UOB Group Fixed Income Investor Presentation Strong Business Performance and Balance Sheet Position June 2018 Disclaimer: This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not to be relied upon as advice to investors or potential investors and does not take into account the Private & Confidential investment objectives, financial situation or needs of any particular investor. This material should be considered with professional advice when deciding if an investment is appropriate. UOB accepts no liability whatsoever with respect to the use of this document or its content.
Agenda 1. Overview of UOB Group 2. Strong UOB Fundamentals 3. Macroeconomic Outlook 4. Regulatory Developments 5. Resilience of the Singapore Housing Market 6. Overview of our Cover Pool and Covered Bond Program Appendix: A. Latest Financials B. Our Growth Drivers
Overview of UOB Group 3
UOB Overview Founding Key Statistics for 1Q18 Founded in August 1935 by a group of Chinese ■ Total assets : SGD364b (USD278b 1 ) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD38b (USD29b 1 ) grandfather of the present UOB Group CEO, Mr. ■ (USD184b 1 ) Gross loans : SGD241b Wee Ee Cheong ■ Customer deposits : SGD274b (USD209b 1 ) ■ Loan/Deposit ratio : 86.7% ■ Net stable funding ratio : 111% ■ Expansion Average all-currency : 128% 2 liquidity coverage ratio UOB has grown over the decades organically and ■ Common Equity Tier 1 CAR : 14.9% through a series of strategic acquisitions. It is today a ■ Leverage ratio : 8.2% leading bank in Asia with an established presence in ■ ROE 3, 4 : 11.0% the Southeast Asia region. The Group has a global network of more than 500 branches and offices in 19 ■ ROA 4 : 1.09% countries and territories. ■ RORWA 4 : 1.95% ■ NIM 4 : 1.84% ■ Non-interest income/ : 34.1% Total income ■ Cost / Income : 44.2% ■ NPL ratio : 1.7% Note: Financial statistics as at 31 March 2018. ■ Credit Ratings Moody’s 1. USD1 = SGD1.31035 as at 31 March 2018. S&P Fitch 2. Average for 1Q18. Issuer Rating AA – AA – Aa1 3. Calculated based on profit attributable to equity holders (Senior Unsecured) of the Bank, net of perpetual capital securities Outlook Stable Stable Stable distributions. 4. Computed on an annualised basis. Short Term Debt P-1 A-1+ F1+ 4
A Leading Singapore Bank; Established Franchise in Core Market Segments Group Retail Group Wholesale Banking Global Markets Best Retail Bank in Singapore 1 Best SME Banking 1 Strong player in Singapore dollar treasury instruments Strong player in credit cards and Seamless access to regional private residential home loan network for our corporate clients business UOB Group’s recognition in the industry Higher 1Q18 margin than peers 2.18% 2.13% 1.84% 1.86% 1.83% 1.67% 41% Best Retail Bank 1 Bank of the Year, Excellence in Mobile SME Bank of the Singapore, Banking – Overall, 33% 58% Year 1 UOB DBS OCBC 2015 2018 NIM Loan margin Source: Company reports. 1. The Asian Banker “Excellence in Retail Financial Service Awards”: 2016 Loan margin is the difference between the rate of return from & 2017 (SME Bank of the Year), 2014 (Best Retail Bank in Asia Pacific customer loans and costs of deposits. and Singapore). Source: Company reports. 5
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 and sustained performance NPAT Trend 2017; $3,390m Acquired Acquired ICB Buana in 2005 2014; $3,249m in 1987 2010; $2,696m Acquired BOA Acquired FEB in 2004 in 1984 Acquired OUB Acquired LWB in 2001 in 1973 2007; $2,109m Acquired Acquired CKB UOBR in 1999 in 1971 2000; $913m 1980; $92m 1990; $226m 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Note: Bank of Asia Public Company Limited (“BOA”), Chung Khiaw Bank Limited (“CKB”), Far Eastern Bank Limited (“FEB”), Industrial & Commercial Bank Limited ICB (“ICB”), Lee Wah Bank Limited (“LWB”), Overseas Union Bank Limited (“OUB”), Radanasin Bank Thail and “UOBR”. 6
