growth 55 52.7 51.5 50 50.8 +5.2 2022 GDP growth +2.2 50 45 China +6.8 40 ASEAN mfg PMI EM services PMI EM mfg PMI DM services PM
Slide 11: Normalisation of monetary policy stance
Normalisation of monetary policy stance 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 2.00 2.15 2.20 2.35 US Fed Funds 0.25 0.25 0.25 0.25 0.25 0.25 0.75 1.25 1.50 1.75 SG 3M SIBOR 0.41 0.41 0.44 0.43 0.43 0.44 0.80 1.25 1.45 1.65 SG 3M SOR 0
Slide 12: Sound fundamentals in Southeast Asia
Sound fundamentals in Southeast Asia Significantly Higher Foreign Reserves Improving Current Account Balances (USD billion) (% of GDP) 418 15.6 15.7 246 75 145 117 30 24 26 3.7 2.1 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.0 –5.4 Dec 1998 Dec 2021 Singapore Malaysia Thailand Indonesia 1997
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 (3Q11 = 100) HK, 214 (% of GDP) CH, 199 CH, 45 US, 186 AU, 167 SG, 39 HK, 25 SG, 112 AU, 25 US, 20 3Q11 3Q13 3Q15 3Q17 3Q19 3Q21 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 9% storage and commerce communication Industry 4% 12% FIs, Building & investment construction Large Others and holding 27% corporates 13% companies Manufacturing and 13% 7% institutions Gr
Slide 21: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.63% 1.93% 1.90% 1.68% balance 1.27% portfolio sheet FY17 FY18 FY19 FY20 FY21 quality efficiency Current Account Saving Account Balances (SGD b) 12.5% CAGR1 Proactive 174 198 Robust 124 130 141 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: Competitive against peers
Competitive against peers Standalone Efficient Cost Competitive Well-Maintained Strength Management returns Liquidity 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 44% 0.9% 87% Aa1 AA– AA– OCBC a1 4
Slide 25: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR 15.8% 15.5% 15.2% 14.7% 14.4% 14.1% 13.9% 13.7% 13.5% 13.0% 12.3% 12.2% 11.8% HSBC OCBC TD MBB DBS SCB CIMB RBC UOB NAB1 BOA Citi 1 CBA Return on Average Equity 7.1% 9.6% 15.9% 9.8% 12.5% 4.8% 9.0% 18.6% 10.2% 10.3% 12.2% 11.5% 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 Additional (BBB+; Baa1; Deposit-funded and liquid balance sheet SGD RMB USD Tier 1, BBB–)1 Tier 2, (A; A2; 11% 2% 32% 12% 22% BBB+)1 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 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: Record income on regional franchise, capturing cross-border opportunities
Wholesale: Record income on regional franchise, capturing cross-border opportunities Strengthening Connectivity +10%1 2x1 Cross-border Growth in suppliers Across our ASEAN footprint income growth and distributors within and global network (formed 30%2 of financial supply chain Group Wholesale manage
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 ~800k1 #12 Customers digitally In App Store and Play Store Scale UOB TMRW across ASEAN acquired across the ranking among key banking in a cost-effective manner region by UOB TMRW apps in Singapore
Slide 34: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN Sustainable financing SGD17b Total sustainability Ecosystem solutions offering Sustainable growth in priority financing1 provided to end-to-end financing for sectors driving ASEAN progress date at end-2021 energy-efficiency projects and EVs Re
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 4Q21 financial overview
4Q21 financial overview Net Profit After Tax Movement, 4Q21 vs 3Q21 (SGD m) 73 0 90 23 51 10 28 1,046 -3% 1,017 +5% –35% +2% –31% –35% +14% 3Q21 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 4Q21 net profit after tax income commission interest expenses allowanc
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 income rose on enlarged asset base, while net interest margin remained stable
Net interest income rose on enlarged asset base, while net interest margin remained stable Net interest 3.00% 3.00% 11,500 margin (%) * 2.19% 2.16% 3 1.91% 1.89% 10,5001.87% 1.90% 1.90% 1.87% 1.89% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.78% 1.00% 1.57% 1.56% 1.00% 1.57% 1.57% 1.56% 1.55% 1.56
