United Overseas Bank Ord

Mr. Wee will first give a broad overview of how our franchise has performed and the operating landscape we are in. Mr. Leong will then go into more details on the financials and business performances from this quarter. After both presentations, we will be taking questions from the media. For the media who are joining us online, please use the raise hand function if you have a question. I would now like to invite CEO to get us started. Mr. Wee, please.

Good morning. Thank you for joining us today. Since we last spoke, the global outlook has changed significantly. The world order has been disrupted by US terrorism. While it is too early to quantify the exact impact, we expect growth to slow in the near term. Amid uncertainties, the long-term fundamentals of ASEAN remain attractive. The region's competitive advantage in manufacturing and commodities will help ensure a relevant role as global supply chains rewind. Quick flows within ASEAN and between ASEAN and the rest of the world will continue to grow as countries seek new ways to prosper. While the road ahead may not be smooth, it will be We have strong balance sheets, capital and liquidity, a good reserve buffer to navigate these uncertain times. Our diversified earnings base continues to provide stability across economic and market cycles. In the first quarter of this year, EOB delivered a solid performance. Net profit was stable year on year at $1.5 billion. Growth was broad-based, supported by resilient income from lending, record fees, and higher trading and investment income. Our asset quality is healthy. With strong earnings this quarter, we are taking a conservative approach to increase our reserves. Given the uncertainties, we have been reshaping our business franchise with diversified client segments and products across our key markets. In the first quarter, we saw healthy demand across sectors and geographies, which boosted our loan books. Our loans grew 6% year on year. Net free income rose 20% year-on-year, led by record investment banking deals with strong growth in loan-related and wealth activities. Our wealth management business saw good traction. Most of our clients adopt conservative investment strategies with a focus on wealth reservations. We see higher fund flows into our discretionary portfolio management. Solutions, reflecting client trust in our ability to help them navigate market volatility. We were named Best Private Bank for DPM Asia and Singapore at the Euromoney Private Banking Awards for this year. This quarter, we also won several other prestigious awards. Global Finance named us as the Best Bank in Asia Pacific for second year. We will also name best bank in Malaysia. Separately, the Asian banker named us as the best SME bank in Singapore in 2025. We are encouraged by these recognitions and will continue to focus on supporting our customers in these volatile times. Looking ahead, the external environment is still fluid. We will resume guidance when the situation stabilizes. However, we remain committed to our 3 billion capital distribution plan. We have already commenced share buyback and the first tranche of 25 cents special dividend has been paid. Despite uncertainties, we see pockets of opportunities across our diversified portfolio. Trade flows in China-ASEAN and intra-ASEAN corridors are about US$1.5 trillion and growing, a trend that we expect to continue. We are well positioned to capture the flows from this structural shift. In fact, most of our trade finance lending continues to be done within the region, reflecting strong intra-regional activities. In the recent survey UOB conducted with 800 businesses in ASEAN and Greater China, two in three businesses expect intra-ASEAN trade to increase due to U.S. talent. They are planning to diversify sourcing tool within their own countries or in a region. There is also a growing demand for hedging from our clients amid current market volatilities. Meanwhile, we have a healthy pipeline of quality financing for infrastructure projects. This is not the first time that we have experienced volatilities and external shocks. We are confident in our ability to navigate the challenges just as we have done before in the past 90 years. We are fully committed to working closely with government and industry players to support our customers through these extraordinary times. Now, I will hand over to our new CFO, Yongqi, to share more. Thank you, Yichong.

Good morning, everyone. I'll take you through the financial update as per rest. If you look at our first quarter results for 2025, there was overall a strong quarter. we had broad-based income and franchise growth. The net profit was S$1.5 billion for this quarter with ROE at 12.3%. The net interest margin was stable at 2% and it was contributed by proactive balance sheet management despite margin pressures. Our net fee income grew to a new high of S$694 million This was largely driven by record loan fees from higher investment and banking revenues that CEO mentioned, as well as momentum in our wealth and card businesses. On treasury and investment income, we grew by 27% quarter on quarter. This came from strong activities from our clients and also relatively good performance in our trading and liquidity management activities. Asset quality remains stable with MPL ratio at 1.6%. And again, as CEO mentioned, given the macro uncertainties, we took a prudent stance to increase our general allowances to strengthen provision coverage, resulting in a total credit cost rising to 35 basis points this quarter. We are approaching the volatility in the market from a very strong tactical and funding position. However, our FT ratio remains at 15.5% and NSFR at 116%. On this page, we can spend a little bit more time to go into detail around the operating profits. We have increased the operating profit by 11% quarter on quarter and 7% from a year ago. However, as we set aside higher preemptive allowances, the net profit after tax declined 2% quarter on quarter, but stable year on year.

