United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (May 2020)
53 slides from United Overseas Bank's investor presentation, May 2020
Slide 1: UOB Group: Maintaining strong balance sheet amid challenging economic conditions
UOB Group Maintaining strong balance sheet amid challenging economic conditions May 2020 Discla imer: The mater ial in th is pre se 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 it s act ivit ies as at the date of the presentat ion. The
Slide 2: Agenda
Agenda 1. Overview of UOB Group 2. Macroeconomic Outlook 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials
Slide 3: Overview of UOB Group
Overview of UOB Group HtUOB
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1Q20 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD278b (USD195b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD322b (USD226b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Loan/Deposit ratio : 85.4% ■ Ne
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 Singapore1 Best SME Banking1 Strong player in Singapore dollar treasury instruments Strong player in credit cards and Seamless access to regional
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
Slide 7: Expanding regional banking franchise
Expanding regional banking franchise Extensive Regional Footprint with c.500 Offices Performance by Segment in 1Q20 MYANMAR GREATER CHINA1 29 offices 2 offices VIETNAM UOB Operating $124b profit Assets under +8% 2 offices THAILAND Open management YoY 156 offices PHILIPPINES 1 office $556m Group +9%
Slide 8: Why UOB?
Why UOB? Proven track record in steering the bank through various global events and Stable crises Management Stability of management team ensures consistent execution of strategies Entrenched local presence. Ground resources and integrated regional Integrated network allow us to better address
Slide 9: Macroeconomic Outlook
Macroeconomic Outlook {itt VOB
Slide 10: Pandemic-led synchronised downturn in the region
Pandemic-led synchronised downturn in the region Growth may gradually resume towards Unemployment higher in 2020, end-2020 but comparable with levels seen in past crises GDP Growth (%) Unemployment Rate (%) YoY % change 2020f 2021f 1Q20f 2Q20f 3Q20f 4Q20f SG MY TH ID Singapore -4.0 4.5 -2.2 -9.3 -2.
Slide 11: Large-scale stimulus and extensive relief measures across the region
Large-scale stimulus and extensive relief measures across the region Singapore Malaysia Thailand Indonesia Vietnam Hong Kong China Size of government stimulus / 12.8% 17.7% 11.4% 2.7% 3.5% 10.0% – GDP Year-to-date decline in 108bp/ 100bp 50bp 50bp 100bp 138bp 30bp policy/short-term rates in 2020 125
Slide 12: Accommodative monetary policy stance
Accommodative monetary policy stance 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20f 3Q20f 4Q20f 1Q21f 2Q21f US 10-Year Treasury 2.41 2.01 1.66 1.92 0.67 0.90 1.10 1.25 1.40 1.40 US Fed Funds 2.50 2.50 2.00 1.75 0.25 0.25 0.25 0.25 0.25 0.25 SG 3M SIBOR 1.94 2.00 1.88 1.77 1.00 0.55 0.55 0.55 0.60 0.60 SG 3M SOR 1.9
Slide 13: Southeast Asia: Resilient key markets
Southeast Asia: Resilient key markets Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 279 226 15.3 14.8 121 102 75 5.2 30 24 26 Singapore Thailand Indonesia Malaysia –0.1 –1.5 –3.2 –2.0 –5.5 1998 Mar 2020 Singapore Malaysia Thailand Indonesia 1997 2020
Slide 14: Southeast Asia banking sectors: Healthy fundamentals
Southeast Asia banking sectors: Healthy fundamentals Robust Capital Positions Adequate Loan/Deposit Ratio Healthy Reserves (Common equity Tier 1 capital adequacy (Loan/deposit ratio, in %) (NPL reserve cover, in %) ratio, in %) Thailand 96 Thailand Indonesia 146 94 21.9 Indonesia Singapore Indonesia
Slide 15: Singapore property market resilient supported by quality mortgages