Slide 39: Non-interest income supported by diversified revenue engines
Non-interest income supported by diversified revenue engines 38.5% 1 % of total income 34.6% 34.2% 34.7% 40.0% 32.8% 34.7% 34.6% 40.0% 31.8% 5,100 31.1% ▬ Non-interest income 1 ▬ Net fee income 20.0% 4,600 20.0% 24.6% 23.2% 25.7% 24.6% 24.0% 24.2% 21.6% 20.3% 21.8% 4,100 1 0.0% 0.0% 957 3,467 3,401
Slide 40: Record fees boosted by wealth management and loan-related activities
Record fees boosted by wealth management and loan-related activities 3,000 2,761850 Fee income 19 730 (SGD m) 2,412 310 750 4 677 666 687 2,500 2,303 2,313 75 37 139 650 5 5 5 Total 63 13 602 37 75 82 297 281 78 296 2 31 37 Others 2,000 156 142 698 550 74 34 154 37 182 Trade-related 558 506 18
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% 6,50046.7% 50.0% 45.0% ▬ 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 4,003 1,089 1,057 1,072 1,095 (SGD m) 1,049 1,253 1,073 1 2
Slide 42: Diversified growth across our key markets
Diversified growth across our key markets 2021 2020 YoY 4Q21 3Q21 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 2,839 2,592 +10 724 686 +6 Rest of Southeast Asia 1,327 1,302 +2 298 351 –15 Malaysia 689 675 +2 148 185 –20 Thailand 407 392 +4 106 99 +7 Indonesia 221 211 +5 40
Slide 43: Healthy growth led by corporate and institutional loans in developed markets
Healthy growth led by corporate and institutional loans in developed markets Dec-21 Sep-21 Dec-20 QoQ YoY +/(–) +/(–) Gross Loans SGD b SGD b SGD b % % Singapore 158 158 143 –1 +10 Rest of Southeast Asia 63 62 63 +2 +1 Malaysia 30 29 30 +1 +0 Thailand 21 20 21 +7 +1 Indonesia 10 11 10 –5 –3 Vietnam
Slide 44: Exposure to Greater China
Exposure to Greater China As at 31 December 2021: Mainland China exposure Hong Kong SAR exposure ($27.7b or 6% of total assets) ($39.5b or 9% of total assets) 74.8 76.1 76.1 Bank exposure ($11.2b) Bank exposure ($2.6b) 71.8 68.3 7.6 10.2 Accounts for ~40% of Mainland Majority to foreign banks 7.
Slide 45: Exposure to oil and gas sector
Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) 11.8 As of 31 December 2021, oil and gas (O&G) loans represented 2% of total loans as compared with 5% at 30 June 2018 3.3 7.2 Around 70% of O&G exposure is to downstream players and 4.8 2.0 traders, which are mainly national oil
Slide 46: Higher new NPL formation with benign NPL ratio
Higher new NPL formation with benign NPL ratio (SGD m) 4Q20 1Q21 2Q21 3Q21 4Q21 NPAs at start of period 4,301 4,608 4,544 4,547 4,772 Non-individuals: New NPAs 622 145 360 251 670 Upgrades and recoveries (175) (250) (158) (73) (172) Write-offs (179) (26) (202) (42) (205) 4,569 4,477 4,544 4,683 5,06
Slide 47: Steady credit costs as macro outlook stabilises and pre-emptive provisions mostly taken in 2020
Steady credit costs as macro outlook stabilises and pre-emptive provisions mostly taken in 2020 80bp 80bp 3,000 Average Gross Loans 57bp 55bp 1 60bp 60bp (basis points) * 2,500 ▬ Allowances for NPLs 40bp 1 40bp 29bp 22bp 18bp 20bp 20bp 20bp ▬ Total allowances for 16bp loans 20bp 2,000 34bp 20bp 1 24
Slide 48: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 107% 112% 110% 106% 12 96% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 10 37% 37% 35% 34% 31% 50% ▬ Specific allowances / NPAs ▬ General allowance on loans* / 0% 8,0 performing loans (%) 1.0% 1.0% 1.0% 1.0% 1.0% -50% 5,075 5,007 5,052 6,
Slide 49: Strong capital and leverage ratios
Strong capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.7% 14.3% 14.2% 13.5% 13.5% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.4% 7.5% 7.4% 7.1% 7.2% ▬ Return on risk-weighted 5.00% assets (%) * 1.22% 1.76% 1.68% 1.71% 1.59% 236 241 253 259 Risk weighted assets (SGD
Slide 50: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 125% 123% 125% 90 121% 116% ▬ Net stable funding ratio (%) 120% 80 ▬ Group loan-deposit ratio (%) 100% 85.4% 87.0% 86.9% 85.1% 87.0% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 62.5% 62.6% 60.4% 61.6% 50 40% 58.2% 360% 40 20% 321% Liquidity coverage ratio (%
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 (March 2022) on 6ix