Next, I'll go into the business segments in a bit more detail for you.

On the retail business, if you look at the slide, our increase in CASA demonstrates the franchise that we've been building for a while. The credit card billings and the double-digit increase in wealth income helped to cushion some of the margin pressures that we saw. The credit card billings remain robust, not just in Singapore, but throughout the region as well, as we continue to wait Better Propositions and Lifestyle Offerings for our Customers, and in particular the customers who have onboarded with us when we consolidated with the City Business. The Wealth Management Business continues to be underpinned by a shift from deposits to investments, and net new money flows coming in continue to encourage us, but it was also balanced by market dislocations. Most of our clients have very balanced portfolios aligned with our focus and philosophy on wealth preservation. This resulted in minimal margin calls despite the market volatilities that we saw in the last few weeks. Moving to the wholesale bank, I mentioned briefly earlier on that we had record investment banking fees this quarter, double-digit trade and treasury growth, and this has helped offset the drop in margin from declining interest rates as well as competitive pressures from peers for quality assets. We remain focused on our customer franchise and our growth engines.

We continue to leverage on our strength in connectivity in the region. The focus on our investments that we have made for the wholesale banking platforms

have helped us drive positive growth for our CASA and trade loans. If you look at the CASA item in the slide, you would have seen that 8% growth in CASA continues. We generate at least 56% in terms of CASA to deposit mix right now.

The shape of our business continues to improve.

NIM remains stable at 2%.

This is by no means an easy feat.

We continue to be very active in terms of how we manage our balance sheet. The quarter-on-quarter net interest income did ease by 2%, but that's also partially due to a shorter quarter. Loan margin has been compressed due to asset pricing pressures and the softer environment in terms of rates.

but through this balance sheet management, we've managed to keep our lending stable. I mentioned briefly about our record loan fees, so we'll dive a little bit more deeper into each of those areas.

Investment banking fees at a good quarter. This was from participating in large syndicated deals coupled with increased loan demand. There was also good momentum in our wealth fees from robust unit trust sales and structured products, and wealth fees were generally up 30% year-on-year and 19% up quarter-on-quarter. Card failings also grew year-on-year, but compared to a quarter ago, there was a seasonal differentiation, the fourth quarter usually is higher.

Trading and investment income

was undertaken by our customer treasury income rising to $243 million this quarter. This was an increase of 11% from a year ago and 13% from the last quarter. It was spurred largely by retail structured products demand. Our own trading and liquidity management activities have also performed well and these have largely been from bond sales as well as trading

opportunities in the volatile market environment.

In terms of expenses, we've managed to maintain the stance on our discipline spending and cost to income ratio has improved to 42.6% this quarter. While we continue to focus on investments to build up capabilities in the region, the high cost discipline is something that we will continue to maintain, especially as we wade into the volatile environment. For non-performing assets, it remains sound with an NPL ratio at 1.6%. The new NPA formation has been stable and within expectations. but with lower write-offs, the total NPA inched up our ratio to 1.6% this quarter. On credit costs, we've mentioned earlier on that because of the uncertainties in the macro environment, we have preemptively added to our general allowances this quarter, bringing the total credit costs within five days of point. It is important to note that this increase was something that we've done by taking a very prudent stance to strengthen our provision coverage going into the environment.

On the next page, it shows you the allowance coverage.

Our total allowance as of March was $4.8 billion. of which $2.8 billion relates to allowances for non-impaired assets. Overall, our coverage remained adequate at 90% for 207% after taking collateral to the account.

Next, we move into a look at our loans growth.

