United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (August 2023)
51 slides from United Overseas Bank's investor presentation, August 2023
Slide 1: UOB Group: Robust results supported by strong balance sheet
UOB Group Robust results supported by strong balance sheet Aug 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
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 1H23 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD319b (USD235b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD377b (USD278b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 83.5% 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 1H23 performance by segment Myanmar 2 offices Greater China1 27 offices UOB SGD165b 3 Operating Assets under +19% Thailand Vietnam management YoY Open profit 153 offices 5 offices Malaysia Philippines Group SGD1.
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 +5.0 +4.5 Tourism Rebound In Asia To Support Consumption Demand 2024F GDP growth +3.0 Amid Weaker Trade China +8.0 +5.2 +6.0 +3.1 +3.5 +2.6 Vietnam Thailand +8.7 +4.4 +4.6 +3.6 +3.5 +5.
Slide 11: Fed closing in on end of rate hiking cycle
Fed closing in on end of rate hiking cycle 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23F 4Q23F US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.83 3.87 3.47 3.84 3.50 3.20 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 5.50 SG 3M SIBOR 0.44 0.43 0.43 0.44 0.79 1.91
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) 331 15.6 15.5 218 138 111 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, 208 (% of GDP) AU,174 SG, 40 HK,172 AU, 24 CA,136 CA, 21 SG,128 HK, 21 US, 19 1Q14 3Q15 1Q17 3Q18 1Q20 3Q21 1Q23 2018 2020 2022 2024 2026 2028F 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 -- 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: 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 8% and institutions 15% 12% 54
Slide 20: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.90% 1.83%1 2.38%1 1.27% 1.68% balance sheet portfolio FY19 FY20 FY21 FY22 1H23 efficiency quality Current Account Saving Account Balances (SGD b) 7.4% CAGR2 174 198 175 179 141 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: 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 84% Aa1 AA– AA– OCBC a1 38% 1.5% 79% Aa1 AA– AA– DBS a1 38% 1.
Slide 24: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.4% 15.3% 15.1% 14.7% 14.3% 14.1% 14.0% 13.7% 13.6% 13.3% 13.2% 12.2% 11.4% 2 2 OCBC TD MBB HSBC CIMB DBS SCB RBC UOB Citi BOA NAB CBA Return on Average Equity (annualised) 14.3% 14.1% 10.7% 20.8% 10.3% 18.9% 11.9% 14.4% 14.5%1 5.6% 11.
Slide 25: 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 26: Our Growth Drivers
Our Growth Drivers 26
Slide 27: 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 28: 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 29: 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 30: 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 31: Consumers: digital acquisition and engagement
Consumers Scale Acquisition with Digital Scale UOB TMRW across ASEAN to digitally acquire at >7m +47% • Tapping on rising low cost Retail customers, Year on year increase of 78% are new-to-bank customers affluence and growing digitally enabled acquired vs 1H22, digitalisation in Southeast 56% digita
Slide 32: Wholesale customers
Strengthening +17% Wholesale Cross border income1; Connectivity Formed 23% 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 opportuniti
Slide 33: Latest Financials
Latest Financials 33
Slide 34: 2Q23 financial overview
2Q23 financial overview Core Net Profit After Tax Movement, 2Q23 vs 1Q23 1 (SGD m) 28 28 18 8 196 1 115 1 1 1,577 -4% 1,507 +1% –5% +3% +1% +116% +2% –32% 1Q23 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 2Q23 core net profit after tax income commission interest
Slide 35: 1H23 financial overview
1H23 financial overview Core Net Profit After Tax Movement, 1H23 vs 1H22 (SGD m) 770 648 1 1,297 64 219 1 69 +53% 1 3,084 2,018 +37% –6% +206% +29% +69% –1% +13% 1H22 net Net interest Net fee and Other non- Operating Total Share of profit Tax, 1H23 core net profit after tax income commission interes
Slide 36: Performance by Geography
Performance by (1) 1H23 1H22 YoY 2Q23 1Q23 QoQ Core operating profit $m $m +/(-)% $m $m +/(-)% Geography Singapore 2,418 1,542 57 1,184 1,233 (4) • 1H23 Core operating ASEAN-4 911 635 43 446 465 (4) Malaysia 412 333 24 188 224 (16) profit surged to $4.2b Thailand 364 193 89 193 171 13 Indonesia 122
