United Overseas Bank Limited

Good morning, and thank you for joining us, and we hope everyone is safe and healthy. Now, since all of you are reporters, I have four messages for you today. Message one, strong start to 2021, delivering our promise. The bank, we had a strong start to 2021. First quarter, net profit surged 46% to $1 billion, supported by recovery in our key franchise markets. Our return on equity recovered to 10.2%. Income growth was broad-based, reaching pre-COVID levels at S$2.5 billion. Loans grew 4%, while net interest margin held stayed. Fee income hit a record high from diversified drivers, including wealth management, loans-related and investment banking activities. Our portfolio remains resilient and well-secured. Even as relief measures are tapering off, the impact to our book is manageable. Having proactively set aside sizable provision in 2020, Our total credit costs almost half. Message 2. Growth driven by economic recovery backed by our franchise and capabilities. The robust growth was driven by recovery of economic flows in our key markets. Starting with Singapore and Greater China. which have been able to contain the local community cases more effectively. As China remounds strongly from the pandemic, most of Asia is set to benefit. Our wholesale banking business registered a record quarterly performance, backed by improved sentiment, business activities picking up and commodity trade flows resuming between ASEAN and Greater China. In particular, we are seeing strong credit demand by large corporate and institutional clients, diversifying and deepening their footprint across our key markets. In our home market, Singapore, UOB has been active in the privatisation space with a market-leading position. Since 2020, we have advised eight public takeover deals and provided acquisition-related financing as part of our holistic offering to our customers. We are able to ride the recovery wave with our customers. with our established network and connectivity, deep sectoral insights and local expertise. We expect the growth momentum to continue and cross-border activities to increase and to be extended to other ASEAN markets, possibly in second half this year or 2022. as countries speed up their vaccination drive. We see governments in this region ramping up infrastructure projects to kick-start economies. These present opportunities. Our team and resources stand ready to support customers as they emerge from the pandemic. Our healthy balance sheets and franchise, built up through years of investment, enable us to support customers through progressive, timely solutions. Not just for businesses, but individual customers, especially in the wealth management space, where we also saw a record quarterly performance, with AUM reaching a new high. Message 3 ESG embedded in all we do, advancing our sustainability strategy. As a responsible financial steward, we embed ESG considerations into our business strategies, supporting customers' financing and investment needs. and we are making good progress in our sustainability journey. Research indicates the potential of US $1 trillion in annual economic opportunities in Southeast Asia as the region transitions to a green economy. As a long-term player in this region, we see our role as a catalyst and enabler in supporting our customers as they future-proof their business models. We have in place sustainability frameworks to facilitate holistic end-to-end solutions for customers and ecosystems. These are showing results. We see strong momentum in demand for green and sustainability linked loans. Last month, global investors responded very well to our inaugural sustainability bond offering. It was the first in Singapore and the first new tranche issuance globally. Our recent appointment of a Chief Sustainability Officer and dedicated team underscores our commitment to forge a sustainable future. Message 4 For this year, our guidance remains intact. Looking ahead, We are positive on growth prospects as economies recover. Customers set up expansion plans and grow in personal wealth. However, we will always stay vigilant and nimble, especially as economies are not fully out of the wood yet. For 2021, we expect profit to rebound. driven by high single-digit loan growth, double-digit non-interest income growth, stable cost-to-income ratio, and lower credit cost to below 30 basis points, given our resilient portfolio. Over the medium to long term, we are confident of Asia's potentials. Our solid performance riding on our franchise is possible because of the efforts and teamwork of my colleagues across the network. I thank them for their dedications and contributions. To continue to build for the future, the Bank is committed to invest in the right capabilities and technology to drive transformation. We believe these are key enablers in creating sustainable value for long-term shareholders. Thank you for your support as we forge ahead. I will now hand over to my CFO to elaborate on our financials. Thank you.

