United Overseas Bank Limited · SGX:U11
United Overseas Bank — 2Q 2020 Earnings Presentation
18 slides from United Overseas Bank's earnings presentation, Aug 6, 2020
Slide 1: UOB Group Financial Highlights, First Half / Second Quarter 2020
UOB Group For the First Half / Second Quarter Ended 30 June 2020 Financial Highlights Lee Wai Fai Group Chief Financial Officer 6 August 2020 Disclai me r: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentati
Slide 2: Financial Highlights
Financial Highlights 2Q20 Key financial indicators Maintains strong balance sheet position amid challenging economic conditions Income Net profit after tax $2.26b $703m • 2Q20 NPAT at $703m, down 18% QoQ; 1H20 NPAT at $1.56b, down 30% YoY - 6% QoQ - 18% QoQ - 12% YoY - 40% YoY • Performance impacted
Slide 3: First half and second quarter earnings fell on declining margins and higher allowance
First half and second quarter earnings fell on declining margins and higher allowance set aside amid global economic uncertainties 1H20 1H19 YoY 2Q20 2Q19 YoY 1Q20 QoQ $m $m +/(-)% $m $m +/(-)% $m +/(-)% Net interest income 3,049 3,241 (6) 1,456 1,653 (12) 1,593 (9) Net fee income 960 1,005 (4) 445
Slide 4: Operating profit declined sharply in Singapore, overseas diversification provided stability
Operating profit declined sharply in Singapore, overseas diversification of franchise provided stability Singapore: YoY and QoQ results were impacted by 1H20 1H19 YoY 2Q20 1Q20 QoQ NIM compression from falling Operating Profit $m $m +/(-)% $m $m +/(-)% benchmark interest rates Singapore 1,316 1,
Slide 5: Business segment performance shows resilience
Business segment performance shows resilience Retail Retail’s income 1H20 1H19 YoY 2Q20 1Q20 QoQ marginally lower YoY as +9% YoY margin compression Assets under Operating Profit $m $m +/(-) % $m $m +/(-) % partly moderated healthy management at Group Retail 1,036 1,061 (2) 480 556 (14) volume growth
Slide 6: QoQ NIM down 23 bps to 1.48% on steep benchmark rate decline
QoQ NIM down 23 bps to 1.48% on the back of steep benchmark rate decline across the regional markets Net Interest Income (NII) and Margin 2.18 2.19 2.18 2.12 1.98 2.08 1.87 1.80 1.81 1.60 1.77 1.76 1.71 1.48 0.79 0.65 0.77 0.73 0.78 0.76 3,241 0.56 3,049 387 358 1,653 1,687 1,635 1,593 188 196 198 1
Slide 7: Fee income decreased 14% QoQ on lower wealth management and credit card fees
Fee income decreased 14% QoQ on lower wealth management and credit card fees as sales and transactions reduced Non-Interest Income 1,749 161 1,617 139 930 922 582 91 61 517 796 813 804 75 65 97 311 310 224 224 294 525 460 • Loan-related 267 229 $144m +10% QoQ 268 199 231 • Wealth Management $133m -3
Slide 8: Operating expenses continued to fall QoQ and YoY
Operating expenses continued to fall QoQ and YoY from lower staff costs and discretionary spend Expenses and Cost / Income Ratio 44.1 45.6 45.9 45.1 46.0 43.7 44.2 2,203 2,126 283 263 253 278 1,129 1,154 1,116 1,086 332 144 1,040 289 148 137 140 123 123 134 128 132 146 173 178 178 142 147 1,335 1,29
Slide 9: Lower NPA formation this quarter, NPL ratio unchanged at 1.6%