Singapore property market resilient supported by quality mortgages Regional House Price Indices over Last 10 Years Property Cooling Measures in Singapore (4Q09 = 100) Non- Loan-to-value (LTV) 1st property 2nd property Thereafter individual limit 75%/55%* 45%/25%* 35%/15%* 15% HK, 282 Max mortgage te
Slide 16: Basel III across the region
Basel III across the region BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15 Jan-15 Jan-15 Jan-13 Jan-14
Slide 17: Global regulators have delayed capital rules by a year
Global regulators have 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 -- Le
Slide 18: Impact of Basel IV likely to be manageable
Impact of Basel IV1 likely to be manageable Retail credit Wholesale credit Others LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for to 5% from 10% QRRE4 and Other Retail Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%
Slide 19: Strong UOB Fundamentals
tit UOB Strong UOB Fundamentals 19
Slide 20: Strong UOB fundamentals
Strong UOB fundamentals Strong Proven track record in steering the bank through various global events and Management with crises Proven Track Record Stability of management team ensures consistent execution of strategies Responsible yet prudent approach in extending relief to customers via var
Slide 21: Managing risks for stable growth
Managing risks for stable growth Prudent approach has been key to delivering sustainable returns over the years Manage concentration risk Institutionalised framework through Group Risk Appetite Maintain Statement (GRAS): Nurture core balance talent sheet – Outlines risk and return strength objec
Slide 22: Diversified loan portfolio
Diversified loan portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others 11% Singapore 16% SGD IDR 47% Greater 52% 2% China 15% THB 7% Indonesia 4% Thailand MYR 7% 10% Malaysia USD 11% 18% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professi
Slide 23: Disciplined balance sheet management
Disciplined balance sheet management RoRWA1 1.93% 1.90% 1.51% 1.63% Sustained Healthy balance FY16 FY17 FY18 FY19 portfolio sheet Current Account Saving Account Balances (SGD b) quality efficiency 7% CAGR2 107 114 124 130 141 Proactive Robust FY15 FY16 FY17 FY18 FY19 liability capitalisation managem
Slide 24: Competitive against peers
Competitive against peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA1 Liquidity Moody’s baseline Costs/income Return on average Loan/deposit Moody’s S&P Fitch credit assessment ratio assets1 ratio Aa1 AA– AA– UOB a1 45.1% 0.83% 85.4% Aa1 AA– AA– OCBC a1 44.5% 0.67
Slide 25: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 23.7 23.7 24.6 20.3 19.4 (Common Equity 18.5 17.4 17.4 17.2 17.2 16.8 16.8 16.5 16.4 15.7 15.7 15.7 15.7 15.1 15.1 15.1 15.1 14.9 14.9 14.6 14.6 14.5 14.3 Tier 1 CAR; 14.1 14.1 14.0 13.9 13.4 13.1 13.1 12.
Slide 26: Strong investment grade credit ratings
Strong investment grade credit ratings Aa1 / Stable / P-1 AA– / Stable / A-1+ AA– / Rating Watch Negative / F1+ Capital good by global standards Well-established market position, strong Deposit-funded and liquid balance sheet funding and prudent management record Sound capital and high loan-
Slide 27: Our Covid-19 response: Supporting our stakeholders
Our Covid-19 response: Supporting our stakeholders For our customers Businesses Individuals • First Singapore bank to announce • Moratorium for existing • Moratorium for S$3b in liquidity relief programme secured loans mortgage borrowers • Assisted >1m1 businesses and • Fresh liquidity in working •
Slide 28: Our sustainability milestones
Our sustainability milestones UOB pledged support for the Taskforce on Climate-related Financial Disclosures (TCFD) and UOB Asset Management, UOB Venture Management and UOB Global Capital are signatories of United Nations-supported Principles for Responsible Investment (PRI). Supporting Sustainable
Slide 29: Our Growth Drivers
itt UOB Our Growth Drivers 29
Slide 30: Our growth drivers