Thank you, Lee Cheung. Once again, good morning everybody. Thanks for joining us for this result briefing. As you know, after a very difficult 2020, our net profit for the first quarter this year actually rose above $1 billion. This is 46% increase in a QRQ profit and was a remarkable start to 2021. as broad-based growth are seen across our diversified franchise. NIM was stable at 1.57% despite the current low interest rate environment. As business activity picked up across markets, customer loans grew 4% this quarter. Non-interest income expanded by 30%, with fees income at a record quarterly high. driven by both our consumer wealth management and our wholesale loans-related fees. At the same time, asset quality remained resilient with NPL ratios stable at 1.5%. Total credit costs on loans fell to 29 basis points as we have made adequate provisions in 2020 and our reserve coverage continues to be high. We remain well disciplined with our CT1 ratio strong at 14.3%. All segments showed good growth across the franchise, supported by improvement in economic and business activities. Retail reached a record high on wealth fees, while wholesale saw faster growth. as we were able to capture increasing demand from our large corporations and institutional clients for trade and investment banking activities. Global market commendable growth of 25% was the result of a very strong trading performance. Operating profit for wholesale grew 9%. As Lee Chong earlier mentioned, wholesale actually had a record quarterly profit for this quarter. on the back of ongoing diversation across geography, sectors and products. In particular, cross-border income grew 7% and now accounts for 29% of the group wholesale banking income. This is the result of what we have done previously on all our investments on sector solutioning and cross-border solutioning and all. Riding on the recovery momentum as trade and investment activities picked up across global economies, our non-Singapore income increased 8%. Our financial sector continues to offer value-added solutions, registering a 10% income growth. Our corporate customers' usage of our digital platform continues to grow, with the number of cashless payments to businesses by our corporate pay now in Singapore, growing by 43%, and the digital banking transactions by our Infinity increasing by 6%. On the retail front, our group retail operating profit grew 2% year-on-year on the back of record growth in wealth management fees. I think if you look at the details, it's quite commendable because the margin pressure in retail is actually quite high. So our growth in fees actually offset that margin pressure that we had. Our asset management rose 10% year-on-year to a new high of $136 billion. Of that amount, around 60% was from overseas customers across the group's network. Digital adoption continues to rise. Our digitally engaged customers rose by a further 5 percentage points. Our digital bank tomorrow continued to gain scale across Thailand and Indonesia with a strong product proposition and ecosystem partnerships. Tomorrow now serves more than 300,000 customers across both countries. It accounts for 29% of our retail base in Indonesia and 15% of our retail base in Thailand. Total deposits grew 24% quarter-and-quarter. along with tomorrow's growing scale, I think more importantly, the cost of acquisition per customer fell significantly. The customers whom we are acquiring for tomorrow will actually serve as an important pipeline for our future franchise growth across the group. The strength of the franchise is evident across our key regional markets where you see we have strong growth in all markets. Overseas contribution to operating profit increased to 48%, reflecting the increase in cross-border connectivity activities. On the financials, I think I touched on this earlier, and I'll let you read it at the same time. On the margins front, Despite the current low rate environment, we managed to maintain imstable at 1.7%. As a result, our net interest income grew 1%, supported by our loans growth of 4%. On the fees, I think like Yichang mentioned, the first quarter fees income was a record high. There was very strong momentum in wealth management fees, led by a pick-up in the equity market. With our customers investing more through our platform, our AUM grew 10% year-on-year. I think more importantly is besides wealth. Our loans-related fees showed strong growth across Singapore, Hong Kong, and the USA. These are from increased participation in large syndicated and M&A deals. Trading and investment income rose by 62% to $468. $246 million this quarter, led by higher gains from investment securities and a stronger trading income, coupled with an increase in customer-related treasury demands. Expenses. Expense increased 4% quarterly, quarter-on-quarter, mainly from staff costs. I think this is in tandem with our accrual for the stronger income growth. On the back of a stronger income growth, cost-to-income ratio improved to 43.8%. The overall asset quality of our loans portfolio remained resilient as our new NPA formation stayed low. Coupled with payment recoveries, NPL ratios were stable at 1.5%. While NPL emergence is low, we are conscious that the various support measures may have a lagging effect on NPL. So we remain cautious and careful. However, based on our stress test, we are confident that the impact from our vulnerable exposure is manageable. You all remember that we did a bottom-up and going through the details of those. And there are some changes, but we are generally comfortable with the overall level has not changed significantly. So our pre-emptive allowances that we made in 2020 is more than enough to offset this should it happen. Together with a stabilizing credit outlook, I think credit costs eased to 29 basis points this quarter. As of the end of the quarter, the group has $4.7 billion of total allowances. of which $3 billion relates to allowances for non-impact assets, and commonly called GP. NPA coverage remained high at 112% or 257% after taking collateral into account, while performing loans coverage is well over 1%. Customer loans grew 4% quarter-on-quarter. mainly from term and trade loans of our corporate and institutional customers in Singapore and North Asia, as economic activities picked up amid the improving outlook. Deposits increased 3%, with CASA to total deposit ratio stable at 53.5%. Equity Fund, we are very comfortable with our LCR at 139%, and NSFR at 121%, which are well above the minimum regulatory environment requirements. We actually let our NSFR drop a little bit, mainly because we are confident with the stability of our CASA, and we are flushing out a lot of the high-cost deposits. So it's a conscious effort and something that our LCO discussed and that's the result of the discussion. While CET1 is to 14.3% due to strong loans growth, we remain well positioned to support customers when more opportunity arises in the future. To summarize, these are some of the few key messages. loans growth was strong at 4% for the quarter, signaling the start of the economic activities. If you look at the details, we were a bit cautious on Southeast Asia in the first quarter. And if we expect recoveries in the second or at the later part, our diversified portfolio will be well on track to deliver the high single-digit growth that Yicheng actually guided. Fees are at record levels.

Wealth is continually strong.