United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (November 2021)
52 slides from United Overseas Bank's investor presentation, November 2021
Slide 1: Sustained growth reflecting our diversified franchise
UOB Group Sustained growth reflecting our diversified franchise November 2021 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 9M21 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD306b (USD225b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD355b (USD261b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 85.1% 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 9M21 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD137b2 Operating Assets under +6% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD1.6b 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: Asia projected to rebound in 2021 and 2022
Asia projected to rebound in 2021 and 2022 Recovery across manufacturing and services sectors 2020 GDP growth Purchasing managers’ index (PMI) +7.9 2021 GDP growth 60 (Index) +5.7 2022 GDP growth 50 +2.3 40 30 +7.4 20 China Sep-19 Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21 ASEAN M-PMI EM S-PMI EM M-P
Slide 11: Accommodative monetary policy stance
Accommodative monetary policy stance 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21f 1Q21f 2Q21f 3Q21f US 10-Year Treasury 0.66 0.68 0.91 1.74 1.47 1.49 1.85 1.90 2.00 2.05 US Fed Funds 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 SG 3M SIBOR 0.56 0.41 0.41 0.44 0.43 0.43 0.40 0.40 0.50 0.50 SG 3M SOR 0.20
Slide 12: Sound fundamentals in Southeast Asia
Sound fundamentals in Southeast Asia Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 417 15.6 15.7 245 75 147 115 30 24 26 3.7 2.1 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.0 –5.4 Dec 1998 Sep 2021 Singapore Malaysia Thailand Indonesia 1997 20
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% 13% FIs, Building & investment construction Large Others and holding 27% corporates 13% companies Manufacturing and 11% 8% 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% 1.72% balance 1.27% portfolio sheet FY17 FY18 FY19 FY20 9M21 quality efficiency Current Account Saving Account Balances (SGD b) 13% CAGR1 Proactive 174 198 Robust 124 130 141 liability capitalisati
Slide 22: UOB's responsible financing journey: pragmatic and progressive
UOB’s responsible financing journey: pragmatic and progressive 2018 2019 2020 Rolled out ESG risk classification to Discontinued (i) new project Strengthened due diligence process better manage ESG risk in portfolio financing of coal-fired power plant with enhanced checklist and climate- proje
Slide 23: UOB's TCFD journey
UOB’s TCFD journey Qualitative assessment Transition risk scenario analysis Findings Completed qualitative assessment Partnered an internationally recognised Carbon-intensive segments in 2019, referencing SASB’s1 environmental consultancy in climate formed less than 10% of loans Materiality Ma
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% 85% Aa1 AA– AA– OCBC a1 4
Slide 25: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR 15.9% 15.5% 14.6% 14.6% 14.5% 14.5% 13.6% 13.5% 13.4% 13.1% 12.6% 12.4% 11.7% HSBC OCBC MBB SCB DBS TD RBC UOB CIMB CBA1 BOA NAB1 Citi Return on Average Equity 8.2% 10.4% 10.5% 7.0% 13.4% 15.4% 19.2% 10.2% 9.1% 13.5% 12.7% 10.6% 13
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; RMB Deposit-funded and liquid balance sheet SGD USD Tier 1, BBB–)1 Tier 2, (A; A2; 2% 11% 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 +6%1 2x1 Cross-border Growth in suppliers Across our ASEAN footprint income growth and distributors within and global network (formed 30% of Group financial supply chain Wholesale Banking
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 >2x1 ~5ppt1 Target growth in income Target decline in cost / Scale UOB TMRW across ASEAN from digitally-engaged income ratio of digitally- in a cost-effective manner customers2 engaged customers2 E
Slide 34: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN Sustainable financing SGD14b Total sustainability Ecosystem solutions offering Sustainable growth in priority financing1 provided to end-to-end financing sectors driving ASEAN progress date at end-9M21 Responsible investment Integrate sustaina
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 3Q21 financial overview
3Q21 financial overview Net Profit After Tax Movement, 3Q21 vs 2Q21 (SGD m) 26 6 16 15 19 10 14 1,003 +4% 1,046 +2% –1% +7% +1% –10% –27% –6% 2Q21 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 3Q21 net profit after tax income commission interest expenses allowa
Slide 37: 9M21 financial overview
