United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (March 2023)
53 slides from United Overseas Bank's investor presentation, March 2023
Slide 1: UOB Group: Record Profit Supported By Growth in Core Franchise
UOB Group Record Profit Supported By Growth in Core Franchise March 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
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 FY22 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD320b (USD238b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD369b (USD274b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 85.6% 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 FY22 performance by segment Myanmar 2 offices Greater China1 27 offices UOB SGD154b 3 Operating Assets under +11% Thailand Vietnam management YoY Open profit 153 offices 5 offices Malaysia Philippines Group SGD2.
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 2023
Asian growth to sustain into 2023 2020 GDP growth 2022F GDP growth +5.2 China’s reopening poised to boost tourism in ASEAN to pre- 2023F GDP growth +2.2 +3.0 pandemic levels China +8.0 +6.6 +3.2 +3.7 +2.9 Thailand Vietnam –6.2 +8.3 +4.0 +3.8 Malaysia +0.7 –5.6 +5.4 +5.0 Singapore –4.1 Indonesia –2.1
Slide 11: Monetary policy to tighten further as inflation stays elevated
Monetary policy to tighten further as inflation stays elevated 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23F 2Q23F 3Q23F 4Q23F US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.83 3.87 3.90 3.80 3.60 3.40 US Fed Funds 0.25 0.25 0.25 0.25 0.50 1.75 3.25 4.50 5.00 5.25 5.25 5.25 SG 3M SIBOR 0.44 0.4
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) 289 15.6 12.8 217 137 114 1.6 2.2 75 30 24 26 –2.0 –0.5 –1.5 –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, 210 (% of GDP) AU,184 HK, 162 SG, 36 CA, 137 AU, 24 SG, 129 HK, 23 CA, 22 US, 22 4Q12 4Q14 4Q16 4Q18 4Q20 4Q22 2017 2019 2021 2023 2025 2027F US and AU are
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: 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, with st
Slide 19: 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 20: Diversified loan portfolio
Diversified loan portfolio Housing loans Professionals 24% Others Transport, and private 5% storage and individuals communication 9% 5% General Industry commerce 11% FIs, investment Building & and holding construction companies Manufacturing 27% Large corporates Others 12% 7% and institutions 15% 53
Slide 21: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.93% 1.90% 1.27% 1.68% 1.83%1 balance sheet portfolio FY18 FY19 FY20 FY21 FY22 efficiency quality Current Account Saving Account Balances (SGD b) 7.6% CAGR2 174 198 175 130 141 Proactive Robust liability FY18 FY19
Slide 22: 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 23: 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 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 43%1 1.0% 1 86% Aa1 AA– AA– OCBC a1 43% 1.3% 83% Aa1 AA– AA– DBS a1 43% 1
Slide 25: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 16.2% 15.2% 14.6% 14.2% 14.1% 14.0% 13.8% 13.3% 13.0% 12.8% 12.6% 11.5% 11.5% 2 2 TD OCBC DBS HSBC CIMB SCB MBB UOB Citi BOA RBC NAB CBA Return on Average Equity 1 (annualised) 15.9% 11.1% 15.0% 8.7% 10.4% 8.0% 9.6% 11.9% 7.7% 10.8% 16.4%
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 GBP USD Additional (BBB+; Baa1; (A; A2; SGD Tier 1, BBB–)1 ▪ Deposit-funded and liquid balance sheet 9% 34% Tier 2, BBB+)1 13% 16% 22% ▪ 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 environment ▪ Grow fee income to offset ▪ Disciplined approach in serve expanding regional remains uncerta