Year on year, overall loans growth at 6%. and 1% quarter-on-quarter. The same quantum of growth was seen both in wholesale as well as retail businesses. The momentum is sustained well with broad-based growth and in the wholesale side has been termed and traded on the retail side mortgages. We do want to remain vigilant and selective in our lending given the outlook, but we remain very committed to supporting our customers through these plans. On our funding positions, I mentioned at the start that we are approaching this with a strong capital funding and equity position. From here, you can see that our LCR remains sound at 143%, NSFR at 116%, both of which are well above the minimum regulatory requirements. Our CASA deposits continues to grow steadily and I've mentioned earlier on the mix of our CASA continues to help us shape the funding mix into something which is helpful in terms of managing our costs of funding.

On the next page,

Our capital position remains strong at 15.5% or fully loaded at 15.4%. And again, this allows us to remain very confident in terms of how we go into the next quarter.

With that, I end the presentation in terms of financials.

Thank you, Mr. Leong. We'll now begin the Q&A. For those dialing in on Teams, please use the raise hand function if you'd like to ask a question. We'll begin with those in the group.

Charmaine. Hi, Jennifer, from Bloomberg. Back to what CEOs say at the beginning about wealth flows that boosted AUM. What was the net real money? Second question also on your next deal about hedging by customers. Could you comment and provide colors on what exporters and importers do during this volatility? Third question on USD assets at UOB, including your under asset management. I mean, with this steep dollar decline, especially against SDV, which is your recurrence, what are you doing?

I take that first. I think on the US dollar assets, it remains actually a very small part of our portfolio. The securities portfolio and US dollars are mainly for HGLB and for government securities. So we have not disclosed that in terms of the actual numbers. I think that only addresses the first question. I think the first, sorry, the second question. The first question was around net new money. Now, net new money flows into our private bank was actually negated by market action. So, net-net, it was flat. If you look at the AUM numbers that were communicated, it's about 189 billion. It's flat quarter to quarter.

Because of market.

We have net new money flows, but market action was cancelled.

So, it's flat.

The first question is about actions by hedging by exporters and importers. So you mentioned that clients have higher demand on hedging. Is it FX? And could you say specifically, have your clients, particularly exporters and importers, have had that adequately hedged before? Currency One Activity, and if they didn't do it sufficiently, what are they doing now?

I think we've seen customer activities, and I think the slide that I had shown earlier on our treasury and income activities, you have seen very healthy pickup. If you have questions with respect to more recent, in terms of April.

Deliveration dates. Yes.

Those activities have continued. I think we see a lot of customers front-loading some of the activities. If you are looking at Treasury in terms of interest rate and FX hedging activities, those activities have continued. It's not unusually higher than normal. But you see many of our customers continuing their business activities as stable as they can. because the uncertainties around the cannabis situation has not picked up. So while general expectation was that maybe some of these may freeze up, but that has not shown up to be the case because our businesses, our clients continue to front load some of their activities in anticipation.

So they have prepared.

Yes.

Sorry, just last thing. We see you all say that we'll resume 2025 guidance when situation stabilizes. Do you expect stabilization within this four year from now?

Not a thing, but I'm just, but I think generally, I cannot predict what's happening. What I can tell you, what I can assure the public is we have a strong value. have the strong capital to write two months on it. Well, generally, Terry, if you're talking about SPIC, SPIC constitute 10% of the total balance sheet. So, and most of our SPIC, frankly, I mean, it's more intra-regional, more China plus one. So, yes, we did go through a portfolio analysis, look at some of the customers, Some of them could export to US 20%, 30%, 40% but I would say generally it's quite I would say it's not really a major concern for us The second order impact will be more severe if the uncertainty continues then it will affect consumer confidence This is where the slowdown in the economy will come That will be the second point. But if you talk about first order impact, I think the trade, I think generally we have gone through the portfolio. Of course, we continue to discuss with the customer how do they want to do it. They may divert certain activity within ASEAN, so going to US and our exposure to China is not so much. It basically will be more ASEAN.

Univision.

So coming back to the stress test, what is the stress test that the banks do? Because I think MAS, there's an MAS-led stress test every year. So is it going to be more stringent or is there going to be a more stressful stress test? And what's the worst case scenario? And how would it affect your capital? And will this ultimately Will dividends be cut by having COVID?