9M21 financial overview Net Profit After Tax Movement, 9M21 vs 9M20 (SGD m) 612 35 161 348 107 83 187 +37% 3,057 2,226 +4% +24% –12% +3% –53% +55% +34% 9M20 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 9M21 net profit after tax income commission interest expen
Slide 38: Net interest income rose with asset volumes, while net interest margin was stable
Net interest income rose with asset volumes, while net interest margin was stable Net interest 3.00% 3.00% 11,500 margin (%) * 2.14% 2.19% 2.16% 3 1.91% 10,5001.83% 1.87% 1.90% 1.90% 1.87% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.77% 1.78% 1.00% 1.57% 1.00% 1.53% 1.57% 1.57% 1.56% 1.55% ▬ Inter
Slide 39: Non-interest income supported by diversified revenue engines
Non-interest income supported by diversified revenue engines 38.5% 1 % of total income 35.4% 34.6% 34.2% 40.0% 34.8% 32.8% 34.7% 34.6% 40.0% 31.8% 5,100 ▬ Non-interest income 1 ▬ Net fee income 20.0% 4,600 20.0% 22.7% 23.2% 25.7% 24.6% 24.0% 21.9% 21.6% 20.3% 21.8% 4,100 1 0.0% 0.0% 957 3,467 3,600
Slide 40: Fee income held up, due to a base of diverse streams
Fee income held up, due to a base of diverse streams 850 Fee income 2,412 730 (SGD m) 2,500 2,303 2,313750 37 4 677 666 2,161 63 13 75 297 5 4 Total 80 296 280 650 602 37 75 581 78 2,000 272 156 142 2 Others 154 4 74 31 34 550 71 148 37 182 558 506 33 Trade-related 1,500 545 183 164 471 450 10
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% 45.6%50.0% 6,50044.6% 46.7% 43.7% 43.9% 44.6% 43.8% 43.7% 43.7% ▬ Costs / Income 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 30.0% Operating expenses 4,18430.0% 4,500 1 4,003 1,089 1,057 1,072 (SGD m) 1,049 3,739 1,009 1,253 1 20.0% 1,
Slide 42: Steady growth across our key markets in Southeast Asia and North Asia
Steady growth across our key markets in Southeast Asia and North Asia 9M21 9M20 YoY 3Q21 2Q21 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 2,115 1,941 +9 686 705 –3 Rest of Southeast Asia 1,029 995 +3 351 335 +5 Malaysia 541 512 +6 186 173 +7 Thailand 301 299 +1 99 101 –1 I
Slide 43: Healthy growth led by term and trade loans in Singapore and North Asia
Healthy growth led by term and trade loans in Singapore and North Asia Sep-21 Jun-21 QoQ Sep-20 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 158 153 +4 144 +10 Rest of Southeast Asia 62 62 +1 63 –1 Malaysia 29 29 +1 30 –3 Thailand 20 20 –1 19 +1 Indonesia 11 11 –0 11 –2 Vietnam 2 2 +9
Slide 44: Exposure to Greater China
Exposure to Greater China As at 30 September 2021: Mainland China exposure Hong Kong SAR exposure ($26.4b or 6% of total assets) ($40.9b or 9% of total assets) 74.8 76.1 69.2 71.8 Bank exposure ($10.7b) Bank exposure ($2.9b) 68.3 7.6 10.2 6.1 7.3 ~60% to top five domestic banks Majority to forei
Slide 45: Exposure to oil and gas sector
Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) 11.8 12.1 As of 30 September 2021, oil and gas (O&G) loans represented 2.0 4% of total loans as compared with 5% at 30 June 2018 3.3 5.0 Around 80% of O&G exposure is to downstream players and 4.8 traders, which are mainly nation
Slide 46: Benign new NPL formation and NPL ratio
Benign new NPL formation and NPL ratio (SGD m) 3Q20 4Q20 1Q21 2Q21 3Q21 NPAs at start of period 4,628 4,301 4,608 4,544 4,547 Non-individuals: New NPAs 74 622 145 360 251 Upgrades and recoveries (216) (175) (250) (158) (73) Write-offs (63) (179) (26) (202) (42) 4,423 4,569 4,477 4,544 4,683 Individu
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 68bp Average Gross Loans 57bp 55bp 1 60bp 60bp (basis points) * 61bp 2,500 ▬ Allowances for NPLs 40bp 40bp 1 28bp 29bp 18bp 20bp 20bp ▬ Total allowances for 16bp 20bp 20bp 2,000 34bp 1 loa
Slide 48: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 111% 107% 112% 110% 106% 12 Coverage ratios (%) 100% ▬ Total allowances* / NPAs 39% 10 37% 37% 35% 34% 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 14.0% 14.7% 14.3% 14.2% 13.5% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.4% 7.4% 7.5% 7.4% 7.1% ▬ Return on risk-weighted 5.00% assets (%) * 1.17% 1.22% 1.76% 1.68% 1.71% 231 236 241 253 Risk weighted assets (SGD
Slide 50: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 125% 123% 125% 90 122% 121% ▬ Net stable funding ratio (%) 120% 80 ▬ Group loan-deposit ratio (%) 100% 86.7% 85.4% 87.0% 86.9% 85.1% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 62.5% 62.6% 60.4% 50 40% 58.0% 58.2% 360% 40 20% 301% 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 55 50 Final 39 50 55 60 Interim 39 2018 2019 2020 1H21 Payout amount (SGD m) 2,000 2,171 1,304 1,006 Payout ratio (%) 50 50 451 50 Payout ratio (excluding special 42 42 451 50 d
Slide 52: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — Investor Presentation (November 2021) on 6ix