United Overseas Bank

UOBKayhian on 9 Sep 2014

FY13 PE (x): 11.0

Malaysia is UOB’s largest overseas market. UOB (Malaysia) contributed to 14.4% of
total income and 15.5% of group PBT in 2013. It has achieved stellar growth post
financial crisis. UOB (Malaysia) has grown both loans and deposits at a 4-year CAGR
of 22%. It has a market share of 5.1% for loans and 4.6% for deposits.
UOB (Malaysia) is highly profitable and cost efficient. It achieved net interest margin of
2.09% (UOB Group: 1.72%) and return on equity of 17.6% (UOB Group: 12.3%) in
2013, while cost-to-income ratio was low at 34.8% (UOB Group: 43.1%). It has a strong
deposit franchise with CASA ratio of 27.6% (UOB Group: 41.9%), above the industry
average of 26%. Asset quality is healthy with gross NPL ratio at 1.7%.
Malaysia and China are significant overseas growth drivers. UOB generated growth
from Malaysia and Greater China, where pre-tax profits have grown at a 5-year CAGR
of 18.8% and 122.4% respectively (35.4% if we ignore the low base in 2008). UOB
(Malaysia) will continue to be a key pillar of UOB’s overseas operations due to the
extensive scale and longstanding customer relationships for both wholesale banking
and retail banking.