UOB Group Stable Core Earnings in Slower Operating Environment; - PowerPoint PPT Presentation

UOB Group Stable Core Earnings in Slower Operating Environment; Strong Balance Sheet February 2017 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. Macroeconomic Outlook 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials

Overview of UOB Group 3

UOB Overview Founding Key Statistics for FY16 ■ Total assets : SGD340b (USD235.1b 1 ) Founded in August 1935 by a group of Chinese businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD33b (USD22.7 b 1 ) grandfather of the present UOB Group CEO, Mr. ■ Gross loans (USD156.0b 1 ) : SGD226b Wee Ee Cheong ■ Customer deposits : SGD255b (USD176.5b 1 ) ■ Common Equity Tier 1 CAR : 13.0% ■ Fully-loaded Common : 12.1% Equity Tier 1 CAR 2 Expansion ■ Leverage ratio 3 : 7.4% UOB has grown over the decades through organic ■ ROA : 0.95% means and a series of acquisitions. It is today a ■ ROE 4 : 10.2% leading bank in Asia with an established presence in ■ NIM : 1.71% the ASEAN region. The Group has an international network of around 500 offices in 19 countries and ■ Non-interest/Total income : 38.1% territories. ■ NPL ratio : 1.5% ■ Loans/Deposits ratio : 86.8% ■ Average all-currency : 162% 5 liquidity coverage ratio Note: Financial statistics as at 31 December 2016. 1. FX rate used: USD 1 = SGD 1. 44635 as at 31 ■ Cost / Income : 45.9% December 2016. ■ Credit Ratings : 2. Based on final rules effective 1 January 2018. 3. Leverage ratio is calculated based on the revised MAS Moody’s S&P Fitch Notice 637 which took effect from 1 January 2015. Issuer Rating AA – AA – 4. Calculated based on profit attributable to equity holders Aa1 (Senior Unsecured) of the Bank net of preference share dividend and capital Outlook Stable Stable Stable securities distributions. 5. Average for 4Q16. 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 FY16 loan margin than local peers 2.20% 2.06% 2.06% 1.80% 1.71% 1.67% 41% 40% Best Retail Bank in Bank of the Singapore Year, Best Bank in 33% 58% Singapore Singapore Best SME Banking UOB DBS OCBC NIM Loan margin Source: Company reports. Loan margin is the difference between the rate of return from 1. The Asian Banker “Excellence in Retail Financial Services Awards”: customer loans and costs of deposits. 2011 & 2016 (Retail and SME Banking), 2012 & 2014 (Retail Banking). 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 Acquired 2014; $3,249m Acquired ICB Buana in 2005 in 1987 2010; $2,696m 2016; $3,096m Acquired BOA Acquired FEB in 2004 in 1984 2007; $2,109m Acquired OUB Acquired LWB in 2001 in 1973 2005; $1,709m Acquired Acquired CKB UOBR in 1999 in 1971 2000; $913m 1980; $92m 1995; $633m 1990; $226m 1985; $99m 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 and Intangibles by Region (SGD m) MYANMAR GREATER CHINA 2 offices 28 offices 1 37% of VIETNAM Group PBT 33% of THAILAND 1 office 324 367 Group PBT 300 157 offices 301 252 21 PHILIPPINES 305 366 71 222 272 99 1 office 61 184 159 193 175 178 MALAYSIA 118 146 47 offices INDONESIA 593 548 537 557 190 offices 555 SINGAPORE AUSTRALIA 73 offices 4 offices 2,363 2,364 2,345  2,256 Most diverse regional franchise among Singapore banks; 2,181 effectively full control of regional subsidiaries  Integrated regional platform improves operational efficiencies, enhances risk management and provides faster time-to-market and seamless customer service  2012 2013 2014 2015 2016 Simultaneous organic and inorganic growth strategies in emerging/new markets of China and Vietnam Singapore Malaysia Thailand  Aim for region to contribute 40 % of Group’s PBT in m edium Indonesia Greater China Others term Established regional network with key South East Asian pillars, supporting fast-growing trade, capital and wealth flows 1. UOB owns c13% in Evergrowing Bank in China. 7