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 ▪ Third largest population franchise among Singapore 667 726 6.3 banks 581 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 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 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 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 32: Well-timed acquisition complementing the ASEAN strategy
Well-timed acquisition complementing the ASEAN strategy Financial impact so far Our 2026 Promise ▪ Group to remain well capitalised ▪ ROE > 13% ▪ RoRWA > 2% Positive boost Costs1 in Asset quality to income tandem with stable ▪ Maintain dividend payout ratio drivers income of 50% ~10bps Mid-40% Mid-s
Slide 33: Income and ASEAN franchise augmented by Citi
Income and ASEAN franchise Integration progress augmented by Citi • Completed the acquisition of Citigroup's consumer portfolio in Malaysia and Thailand on 1 Nov 2022 • Indonesia and Vietnam to Accelerate growth Digitally-enabled Strong cards Augment wealth come onboard in 2023 in customer base cust
Slide 34: Consumers: Tapping on rising affluence and growing digitalisation in Southeast Asia
Consumers: Tapping on rising affluence and growing digitalisation in Southeast Asia Driving Digital Adoption ~7m >800k Retail customers New-to-bank customers Scale UOB TMRW across >70% are digitally enabled 55% are digitally ASEAN to digitally acquire at acquired low cost Ecosystem Partnerships 30 +
Slide 35: Wholesale: Growing regional franchise, capturing cross-border opportunities
Wholesale: Growing regional franchise, capturing cross-border opportunities Strengthening Connectivity +12%1 +31%2 Cross-border Suppliers and Across our ASEAN footprint income growth distributors within and global network (formed 28%2 of Financial Supply Chain Group Wholesale Management (FSCM) Banki
Slide 36: Latest Financials
Latest Financials 36
Slide 37: 4Q22 financial overview
4Q22 financial overview Net Profit After Tax Movement, 4Q22 vs 3Q22 (SGD m) 326 34 146 1 61 80 10 20 unchanged 1 1,403 1,398 +15% –7% –34% +4% +78% +59% +6% 3Q22 net Net interest Net fee and Other non- Operating Total Share of profit Tax, 4Q22 net profit after tax income commission interest expenses
Slide 38: FY22 financial overview
FY22 financial overview Net Profit After Tax Movement, FY22 vs FY21 (SGD m) 1,955 214 45 703 1 54 21 372 1 +18% 4,819 4,075 +31% –9% +4% +16% –8% –17% +43% FY21 net Net interest Net fee and Other non- Operating Total Share of profit Tax, FY22 net profit after tax income commission interest expenses
Slide 39: Strong net interest margin expansion amid rate hikes
Strong net interest margin expansion amid rate hikes 3.00% 3.00% 2.75% Net interest 4,40 2.26% 2.34% margin (%) * 2.16% 12,500 2.02% 1.91% 1.89% 1.89% 1.90% ▬ Loans 2.00% 2.00% 3,90 2.22% ▬ Overall 1.86% 1.95% 1.78% 1.67% ▬ Interbank & 1.00% 1.57% 1.56% 10,500 1.56% 1.58% 3,40 1.00% securities 1.02%
Slide 40: Non-interest income supported by diversified revenue engines
Non-interest income supported by diversified revenue engines 40.0% 34.7% % of total income 40.0% 5,100 31.1% 31.1% 150 27.9% 28.5% 29.8% ▬ Non-interest income 23.1% 4,600 ▬ Net fee income 20.0% 24.1% 20.0% 130 23.8% 24.3% 18.5% 21.0% 4,100 16.3% 14.6% 0.0% 0.0% 110 Non-interest 3,401 3,600 income (S
Slide 41: Credit card fees driven by strong rebound in regional spending and travel
Credit card fees driven by strong rebound in regional spending and travel; muted investor sentiments weighed on wealth fees 850 3,000 750 2,500 2,357 650 2,143 580 572 567 Net fee income (SGD m) 395 550 519 2,000 355 99 94 87 485 ❑ Total 185 86 450 53 42 59 87 231 ❑ Others 1,500 55 768 350 160 137 7
Slide 42: Lower CIR as revenue growth outpaced increase in expenses
