United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (August 2021)
52 slides from United Overseas Bank's investor presentation, August 2021
Slide 1: Sustained growth reflecting our diversified franchise
UOB Group Sustained growth reflecting our diversified franchise August 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 io
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 1H21 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD299b (USD222b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD339b (USD252b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 86.9% 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
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint with ~500 offices 1H21 performance by segment Myanmar Greater China1 2 offices 27 offices UOB SGD137b Operating Assets under +7% Thailand Open profit management YoY 153 offices Vietnam 5 offices Group SGD1.1b AUM from Malaysia +3%
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 Trade volume returning to pre-COVID levels 2020 GDP growth +9.1 (Dec’19 = 100) 2021 GDP growth +5.7 115 2022 GDP growth +2.3 100 85 China +6.7 +6.8 70 +3.5 +2.9 May-19 Sep-19 Jan-20 May-20 Sep-20 Jan-21 May-21 +1.5 World trade Emerging Asia, ex China export
Slide 11: Accommodative monetary policy stance
Accommodative monetary policy stance 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21f 4Q21f 1Q22f 2Q22f US 10-Year Treasury 0.67 0.66 0.68 0.91 1.74 1.48 1.75 2.00 2.10 2.25 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 1.00 0.56 0.41 0.41 0.44 0.43 0.40 0.40 0.40 0.40 SG 3M SOR 0.92
Slide 12: Sound fundamentals in Southeast Asia
Sound fundamentals in Southeast Asia Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 398 15.6 14.6 247 75 137 111 30 24 26 3.8 0.5 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –1.3 –5.4 Dec 1998 Jun 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 (2Q11 = 100) HK, 210 (% of GDP) CN, 198 CN, 45 US, 172 SG, 39 AU, 154 HK, 25 SG, 113 AU, 25 US, 18 2Q11 2Q13 2Q15 2Q17 2Q19 2Q21 2011 2013 2015 2017 2019 2021F 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 Housing loans Professionals Others 23% and private 6% individuals Transport, storage and General 9% communication commerce Industry 4% 12% Building & FIs, construction Large investment 26% corporates Others and holding 12% companies Manufacturing and 12% 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 1H21 quality efficiency Current Account Saving Account Balances (SGD b) 11% CAGR1 Proactive 174 179 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% 87% Aa1 AA– AA– OCBC a1 4
Slide 25: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR 16.1% 15.6% 14.8% 14.5% 14.2% 14.2% 14.1% 13.0% 12.9% 12.8% 12.6% 12.4% 11.9% OCBC HSBC MBB DBS UOB TD SCB BOA CIMB RBC CBA1 NAB1 Citi Return on Average Equity 10.8% 8.4% 11.7% 14.0% 10.1% 15.5% 7.7% 12.0% 9.3% 19.0% 13.2% 10.6% 15
Slide 26: Strong investment grade credit ratings
Strong investment grade credit ratings Debt Issuance History Debt Maturity Profile (SGD b) Issue Aa1 / P-1 Structure Call Amount Ratings (M/S/F) '21 '22 '23 '24 '25 '26 '27 '28 '29 Date Capital good by global standards Jun-21 Perpetual 2028 SGD600m Baa1/BBB–/BBB+ - - - - - - - 0.6 - AT11 Deposit
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 581 656 726 6.6 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 (2025) (SGD b) (SGD b) Markets where UOB has a presence c$66b CAGR c$14b Singapore Thailand c$51b +5% c$1b c$4b c$10b c$9b +5% Hong Wealth c$7b Kong c$3b Tra
Slide 32: Wholesale: Record income on regional franchise, capturing cross-border opportunities
Wholesale: Record income on regional franchise, capturing cross-border opportunities Strengthening Connectivity +7%1 +78%1 Cross-border Growth in suppliers Across our ASEAN footprint income growth and distributors within and global network (formed 29% of Group financial supply chain Wholesale Bankin
Slide 33: Consumers: Tapping on rising affluence in Southeast Asia
Consumers: Tapping on rising affluence in Southeast Asia Omni-channel +20% SGD137b2 Experience YoY growth in Assets under Serving affluent customers mortgage sales1 management (AUM) across various touchpoints 57% YoY Digital Bank: TMRW Specially for mobile-first >355k 4x Total TMRW customers in YoY
Slide 34: Forging a sustainable future with our customers in ASEAN
Forging a sustainable future with our customers in ASEAN UOB Green Trade Sustainable financing SGD13b Finance Framework Total sustainability Also co-led development Sustainable growth in priority financing1 provided to of industry framework sectors driving ASEAN progress date at end-1H21 Under MAS G
Slide 35: Latest Financials