Our growth drivers Realise Full Provides us with ability to serve expanding regional needs of our customers Potential of our Improves operational efficiency, enhances risk management, seamless Integrated Platform customer experience and faster time to market Global macro environment remains un
Slide 31: Southeast Asia's immense long-term potential
Southeast Asia’s immense long-term potential Population GDP1 Trade2 FDI3 (Million persons) (USD trillion) (USD trillion) (USD billion) 726 6.6 4.5 328 654 581 2.8 3.0 1.9 156 1.5 51 2008 2018 2030 2008 2018 2030 2008 2018 2030 2008 2018 2030 • Third largest globally, • Fifth largest economic • Fourt
Slide 32: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High 2019 retail banking pool sizes 8 Vietnam USD b 3 Philippines Denotes UOB’s core markets in Southeast Asia ✓ TMRW launched in Indonesia Mar 2019 Banking penetration 21 growth potential 12 Thailand UAE 9 Malaysia 37 India 9 Taiwan 18 Hong
Slide 33: 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 (2021) (SGD b) (SGD b) c$53b CAGR Markets where UOB has a presence c$46b +7% c$12b Thailand Singapore c$1b c$10b c$4b c$7b +2% Wealth c$7b Hong Kong c$3b Oth
Slide 34: Group wholesale banking income growth supported by diverse sources
Group wholesale banking income growth supported by diverse sources Group Wholesale Banking income (SGD b) +8%2 growth in non-Singapore income +6% 3.9 4.1 +6%2 growth in non-real estate income FY18 FY19 RoRWA1 2.0% 1.7% +8%2 growth in non-loan income 1. Return on risk weighted assets (RoRWA), compute
Slide 35: Strategic initiatives to tap regional flows
Strategic initiatives to tap regional flows Strengthened Sector Products Connectivity Specialisation and Platforms Tapping Greater China / Offering tailored Building new Southeast Asian flows solutions capabilities • Support regional needs of • Improve customer • Financing frameworks2 to companies f
Slide 36: Group retail riding on region's growing affluence
Group retail riding on region’s growing affluence Gross Loans (Group Retail1): +1% YoY in FY19 Income (Group Retail1) +9% YoY in FY19 SGD b SGD b 108 109 3.8 4.0 4.3 104 FY17 FY18 FY19 FY17 FY18 FY19 61% of AUM from overseas customers2 Segment RoRWA3 +0.46%pt YoY in FY19 Assets under management (AUM
Slide 37: Leveraging digitalisation and partnerships
Leveraging digitalisation and partnerships Omni-Channel Digital Bank: Ecosystem Experience TMRW Partnerships Affluent customers with Targeting Mobile-first & Forging collaborations to universal banking needs Mobile-only Generation widen distribution reach • Launched UOB Mighty 2 • Aim: To be the wor
Slide 38: Latest Financials
itt UOB Latest Financials 38
Slide 39: 1Q20 financial overview
1Q20 financial overview Net Profit After Tax (NPAT) Movement, 1Q20 vs 4Q19 (SGD m) 39 30 42 23 140 3 12 1,006 –15% 855 –3% +8% –7% –3% +96% –13% +6% 4Q19 net Net interest Net fee and Other non- Operating Total Share of Tax and 1Q20 net profit after income commission interest expenses allowances prof
Slide 40: FY19 financial overview
FY19 financial overview Net Profit After Tax (NPAT) Movement, FY19 vs FY18 (SGD m) 506 342 65 469 42 13 54 4,008 +8% 4,343 +6% +3% +54% +12% +11% –51% +2% FY18 net Net interest Net fee and Other non- Operating Total Share of Tax and FY19 net profit after income commission interest expenses allowance
Slide 41: Lower net interest income amid falling interest rate environment
Lower net interest income amid falling interest rate environment Net Interest Income and Net Interest Margin 3.00% 3.00% 11,500 2.20% 2.14% 2.19% 2.16% 3,400 2.16% 2.19% 2.18% 2.12% 2.08% 2.00% 2.00% 10,500 1.71% 1.77% 1.82% 1.78% 2,900 1.79% 1.81% 1.77% 1.76% 1.71% 9,500 1.00% 1.00% 0.77% 0.89% 0.7
Slide 42: Non-interest income supported by diverse engines of fees