Lower CIR as revenue growth outpaced increase in expenses 2,000 50.0% 50.0%6,500 1 45.6% ▬ Costs / Income 44.6% 44.1% 43.3% 45.0% 44.8% 43.8% 1,800 ratio (CIR, %) 42.6% 42.6% 40.0% 40.0%5,500 1,600 5,016 1,418 1,357 1,400 4,472 30.0% 4,313 4,500 Core expenses1 (SGD m) 4,184 1,255 30.0% 1,184 363 331
Slide 43: Diversified growth across our key markets
Diversified growth across our key markets FY22 FY21 YoY 4Q22 3Q22 QoQ +/(–) +/(–) Core Operating profit 1 SGD m SGD m % SGD m SGD m % Singapore 3,824 2,805 +36 1,204 1,078 +12 Rest of Southeast Asia 1,427 1,327 +8 404 386 +5 Malaysia 744 689 +8 195 216 –10 Thailand 425 407 +5 135 98 +37 Indonesia 23
Slide 44: Broad based growth across most geographies
Broad based growth across most geographies Dec-22 Sep-22 QoQ Dec-21 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 160 165 –3 158 +2 Rest of Southeast Asia 69 63 +11 63 +9 Malaysia 33 29 +13 30 +12 Thailand 23 20 +20 21 +13 Indonesia 10 11 –9 10 –1 Vietnam 2 2 –8 2 (0) Others 1 1 –3 1 –
Slide 45: Exposure to Greater China
Exposure to Greater China 76.1 77.2 77.1 75.8 69.2 10.8 12.2 11.8 10.6 9.7 ▪ ~$3b in loans to Chinese Debt ($b) developers (1% of group Non Bank ($b) 48.8 51.5 52.5 53.8 48.6 loans & low borrower concentration) Bank ($b) 16.5 13.5 12.8 11.4 10.9 Dec Mar Jun Sep Dec 2021 2022 As at 31 Dec 2022: Bank
Slide 46: Exposure to Commodities
Exposure to Commodities Oil and Gas (O&G) Other Commodity Dec 22 Traders / downstream Total Upstream industries Segments2 industries1 Outstanding loans S$1.9b S$8.0b S$8.8b S$18.7b % of total loans 3% 3% 6% Outstanding O&G exposure is to downstream players and traders which are mainly national oil c
Slide 47: NPA formation normalised; NPL ratio remained low at 1.6%
NPA formation normalised from previous quarter; NPL ratio remained low at 1.6% (SGD m) 4Q21 1Q22 2Q22 3Q22 4Q22 NPAs at start of period 4,772 5,077 5,289 5,422 5,037 Non-individuals: New NPAs 670 462 661 214 395 Upgrades and recoveries (172) (207) (363) (448) (322) Write-offs (205) (36) (123) (60) (
Slide 48: Steady credit costs as asset quality remains benign
Steady credit costs as asset quality remains benign 80bp 3,000 80bp 1000 57bp 60bp 60bp 900 Average Gross Loans 2,500 800 (basis points) 1 40bp 40bp 31bp 22bp ▬ Allowances for NPLs 18bp 20bp 22bp 22bp 700 19bp 17bp 20bpfor ▬ Total allowances 20bp 2,000 24bp 20bp 21bp 21bp loans 17bp 18bp 19bp 600 0b
Slide 49: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 12,000 96% 94% 91% 98% 98% Coverage ratios (%) 100% ▬ Total allowances1 / NPAs 10,000 50% 31% 31% 30% 33% 34% ▬ Specific allowances / NPAs ▬ General allowance on loans1 / 0% performing loans (%) 8,000 1.0% 0.9% 0.9% 0.9% 0.9% -50% 6,000 Allowanc
Slide 50: Capital and leverage ratios remained robust
Capital and leverage ratios remained robust 20.00% 500 ▬ Common equity Tier 1 13.5% 15.00% 13.1% 13.1% 12.8% 13.3% 450 capital adequacy ratio (%) ▬ Leverage ratio (%) 10.00% 7.2% 400 6.9% 6.6% 6.4% 6.6% ▬ Return on risk-weighted 5.00% 350 assets (%) 1 2.14% 2.13% 300 1.59% 1.36% 1.69% 250 200 ❑ Risk
Slide 51: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 900% 116% 113% 114% 116% ▬ Net stable funding ratio (%) 120% 111% 800% ▬ Group loan-deposit ratio (%) 100% 87.0% 87.3% 88.7% 85.2% 85.6% 700% ▬ USD loan-deposit ratio (%) 80% 600% 60% 72.3% 66.3% 64.2% 61.6% 60.0% 500% 40% 400% Liquidity coverage ratio (%)
Slide 52: 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 ❑ Special 75 60 55 ❑ Final 39 ❑ Interim 55 60 60 39 2019 2020 2021 2022 Payout amount (SGD m) 2,171 1,304 2,011 2,261 Payout ratio (%) 50 451 49 49 Payout ratio (excluding special 42 451 49 49 d
Slide 53: Right By You
@ Right By You
United Overseas Bank — Investor Presentation (March 2023) on 6ix