United Overseas Bank Limited

Good morning and welcome to UOB's third quarter 2021 results briefing. This morning, we have Mr Wee Cheong, UOB Deputy Chairman and CEO, and Mr Lee Wai Fai, our CFO, to present the results. A few house rules before we start. Please keep all your questions till after the presentations are done. During the Q&A session, please use the raise hand function to indicate that you would like to ask a question. You can find the icon at the top of the frame, third button from the left. Please also turn on your camera, identify yourself and your publication before asking your question. Finally, before we start, please put yourself on mute for now. Mr Wee, please.

Good morning and thank you for joining us. We hope everyone is staying safe and healthy. In the third quarter, we continue to build on the strong momentum of 2021. Compared to the last quarter, loans grew 3%, mainly from term and trade loans in Singapore and Greater China. fees from credit card were higher while wealth and fund management fees sustained momentum from second quarter. CIR was maintained even as we step up investment in people and technology. This was achieved despite muted growth in ASEAN due to our diversified customer franchise and geographies. Our portfolio remains resilient with stable asset quality. Our restructuring task force proactively manage and restructure accounts from the more vulnerable sectors. And we have minimum exposure to China real estate companies. We remain positive on the investment and trade potential between China and ASEAN and the opportunities within ASEAN. Our cross-border revenue grew by 6% year-on-year. Our wealth management AUM also recorded a year-on-year growth of 6%. We are steadfast and committed in supporting them through these challenging times to digitise and transform for the future, especially for SMEs, the backbone of our economy. The Bank is honoured to have received recognition for our efforts and I thank my colleagues who have contributed much and made the difference. Recently, Euromoney and Global Finance were best SMB bank awards. Our customer-centric approach has also guided our omni-channel and digital innovation strategy in retail. Last month, we launched UOB Tomorrow in Singapore, harnessing the best of our digital bank, Tomorrow and UOB Mighty app into one platform. Besides improving the overall digital banking experience for our customers, UOB Tomorrow also has the largest rewards program in Singapore. This unified platform will allow the bank to tap economies of scale, to accelerate innovations reducing costs to acquire and to serve digitally. We will be rolling out progressively across the region, building up scale and reach in ASEAN. We will also continue to expand our suite of wealth solutions to meet changing customer preferences, such as in ESG-focused investments. Last week, UOB Asset Management launched the first Singapore Focus Fund, aimed at helping investors to contribute to the nation's sustainability drive for future generations. At UOB, we believe in harnessing the opportunities to deliver greater value to our customers. For example, We have been building strategic alliances with like-minded partners such as MarketNord and ADEX. We are the first Southeast Asian bank to work with MarketNord on its DLT-enabled fixed income infrastructure. And we facilitated SAMCorp's first digital green bond on ADEX. Another area is CBDCs. We believe CBDCs can help drive financial inclusion and boost economic growth. We are working with central banks so that customers can benefit from the use of CBDCs in the coming years. At EOB, We tap technology and work with ecosystem partners to power innovative and progressive solutions, supporting customers to transition to a lower carbon economy. We recently launched two new end-to-end solutions under our Smart City Sustainable Finance Framework. U-Energy and Udrive to reduce energy consumption. Let me explain. The Uenergy is basically financing plans for homeowners to improve energy efficiency using smart controls. Udrive plans for electric vehicle ecosystem players to promote transition to green vehicles. and we see our roles as being a catalyst and enabler. We will continue to partner our customers and stakeholders to forge a smart and sustainable future for all. With high single-digit growth in loans backed by strong pipeline in corporate and institutional loans and mortgages, Double-digit growth in non-interest income driven by loan-related wealth and credit card fees. Stable cost-to-income ratio and credit costs to be lower than 25 basis points. In summary, we remain optimistic of ASEAN long-term potential. Although outlook will be affected by China's slowing economy, we are positive that gradual reopening of borders will improve business flows. In the meantime, we stand ready to support our customers with our strong fundamentals built over years of discipline and prudence. We will continue to invest across our franchise to deepen capabilities in connectivity, digital innovations and sustainability, areas of growth in Asia for years to come. I thank my colleagues for their teamwork and dedication. Thank you all of you for your support. I will now hand over to Wi-Fi to elaborate on our financial. Thank you.