Lower NPA formation this quarter, NPL ratio unchanged at 1.6% 2019 2020 ($m) 2Q 3Q 4Q 1Q 2Q NPAs at start of period 4,215 4,185 4,350 4,297 4,590 Non-individuals New NPAs _ 357 180 437 573 131 Upgrades and recoveries (182) (38) (400) (101) (126) Write-offs (229) (26) (81) (208) (42) 4,161 4,301 4,30
Slide 10: 2Q20 total credit costs at 67bps mainly from allowance for non-impaired loans
2Q20 total credit costs at 67bps mainly from allowance set aside for non-impaired loans as macroeconomic outlook deteriorated Total Allowance on Loans 52 67 13 22 36 12 24 23 11 31 712 21 23 8 13 468 408 244 378 177 160 166 30 18 304 11 5 55 214 158 149 161 75 90 1H19 1H20 -20 2Q 3Q 4Q 1Q 2Q 2019 20
Slide 11: Increase allowance for non-impaired assets in anticipation of future credit emergence
Increase allowance for non-impaired assets in anticipation of future credit emergence Allowance Coverage 4,434 4,032 379 3,528 3,687 3,725 114 374 QoQ +$403m (+20%) 54 105 2,391 well above minimum 1,980 1,983 1,985 1,988 regulatory loss allowance of 1% 1,494 1,599 1,626 1,670 1,664 Jun Sep Dec Mar J
Slide 12: Loan growth slowed to 1% QoQ and 3% YoY, focus on high quality loans
Loan growth slowed to 1% QoQ and 3% YoY, focus on high quality loans Jun-20 Mar-20 Jun-19 QoQ YoY Gross Loans $b $b $b +/(-)% +/(-)% Singapore 142 141 142 0 0 Southeast Asia 64 63 61 2 6 Malaysia 30 30 29 0 3 Thailand 21 20 18 5 14 Indonesia 11 11 11 4 0 Vietnam 2 2 1 (2) 35 Others 1 1 1 (2) (20) No
Slide 13: Healthy deposit growth with CASA ratio at 49.6%
Healthy deposit growth with CASA ratio at 49.6%, continue to focus on stability of funding Jun-20 Mar-20 Jun-19 QoQ YoY $b $b $b +/(-)% +/(-)% Singapore 217 216 203 0 7 Southeast Asia 65 62 59 4 9 Malaysia 30 30 30 1 1 Thailand 23 22 20 5 12 Indonesia 8 7 7 16 10 Vietnam 3 3 1 (5) >100 Others 0 0 0
Slide 14: Maintain strong balance sheet position supported by ample liquidity and robust capital
Maintain strong balance sheet position supported by ample liquidity and robust capital position in view of uncertainties ahead LDR, LCR and NSFR CET1, Leverage and RWA 147 149 144 14.3 139 13.9 13.7 14.1 14.0 136 119 111 109 108 107 230 232 226 232 232 88.5 89.3 85.8 85.4 85.4 Jun Sep Dec Mar Jun Ju
Slide 15: Dividends in line with MAS guidance
Dividends in line with MAS guidance 130 120 20 100 20 20 55 50 45 50 55 35 39 2017 2018 2019 1H20 Net dividend Interim Final Special per ordinary share (¢) 2017 2018 2019 1H20 Payout amount ($m) 1,660 2,000 2,170 651 Payout ratio (%) 49 50 50 NM^ Payout ratio (%) (excluding special/one-off dividends
Slide 16: Appendix
Appendix : Exposure to Greater China Exposure to Oil & Gas sector
Slide 17: Exposure to Greater China
Exposure to Greater China 78.1 77.2 73.1 73.6 73.5 6.6 6.2 6.1 6.4 6.2 Debt ($b) 42.7 44.9 41.4 45.1 44.1 Non Bank ($b) Bank ($b) 24.3 26.6 25.8 25.9 23.2 Jun Sep Dec Mar Jun 2019 2020 As at 30 Jun 2020: Mainland China exposure ($29b or 7% of total assets) Hong Kong SAR exposure ($35b or 8% of total
Slide 18: Exposure to Oil and Gas (O&G) Sector
Exposure to Oil and Gas (O&G) Sector Total Outstanding O&G Loans ($b) As of 30 June 2020, outstanding O&G loans represented 3.5% of total loans as compared with 4.7% at 30 June 2018 11.8 9.9 3.7 Approximately 75% of O&G exposure is to downstream players and 3.0 traders, of which around two thirds ar