Non-interest income supported by diverse engines of fees Non-Interest Income and as a % of Total Income 35.9% 35.4% 34.6% 1500 5,100 31.8% 40.0% 34.0% 36.0% 35.4% 33.8% 32.8% 40.0% 4,600 1300 20.0% 21.9% 21.6% 20.0% 21.3% 20.3% 4,100 19.9% 20.4% 21.1% 19.6% 21.4% 1100 0.0% 3,467 0.0% 3,600 930 922 3
Slide 43: Pacing growth in operating expenses while maintaining a stable CIR
Pacing growth in operating expenses while maintaining a stable CIR Operating Expenses and Costs / Income Ratio (CIR) 50.0% 1,800 50.0% 44.6% 45.9% 45.1% 5,500 44.0% 43.7% 43.9% 44.6% 43.7% 44.2% 45.0% 1,600 45.0% 4,472 40.0% 4,500 1,400 40.0% 4,003 3,739 35.0% 1,200 1,129 1,154 1,116 35.0% 1,253 1,0
Slide 44: Committed as a long-term player in the region
Committed as a long-term player in the region Lending profile • Strong capital and funding positions Large enable us to support our customers across Individual corporates the region customers • Incremental lending in 1Q20 was driven by large corporates and top tier customers in 35% developed markets
Slide 45: Steady loan growth from Singapore and North Asia
Steady loan growth from Singapore and North Asia Mar-20 Dec-19 QoQ Mar-19 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 141 139 +2 139 +2 Rest of Southeast Asia 63 63 (0) 60 +4 Malaysia 30 30 0 29 +1 Thailand 20 20 (0) 18 +11 Indonesia 11 11 –4 11 –4 Others 2 2 +7 2 +21 North Asia 48 4
Slide 46: O&G exposures pared down since last crisis, net exposure ~3% of loans
O&G exposures pared down since last crisis, net exposure ~3% of loans 11.8 As of 31 March 2020, outstanding O&G loans stood at S$10.2b, representing 3.6% of total loans as compared with 4.7% at 30 10.2 June 2018 3.7 3.5 75% of O&G exposure to downstream players and traders, of which 70% are national
Slide 47: Exposure to Greater China
Exposure 100.0 to Greater China 78.1 77.2 80.0 72.2 73.1 73.6 6.6 6.4 6.2 5.6 6.1 Debt (SGD b) 60.0 42.9 42.7 44.9 41.4 45.1 40.0 Non-bank (SGD b) 20.0 Bank (SGD b) 23.7 24.3 26.6 25.8 25.9 0.0 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 As at 31 Mar 2020: Mainland China exposure ($32b or 7% of total assets)
Slide 48: Higher NPA formation from a few significant accounts
Higher NPA formation from a few significant accounts (SGD m) 1Q19 2Q19 3Q19 4Q19 1Q20 NPAs at start of period 4,166 4,215 4,185 4,350 4,297 Non-individuals: New NPAs 230 357 180 437 573 Upgrades and recoveries (139) (182) (38) (400) (101) Write-offs (17) (229) (26) (81) (208) 4,240 4,161 4,301 4,307
Slide 49: Rising credit costs amid deteriorating operating environment
Rising credit costs amid deteriorating operating environment Allowances for Loans 2,000 80bp 600 36bp 40bp 61bp 1,800 45bp 60bp 35bp 500 1,600 30bp 40bp 31bp 16bp 23bp 24bp 1,400 18bp 25bp 32bp 20bp 400 28bp 19bp 1,200 15bp 17bp 23bp 20bp 0bp 21bp 1,000 300 13bp 15bp 11bp (20)bp 800 10bp 200 (40)bp
Slide 50: Reserve coverage strengthened with additional allowances
Reserve coverage strengthened with additional allowances 250% Total Allowances1/ 204% 210% 202% 206% 191% Unsecured NPAs200% (%) 150% 1 Total Allowances / NPAs (%) 89% 84% 85% 87% 88% 100% 50%/ Allowances for NPAs NPAs (%) 40% 38% 0% 36% 37% 36% 5,000 Total 4,500 4,032 3,738 3,687 3,725 4,000 3,528
Slide 51: Strong capital, funding and liquidity positions
Strong capital, funding and liquidity positions 146.0% 147.0% 144.0% 149.0% 145% 139.0% Net stable funding ratio (%) 125% 109% 108% 111% 109% 107% All-currency LCR (%)* 105% Group LDR (%) 85% 86.6% 88.5% 89.3% 85.4% 85.4% 65% 72.2% 70.1% USD LDR (%) 65.8% 62.7% 61.2% 45% Mar-19 Jun-19 Sep-19 Dec-19
Slide 52: Higher total dividend for 2019
Higher total dividend for 2019 20 20 20 55 50 45 35 50 55 35 35 2016 2017 2018 2019 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 1,135 1,660 2,000 2,170 Payout ratio (%) 37 49 50 50 Payout ratio (excluding 37 39 42 42 special/one-off dividends) (%) Note: The Scrip
Slide 53: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — Investor Presentation (May 2020) on 6ix