I think for the time being, it's very premature. As I said, it's still a very fluid situation. And the impact is too early to quantify. You can use your imagination, right? If you want to stretch until you want to fill the bank, fine. But I think in today's scenario, given our exposure to the trade, All the customer base we have is all very well spread. I don't see too stress, but I don't think it's that severe that we have to cut dividend. In fact, as I mentioned in my speech, we continue to grow our capital management. We are committed. It's a three-year program. We reduce our capital and we promise 50% of our Our dividend will be generated by the last earnings.

Unless the yields come up, it rise to a halt across the region. Our capital position is very strong to manage what we expect to come. So our first pass in terms of looking at our portfolio and potential impact, we think that's very manageable. The stress test that we are conducting, when we look at the second order, potentially third order, that's a little bit more complicated because there's so many different assumptions that have to go with. And as CEO mentioned, how stressed do you want that to be? I think some of those variables, the macroeconomic variables that we need to input, I think has yet to land and depends on some of the outcomes we will see in the coming weeks and months.

So, for your BCL-1, it also depends on this MEV model. So, how much have you changed the MEV model for 1Q versus?

We have not changed it yet. We have not changed it yet, but we are in the process of figuring out what needs to be changed.

There's a certain growth assumption.

We know that needs to be changed. It shouldn't change to 1Q.

Oh, so you haven't changed even your growth assumptions?

I think we do have an expectation that on a broad basis, that growth and trade probably will be impacted. The extent of that and where it hits which industries, which countries, I think that still has yet to come out.

It's funny, I think since the global financial crisis, you have this test where you must have enough HQLA for 90 days of outflows. So have you looked, I mean, I think your philosophy says that you have, that's based on that you have, but that's a normal situation. Do you think there would actually be those outflows? I mean,

No, I think if you compare the current environment versus what we saw in Oakland, I think we've gone through that and we've been very well prepared for that. We do not expect even the uncertainties that we are to face in the next quarter or so that we would be as severe as what we saw during the most difficult times during COVID. Those capital positions and equity positions we view are more than sufficient and adequate to manage.

In fact, if you look at the whole ASEAN, if you look at the individual countries, the foreign service industry, the interest rate is continuing to be low. So I would say, relatively speaking, in fact, the favour should be more towards ASEAN now.

You know, this JSSE said, So since this 2nd of April Liberation Day announcement, are people still interested? Has there been a slowdown?

The feedback is still quite good. And you know, we are UOB, we are well-precision and we are the biggest foreign bank in Malaysia. We have seven branches, small in SEX and signed MOU with the Chinese Chamber of Commerce in Malaysia as well as Singapore. And we are the only bank who has a Greenland initiative with Invest Johor.

So what's the Greenland?

Well, in other words, we help customers provide some Greenland services, more expedited, more approval, speedy approval. So this is an arrangement we make with Johor.

It's something that we've tied up with InvestJob.org to facilitate and accelerate some of the investments they're doing. So that coordinated approach helps to eliminate some of the bureaucracy and red cape and help businesses move there faster.

And are people investing?

Have your customers actually put money into investing? We have invested our foreign direct investment for the last 10 years. So there are quite a number of inquiries and some of them are actually committed.

The interest level and activities continue. I don't think during liberation date there's not any significant slowdown or shift seen in that.

I think it's no different than COVID We are more than happy We are more than happy given our strong position

And in fact today, together with the government and MLS, everyone is on a happy to support. Not only Singapore, all the bridge, all the central bank, they all willing to support the machine. So we have to, if we have to look at an individual credit, like customers, right? And depending on how severe and we will apply certain business logic, certain way of structuring to help them to ease the cash flow.

There are serious levels on this, right? I think if you look at SMEs, those that have direct exposure to the US, they will decide. But we wouldn't underestimate how entrepreneurial and how adaptable clients and businesses are. The first order which we stressed about the direct impact between US to exports will supply parts direct to the US? I think that's the question. The question is the second order, third order. So if you supply parts to children who then exports to us. Now, when that slowdown happens, if it happens, I think that second order impact is what we are all concerned about. But the variable assumptions that goes into that are so many different problems. We mentioned briefly earlier around the consumer confidence. Job Security. If some of these uncertainties pan out and stress the economy in that direction, there won't be an impact on investment in terms of consumer spending and over-investment, even consumed in the domestic markets. So for now, what we're seeing is that most of our book exposure is domestic, intra-regional, is okay.