And once again, good morning to everyone. Thanks for joining us again today. Third quarter profit was 4% higher than last quarter at $1.05 billion from sustained income momentum and lower credit costs. This is also 57% higher than a year ago. For the nine months period, profit increased 37% to $3 billion. This good performance is the result of our strengthened connectivity capability and improving customers' experience with digital innovations. Quarter-and-quarter, NII was up 2% on steady loans growth as economies slowly recover. Fees income remained strong, while trading and investment income grew 5% on higher investment gains. asset quality remain resilient with NPR ratio stable at 1.5%. Total credit cost on loans stayed at 20 basis point. Our capital position is strong at 13.5%. The group's commercial banking activities remain strong. Our continued engagement and support to customers in their personal or business needs through the pandemic started to show results as we captured volume growth alongside gradual economic recovery. While retail operating environment remains challenging amid margin compression, fees and customers' AUMs soared to record levels. In Singapore, new housing loans grew 10%, resulting in a market share increasing by 2%. In particular, demand from secondary markets were very strong and will benefit from drawdown next quarter. Wholesale continued to see strong demand for financing advice, restructuring and funding opportunities from corporate clients. Global market operating profit was lower as there was less opportunities for bond sales with interest rate being less volatile this year. Our wholesale business continues to deliver on the back of diverse growth engines. Our comprehensive RCM footprint, sector specialisation and different product capabilities has enabled us to capture the growing cross-border opportunities. Cross-border income grew 6% and now accounts for 30% of our wholesale banking income. Loans and trade-related fees rose 25% as customers increasingly leveraged our sector-specific insights and solutions. Our global financial institution groups registered an 18% income growth in banking property funds and financial sponsors, serving them with our strong structuring capabilities. The acceleration of digital adoption by our corporate customers had also resulted in increased transaction volumes and higher customer satisfaction. For retail, we have accelerated our digital transformation. As shared by my CEO, the conversions of UOB Mighty and the Tomorrow into UOB Tomorrow enables us to have a single unified platform to serve our customers across the wealth continuum. UOB Tomorrow will enable us to effectively scale across ASEAN to digitally acquire new customers in a cost-efficient manner. By leveraging the network of our ecosystem partners, we aim to double the digitally-enabled customers to around 7 million. At the same time, we seek to have 70% of these digitally enabled customers to be digitally engaged. Income from these digitally engaged customers are expected to more than double by 2026, while CIR for these customers will see around a 5% point reduction, driven by increased scale and reduction in the cost to acquire and the cost to serve. Customers can look forward to exciting loyalty rewards for more than the 3,000 merchants we had forged. As part of our digital transformation, we are also strengthening our OMI channel offerings by digitizing customer experience and repurposing branches for more advisory needs. Our AUM grew to $137 billion, a 6% increase year-on-year. I think this growth is actually quite broad-based across all our customer segments. Our new digital wealth offerings, such as Simple Invest, continue to augment the growth of our wealth business. We are optimistic that the economic environment will continue to improve as the world finds better way to deal with the pandemic situation. Vaccination rates have improved tremendously and death rates are now under control. However, the path to recovery will differ in the short term, with ASEAN expected to live with the COVID situation a bit longer. Singapore and developed markets saw greater opportunities for fees and funding with large corps and financial institutions. Like mentioned earlier, retail wealth and customers AUM soared to record levels and in Singapore, the new housing loan sales also grew 10%. While the ASEAN excluding Singapore recovery had been slower, we managed a 3% year-on-year growth as there were pockets of funding opportunity to spur economic activity. As highlighted in my opening slide, net interest income remains strong. with healthy loans growth supported by stable margin. Fees income is very strong, both in retail and wholesale. Expenses are well under control with CIR down 1.5% to 43.8%. Credit quality remains resilient with impairment charges reducing by 53% year-on-year. Let me give you some details on how our commercial banking activities had performed. our loans growth momentum sustained well, increasing 9% year on year. This was mainly from our corporate and institutional customers in Singapore and North Asia as economic activities picked up. With continuous support from customers, most of our key markets in the region grew their loan book in local currency terms. This put us well on track to deliver a high single digit loans growth for the year. With graduate business momentum recovery and strong customer franchise, year-on-year income rose to a new high of $1.8 million. Loan fees were at record levels following strong advisory trade and investment growth. Wealth management fees similarly reached a record level as investor confidence returned with AUM growing 6% year-on-year. The overall asset quality of our loans portfolio remain resilient with NPL ratio stable at 1.5%. The new NPAs were well within management expectation. We know there are some concerns when some countries extended their relief programs. We have accessed the residual risk of this portfolio and believe that the impact on credit costs or NPAs will not be significant. total credit costs remain unchanged at 20 basis points as credit outlook stabilizes. Based on internal portfolio assessment and improved economic outlook, we are confident that the General Allowance is sufficient. We have hence reduced our General Allowance for the quarter. As at September this year, the Group Total Allowance stood at $5.1 billion, of which $3.4 billion was General Allowance. MPA coverage at 106% or 265% after taking collateral into account and performance loans coverage above 1% were all strong ratios. This strong reserve coverage gives us confidence that our general allowance is sufficient to see us through this downturn and we can continue to support our customers' growth. Our liquidity position remains strong, with LCR at 138% and NSFR at 125%, both well above the minimum regulatory requirements. CET1 is to 13.5% this quarter, largely due to strong asset growth and the interim dividend paid. With the worst behind us, a strong balance sheet and adequate general allowance, we are comfortable with our current level of CET1. With that, I conclude my presentation. I'll pass you back to the moderator.