Slide 37: Net Interest Income and Margin
2.61 2.75 Net Interest Income 1.96 2.34 2.61 2.62 2.02 and Margin 2.13 2.22 2.14 2.12 1.63 1.95 • NII rose 1% QoQ from longer 1.67 1.11 0.78 1.11 1.10 1.02 1.02 calendar quarter 0.80 4,846 • Slight moderation in 2Q23 NIM 2,560 803 2,437 due to excess liquidity deployed 2,409 3,549 2,234 372 to high
Slide 38: Fee Income
22 Fee Income 15 21 • Net fee income eased 16 15 16 15 5% QoQ • Loan / trade related fees declined on softer 1,139 1,075 lending activities 162 160 567 552 101 519 524 77 485 • Wealth fees recovery 153 77 78 83 59 78 317 81 55 72 hampered by cautious 298 147 74 131 156 investor sentiments 125 142 •
Slide 39: Trading & Investment Income
130 87 81 Trading & Investment 52 43 Income 40 38 • Another record quarter for 953 T&I 474 478 • Resilient customer-related 568 370 treasury income, 272 296 supported by hedging 257 214 178 203 demands 41 26 334 384 191 202 182 • Good performance from 173 177 trading and liquidity (76) management ac
Slide 40: Core Expenses and Cost / Income Ratio
44.3 Core Expenses and 40.9 43.8 42.6 45.2 43.3 44.1 Cost / Income Ratio (1) 2,889 42.6 40.9 40.9 325 + 21% • CIR unchanged at 40.9% 2,241 464 + 30% 1,418 1,440 1,448 on the back of disciplined 1,357 130 157 167 269 1,184 170 spending 383 + 31% 215 230 233 357 151 197 • Continued focus on 293 183 16
Slide 41: Non-Performing Assets
2022 2023 Non-Performing ($m) 2Q 3Q 4Q 1Q 2Q Assets NPAs at start of period 5,289 5,422 5,037 5,127 5,150 Non-individuals • Asset quality remained New NPAs _ 661 214 395 301 364 resilient and portfolio Less: well-collateralized with Upgrades and recoveries 363 448 322 80 137 SP/NPA stable at 33% Wri
Slide 42: Total Allowance on Loans
27 31 20 30 25 Total Allowance on 23 22 17 20 Loans 21 21 21 26 16 • Specific allowance higher 430 64 this quarter largely due to 319 a major Thailand corporate 5 account 173 238 366 173 192 36 135 28 • Pre-emptive general 314 7 8 253 202 166 164 allowance set aside to 127 maintain prudent (80) prov
Slide 43: Allowance Coverage
34 33 33 32 Allowance Coverage 30 0.9 0.9 0.9 1.0 1.0 • Adequate reserve buffer with prudent coverage for 4,934 5,002 5,134 4,931 4,931 performing loans at 1.0% 379 379 379 379 379 • NPA coverage stable at 2,912 2,865 2,868 2,905 3,058 99% or 209% taking collateral into account 1,643 1,687 1,755 1,6
Slide 44: Gross Loans
Gross Loans Jun-23 Mar-23 Jun-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Loans grew 1% QoQ Singapore 156 155 163 1 (4) driven by Singapore, ASEAN-4 68 68 63 (1) 7 North Asia and developed Malaysia 32 33 30 (3) 8 markets Thailand 24 24 21 (0) 15 Indonesia 10 10 11 0 (14) • YoY growth of 1% on Vietnam 2 2 2
Slide 45: Exposure to Greater China
Exposure to Greater China 77.1 75.8 69.2 70.5 71.6 11.8 10.6 9.7 9.4 10.5 Debt ($b) ▪ ~$2.8b in loans to Chinese 52.5 developers (1% of group loans) Non Bank ($b) 53.8 49.8 48.6 51.6 Bank ($b) 12.8 11.4 10.9 11.3 9.5 Jun Sep Dec Mar Jun As at 30 Jun 2023: 2022 2023 Bank exposure ($7.7b) • ~35% of to
Slide 46: 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 0.7% Others exposure is in Singapore 0.8% 0.8% United Kingdom 0.8% 0.8% • Overseas exposure Jun 23 1.5% 1.5% United States Group 8% backed by s
Slide 47: Total Funding
Total Funding Jun-23 Mar-23 Jun-22 QoQ YoY $b $b $b +/(-)% +/(-)% • Customer deposits up Singapore 261 254 245 3 7 1% QoQ, alongside ASEAN-4 70 73 66 (4) 7 stable CASA ratio at Malaysia 34 34 31 1 8 47.6% Thailand 25 26 22 (6) 11 Indonesia 10 11 11 (12) (8) Vietnam 2 2 2 (3) 18 North Asia 22 22 22 (
Slide 48: Liquidity Ratios
167 Liquidity Ratios 154 147 141 142 • Funding and liquidity positions remained 121 121 strong with LCR at 114 116 111 167% and NSFR at 121% 88.7 85.2 85.6 83.3 83.5 Jun Sep Dec Mar Jun 2022 2023 USD LDR (%) 72.3 64.2 60.0 60.7 62.9 All-currency LCR (%) Loan/Deposit Ratio (LDR) (%) Net Stable Fund R
Slide 49: Capital
Capital 13.1 12.8 13.3 14.0 13.6 • CET1 ratio steady at 13.6% 263 266 263 259 258 Jun Sep Dec Mar Jun 2022 2023 Leverage ratio (%) 6.6 6.4 6.6 7.0 7.0 RWA ($b) CET1 ratio (%) 49
Slide 50: Dividends
135 120 Dividends 75 • 60 85 Committed to Net dividend 78 consistent and Per ordinary share (¢) sustainable returns to 39 Interim Final shareholders 60 60 • Interim dividend of 85 39 cents per share 2020 2021 2022 1H23 Payout amount ($m) 1,304 2,011 2,263 1,424 Payout ratio (%) 45 ^ 49 49 49 ^ Divid
Slide 51: Right By You
@ Right By You
United Overseas Bank — Investor Presentation (August 2023) on 6ix