Macroeconomic Outlook 8

China’s Growth Slower but Low Risk of Hard Landing  While China’s GDP growth rate is slowing, the annual increase in absolute GDP has been stable.  The Chinese economy has its underlying momentum, supported by rebalancing reforms and steady job market.  Low central government debt underpins China’s fiscal capacity, which could help mitigate “black swan” events  Base case scenario for China: slow and unexciting growth, RMB sideways, global economy muddling along dragged down by Europe and Japan in deflationary and low yield environment. China “New Normal”: Quality Versus Quantity Structural Shift of China’s Economy (%) (% of GDP) (RMB trillion) 6 15 60 4 10 40 2 5 20 0 0 0 1994 1997 2000 2003 2006 2009 2012 2015 1995 1998 2001 2004 2007 2010 2013 2016 YoY change in real GDP, 1995 prices (LHS) Primary industries Secondary industries Growth rate (RHS) Tertiary industries Source: CEIC, UOB Global Economics & Markets Research Source: IMF, UOB Global Economics & Markets Research Annual Employment Changes Source of China Debt Risk (millions) (% of GDP) 397 9.8 9.7 11.8 12.0 11.1 11.0 11.7 12.2 12.7 13.1 13.2 13.1 13.1 278 255 165 245 186 155 163 151 210 107 233 119 116 104 79 2004 2006 2008 2010 2012 2014 2016 China '07 China '16 US '16 Japan '16 UK '16 Germany '16 Central govt debt Local govt debt Private sector Source: China NAO, CEIC, IMF, OECD, UOB Global Economics & Source: CEIC, UOB Global Economics & Markets Research Markets Research 9

Brexit Impact on Asian Markets via Trade and Investment Channels  It is a challenge to quantify Brexit effects with EU & UK Export Mix of Selected Partners (2015) certainty at this stage.  The immediate impact on Asian economies is likely 19% 17% to be limited and shallow, considering the low export 16% 16% reliance. 10%  10% If adverse impact of Brexit spreads to the broader 8% European Union, however, this could have a more 4% 3% significant impact on Asia given the trade and 3% 3% 3% 2% 1% investment links. As a bloc, EU represented 10.3% of ASEAN’s total exports and 16% of FDIs in 2015. USA HK China India ASEAN Japan Canada To EU To UK Source: Bloomberg ASEAN’s Net FDI Flows by Key Partners (2015) ASEAN’s Trade/Export Mix by Key Partners (2015) 26% 20% 19% 20% 24% 18% 17% 16% 16% 15% 12% 15% 11% 11% 11% 11% 10% 7% 9% 10% 5% 5% 5% 5% 4% 4% 3% 5% 2% 4% 3% 3% ASEAN EU28 Japan China Australia South ASEAN China Japan EU28 US South India Korea Korea Total trade Exports 2013 2014 2015p Source: ASEAN Secretariat Source: ASEAN Secretariat 10

Implication on Regional Policy Rates 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17f 2Q17f 3Q17f 4Q17f US Fed Funds 0.25 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.25 1.50 SG 3M SOR 1.24 1.70 0.81 0.81 0.67 1.01 0.80 1.00 1.15 1.35 MY Overnight Policy 3.25 3.25 3.25 3.25 3.00 3.00 3.00 3.00 3.00 3.00 Rate TH 1-Day Repo 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 ID 7-Day Reverse 6.25 6.25 5.50 5.25 5.00 4.75 4.75 4.75 4.75 5.00 Repo CH 1-Year Deposit 1.75 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Rate • Regional monetary policies have increasingly less room to cut interest rates, as the US Fed Reserve is poised to further normalise interest rates after its Dec 2016 rate hike. • The US Fed is expected to raise interest rates 3 times in 2017. The three contributing factors are: • Expansionary US fiscal policies • Rising US wages • Potentially higher commodity prices • Stabilisation of, or appreciation in, regional currencies have reduced concerns of capital outflows from the region. Sources: UOB Global Economics & Markets Research forecasts 11