Latest Financials 35
Slide 36: 2Q21 financial overview
2Q21 financial overview Net Profit After Tax Movement, 2Q21 vs 1Q21 (SGD m) 50 43 76 32 20 7 5 1,008 –0% 1,003 +3% –7% –24% –3% –10% +24% –2% 1Q21 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 2Q21 net profit after tax income commission interest expenses allowa
Slide 37: 1H21 financial overview
1H21 financial overview Net Profit After Tax Movement, 1H21 vs 1H20 (SGD m) 299 31 94 273 94 20 57 +29% 2,011 1,558 +2% +28% –14% +1% –44% +77% +27% 1H20 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 1H21 net profit after tax income commission interest expenses
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% 10,5001.87% 1.83% 1.87% 1.90% 1.90% ▬ Loans 2.00% 2.00% ▬ Overall 1.82% 9,500 2 1.77% 1.78% 1.00% 1.57% 1.00% 1.48% 1.53% 1.57% 1.57% 1.56% ▬ 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% 35.6% 34.8% 32.8% 34.7% 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% 21.9% 21.6% 20.3% 21.8% 4,100 19.7% 1 0.0% 0.0% 957 3,467 3,600
Slide 40: Diverse fee base, with sustained momentum in loan-related fees
Diverse fee base, with sustained momentum in loan-related fees 850 2,500 2,412 730 Fee income (SGD m) 2,303 37 2,313750 4 677 2,161 63 13 75 297 5 Total 80 296 280 650 602 37 75 581 2,000 272 156 142 2 Others 154 4 74 31 550 509 71 148 5 37 182 558 506 33 Trade-related 1,500 545 64 183 471 450
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% 6,50046.0% 45.6%50.0% 46.7% 43.7% 43.9% 44.6% 44.6% 43.8% 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 (SGD m) 1,040 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 1H21 1H20 YoY 2Q21 1Q21 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 1,429 1,316 +9 705 724 –3 Rest of Southeast Asia 678 663 +2 335 342 –2 Malaysia 355 351 +1 173 182 –5 Thailand 201 189 +6 101 101 –0 In
Slide 43: Healthy growth led by term and trade loans in Singapore, North Asia and rest of the world
Healthy growth led by term and trade loans in Singapore, North Asia and rest of the world Jun-21 Mar-21 QoQ Jun-20 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 153 151 +1 142 +8 Rest of Southeast Asia 62 63 –1 64 –4 Malaysia 29 30 –2 30 –2 Thailand 20 20 –3 21 –5 Indonesia 11 10 +3 11
Slide 44: Exposure to Greater China
Exposure to Greater China As at 30 June 2021: Mainland China exposure Hong Kong SAR exposure ($27.3b or 6% of total assets) ($38.2b or 9% of total assets) 73.5 74.8 69.2 71.8 Bank exposure ($12.9b) Bank exposure ($2.9b) 68.3 7.6 6.2 7.3 ~70% to top five domestic banks Majority to foreign banks 6
Slide 45: Exposure to oil and gas sector
Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) 11.8 11.3 As of 30 June 2021, oil and gas (O&G) loans represented 4% of total loans as compared with 5% at 30 June 2018 3.3 2.0 Around 80% of O&G exposure is to downstream players and 4.9 traders, which are mainly national oil co
Slide 46: NPA formation rose due to a few corporate accounts; NPL ratio stable
NPA formation rose due to a few corporate accounts; NPL ratio stable (SGD m) 2Q20 3Q20 4Q20 1Q21 2Q21 NPAs at start of period 4,590 4,628 4,301 4,608 4,544 Non-individuals: New NPAs 131 74 622 145 360 Upgrades and recoveries (126) (216) (175) (250) (158) Write-offs (42) (63) (179) (26) (202) 4,553 4
Slide 47: Credit costs eased as macro outlook stabilises
Credit costs eased as macro outlook stabilises and pre-emptive provisions mostly taken in 2020 80bp 80bp 3,000 67bp 68bp Average Gross Loans 57bp 55bp 1 60bp 60bp (basis points) * 61bp 2,500 ▬ Allowances for NPLs 40bp 40bp 1 28bp 29bp 18bp 20bp ▬ Total allowances for 16bp 20bp 20bp 2,000 34bp 1 Loan
Slide 48: Allowances sufficient amid ongoing macro uncertainties
Allowances sufficient amid ongoing macro uncertainties 111% 107% 112% 110% 12 96% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 39% 10 36% 37% 37% 35% 50% ▬ Allowances for NPAs / NPAs ▬ Allowance for non-impaired 0% 8,0 loans* / performing loans (%) 0.9% 1.0% 1.0% 1.0% 1.0% -50% Allowances (SG
Slide 49: Strong capital and leverage ratios
Strong capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.0% 14.0% 14.7% 14.3% 14.2% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.3% 7.4% 7.4% 7.5% 7.4% ▬ Return on risk-weighted 5.00% assets (%) * 1.21% 1.17% 1.22% 1.76% 1.68% 232 231 225 236 241 Risk weighted assets
Slide 50: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 125% 123% 90 119% 122% 121% ▬ Net stable funding ratio (%) 120% 80 ▬ Group loan-deposit ratio (%) 100% 85.8% 86.7% 85.4% 87.0% 86.9% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 62.5% 62.6% 50 59.6% 58.0% 58.2% 40% 40 20% 305% 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 (August 2021) on 6ix