Expanding Regional Banking Franchise Extensive Regional Footprint with c.500 Offices Profit Before Tax by Region (SGD m) MYANMAR GREATER CHINA 2 offices 28 offices 1 39% of VIETNAM Group PBT 469 THAILAND 1 office 324 367 301 154 offices 419 PHILIPPINES 305 366 300 29 218 99 1 office 71 61 159 193 175 MALAYSIA 581 48 offices INDONESIA 593 548 537 180 offices 43% of SINGAPORE AUSTRALIA Group PBT 69 offices 4 offices 120 2,491 2,363 2,364 2,345 40 Most diverse regional franchise among Singapore 118 77 banks; effectively full control of regional subsidiaries 159 Integrated regional platform improves operational 679 efficiencies, enhances risk management and provides faster time-to-market and seamless customer service 2014 2015 2016 2017 1Q18 Organic growth strategies in emerging/new markets of Singapore Malaysia Thailand China and Indo-China Indonesia Greater China Others Established regional network with key South East Asian pillars, supporting fast-growing trade, capital and wealth flows 1. UOB owns c13% in Hengfeng Bank (formerly Evergrowing Bank) in China. 7
Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 22.7 22.7 23.7 21.0 20.7 19.4 18.8 (Common Equity 18.0 17.6 16.5 16.5 16.4 16.4 16.4 15.8 16.0 15.8 16.0 14.9 14.8 15.0 14.8 14.8 14.5 14.4 14.2 14.0 13.7 Tier 1 CAR; 13.6 13.6 13.1 13.0 12.7 12.4 12.4 12.2 11.3 10.4 10.2 Tier 1 CAR; and Total CAR in %) 1 1 BCA BBL UOB MBB HSBC DBS SCB OCBC Citi CIMB BOA CBA NAB Return on 16.1% 8.8% 11.0% 10.9% 7.5% 13.1% 1.7% 11.8% 9.7% 9.6% 10.9% 15.1% 10.5% Average Equity 2 Reported Leverage Ratio 3 16.5% 8.2% 7.6% 7.0% 6.8% 6.7% 6.0% 5.6% 5.6% 5.4% 1 1 BCA UOB DBS OCBC BOA Citi SCB HSBC NAB CBA UOB is among the most well-capitalised banks, with capital ratios comfortably above regulatory requirements and high compared with some of the most renowned banks globally Source: Company reports. The financials of banks were as of 31 Mar 18, except for those of SCB, CIMB, MBB and CBA (which were as of 31 Dec 17). NAB’s and CBA’s CARs are based on APRA’s standards. Their internationally comparable CET1 CAR was 14.6% (31 Mar 18) 1. and 16.3% (31 Dec 17), respectively. 2. Computed on an annualised basis. 3. BBL, MBB and CIMB do not disclose their leverage ratio. 8
Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained ROAA 1 Strength Management Liquidity Moody’s baseline Costs/income Return on average Loan/deposit Moody’s S&P Fitch credit assessment ratio assets 1 ratio AA – AA – UOB Aa1 a1 44.2% 1.09% 86.7% AA – AA – OCBC a1 44.2% 1.17% Aa1 84.4% AA – AA – DBS a1 41.6% 1.18% Aa1 87.3% AA – 68.4% 0.58% A2 A HSBC a2 71.1% SCB 70.8% 0.20% A2 BBB+ A+ baa1 69.4% A – CIMB 51.8% 0.90% 90.8% Baa1 n.r. baa2 48.7% 1.04% A – A – MBB a3 93.8% A3 40.7% 1.13% BBL baa2 84.8% Baa1 BBB+ BBB+ BBB – 53.2% 3.40% 77.9% BCA baa3 Baa3 n.r. 59.7% 1.21% A – A – BOA 69.5% baa1 A 58.0% 0.98% Citi 66.0% baa2 Baa1 BBB+ A 43.9% 1.01% 117.8% AA – AA – CBA Aa3 a2 52.2% 0.65% 139.9% AA – AA – NAB a2 Aa3 Source: Company reports, Credit rating agencies (updated as of 7 May 2018). The financials of banks were as of 31 Mar 18, except for those of SCB, CIMB, MBB and CBA (which were as of 31 Dec 17). 1. Computed on an annualised YTD basis. 9
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