That's for the second, third order, I think that's it.

Can I just ask one more question? I mean, you talk a lot about uncertainties and you have strong capital position still. But what does that mean? You still have conditions for M&A, if I can read you right from previous remarks. Are you pausing? Those ambitions are taking over.

I think we're always on the lookout while we're running the business. In fact, this headwind can convert into opportunities for us. And even our connectivity strength. We are always on the lookout. We are running the business. If there are opportunities, why not influence the opportunity? I know this is a very motherhood statement, but if you look at the balance sheets, the capital decisions that we have, I think the comfort from our existing customers, that will give them a lot of comfort to have a bank to support them. And also for the comfort to potential customers to say, hey, this is a bank that is strong, they are able to withstand. We may be able to attract potential customers.

I like this confidence.

Some priorities.

We look at even for Citibank acquisition, everyone's dying in the midst of COVID. So in these sort of situations, you do find opportunities, but you have to find opportunities that make sense for our franchise.

Would you ever think of bringing back even the script shiver terms that you used to have some years ago that will stop you? I mean, why did you stop? You stopped it.

Oh, it's kind of counterproductive if you're out there doing share buybacks. I think we've reached a maturity and confidence in our capital and earnings generation. And when the Basel IV Groups were also in the level, I think it gave us the confidence that some of these excess capital should be given to shareholders, which was and backdrop of the $3 billion agreement.

So no plans for a scripted agreement.

Hi, good morning. So I have a question about the forecast. I know that UOB will only resume the forecast until the situation stabilizes. But I remember that UOB forecast a high single digit for the loan growth this year and double-digit fee income growth in WZ, right? So I wonder, have these two forecasted numbers changed or will they change after the liberation tariffs?

I think this comes back to The common theme, I think everybody is trying to address the theme, which is visibility. Could be more specific around the flow of numbers and so on. I think the overarching sentiment is that our clients are feeling uncertain. So if you are forward planning on CapEx plans, where are you going to locate the next factory? are you ordering, shipping, quick forwarding logistics for the next 6 to 12 months? I think there's a lot of uncertainty and inability to project forward. Even if you look at some of the global companies, whether it's Apple, General Motors, Amazon, JP Morgan, everyone is suspending guidance because their visibility today is not easy. Then the question is, amidst all this, what are the Things that you can have a handle on is strengthen your balance sheet, look at what we can do to help the clients navigate. Many of our clients are very adaptable and entrepreneurial. They are also actively looking at if this happens, where would their trade flows go and where do they need to shift their supply chain. So our front liners are very actively engaging clients to assist them in doing so. Not to dodge your question, The question specifically was, were those trade projections, growth projections still intact? We are working on the assumption today on those numbers, but those numbers will have to be revised. We are not yet ready to revise those numbers.

We have a question from online, Ultra from Reuters. Could you unmute yourself and ask your question, please?

Thank you. This is Ultra from Reuters. First, I have two questions. The first question is basically a follow-up to Chang Yapon's earlier questions. But in general, how will the strengthening of the Asian currency against the US dollar, such as the Singapore dollar, will affect UOB both positively and negatively, or directly and indirectly? and the second question is we would love to hear more on from UOB on what changes in trade financing demand that UOB is seeing from clients in a short and medium term and from this US tariff and what is UOB doing to help your all your clients thank you the strengthening of the same dollar I guess against the US dollar from

importer sense, I think, good, but not in the export business. I think there are various elements here. The fact that SingDollar remains strong would also mean that we would be a good sender of food welcoming into Singapore. We hope to benefit from that in terms of the law of management. as our businesses that we do for the retail clients. But for businesses, you're going to see a spectrum depending on whether you're more import or export driven. We are fairly well diversified in the sense that, yes, we have a large Singapore portfolio and we have a regional franchise, but we manage our businesses as much as possible to natural heading. The second question was around changes in trade finance demand from tariffs and what we are doing about it. We mentioned briefly earlier on that trade is about 10% of our total loans portfolio. It is something that we continue to want to build. The question was around, have we seen changes on it in the last month or so? The answer is that it remains fairly stable, but those signals carry a lot of noise in there. And it carries noise because some of these trade activities could be front-loading of activities. People are expecting that your average situation in the next few months may result in certain outcomes. So some of those front-loading of export shipments and trade activities have, in terms of numbers, from our perspective, they continue to be impacted. There's no particular drop-off. They continue to be impacted.

But there are noises in those areas.

Just to be sure. Accurately, if I say from loading means rushing to do to pitch or to send export, I think that would be.

Yes.

You have any other questions?

Yes. Can I ask about some mortgage demand in Singapore and demand for buildings and construction loans in Singapore? Has that dropped off? Or is that, has that been stable or is that?

It's been stable, but...

Since Liberation Day, people stopped buying property.

I think you have to look at the conversation here in this room. You're trying to compress timelines on what has happened about a month ago. A month ago. Now, loans and loan growth doesn't adjust overnight like that. people make plans for loans, they negotiate terms for loans, and they document loans. All of that takes time. So even if corporates were to slow down loan activity, people were to stop their mortgage activities and so on, the numbers flowing through will go down a while more. Maybe next quarter we will see periods. But you're talking about what actually came out on Liberation Day in early April, and then multiple variations and changes to it since. So it's probably too premature to say what those impacts will flow through in terms of numbers. But on a practical aspect, you know, these things do take time. When people plan and adjust their capital outlays and capex plans, it will take a bit more time to go through.

Go back to the confidence.

It takes time. But if you focus on the First quarter numbers, because the results that we are sharing with you today is one million. First quarter numbers remain strong. Quarter to quarter, they were high.

So did the mortgages rise? Was there an increase in mortgages?

Yeah, no single.

Sorry, I have a question about the comparison. If we compare to the COVID time, which Which situation is worse?

I think COVID will be worse. COVID is a total shutdown. It's very different. So we've gone through all this. Again, as I said, we are more than confident. We are willing to pay dividends. We are willing to have capital reduction. I don't think we need to be overly alarmed.

If I could simplify it, during COVID, you saw in certain industries and certain companies a complete sudden shutdown. Here you expect a slowdown and an adjustment because factories cannot be set up overnight. Even if you needed to re-establish your supply chain and manufacturing locations elsewhere, it takes time to shift. So in the meantime, some of these activities will continue. It may come with higher costs associated and business costs associated with it, but it's not like COVID where things suddenly just shut down. So you would see a period of volatility and adjustments, but I think the severity is going to be moderate.

Is there any situation where activity increases in ASEAN? Do you think? There will be more trade or more investment into Penang and Johor.

I think the overall global pie of demand doesn't change overnight unless it's consumer confidence that gets impacted. If you look at trade flows, I think the trade flows will evolve. Countries that have been more affected by terrorists and can no longer economically, it's not economically viable to export to a particular country will find new markets. So you've got to shift businesses, time to adjust. But it doesn't suddenly create a global new demand overnight. You're looking for where to shift those demands and supply chains to.

Maybe we take the one or two last questions.

If I may, what do you see MPI, NPI, NPI, NPL, non-performing assets? What's the ratio at the end? Now it's 1.6 from 1.5. What do you see? You're asking the same question. So I think

CEO mentioned at the height of the COVID crisis, our credit cost actually went up to about 57 basis points. We've just mentioned to you that we've built it up to 35 basis points and that's already preemptively navigating what we think is to come now. Do we need more or less? I think next quarter.

My question is not whether you can withstand it. I'm sure you can. I'm just trying to see your assessment on your client's side rather than if I can make it clear.

Well, I think the NPK 1.1 share work has remained stable for us. It's first quarter as well as into April. The NPA formation numbers that came out were around clients and geographies that we already saw. We were recognising it and provisioning for it. There hasn't been any particular spike-up as of the sum. It is what we already saw, we are recognising and provisioning. But these are not sudden spike-ups in terms of new assets that surprised us or shocked us. In fact, your ECL suite fell, didn't it?

Your SPs actually fell in the first quarter.

I think the takeaway would be this. I think the immediate downside risk to asset quality seems manageable to us versus the growth risk. I think that Peace of work is not done. We need to look at all of these stress testing and outcomes and projections and forecasts that peace of work is not done.

If there's no further questions, thank you everyone.

And if you have any further questions or clarification, please do reach out. Thank you. Thank you.