UOB UOB -- Premier Regional BankPremier Regional Bank

Analysts’ BriefingFull Year 2003 Results

Address byKuek Tong Au

Executive Vice PresidentCorporate Services

20 February 2004Disclaimer : 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 investment objectives, financial situationor needs of any particular investor. These should be considered with or without professional advice when deciding if an investment is appropriate. UOB Bank accepts no liability whatsoever with respect to the use of this document or its content.

Quarter-on-Quarter Profits Trending Upwards

304

262228

212

263239

335366

0

100

200

300

400

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03

($m)

Net Profit After TaxNet Profit After TaxNet Profit After Tax

9.2%

Higher Profits in 4th Quarter 2003

Inc / (Dec)

4Q03 $m

3Q03 $m $m %

Net Interest Income 540 503 37 7.4 Non-Interest Income 291 251 40 16.1 Total Income 831 754 77 10.3 Less: Operating Expenses 290 269 21 7.6 Operating Profit before Goodwill

and Provisions 542 485 57 Less: Goodwill Amortisation 50 50 - (1.3)

Provisions 41 40 1 2.7 Operating Profit after Goodwill

and Provisions 451 394 57 14.3 Share of Profit of Associates 45 32 13 39.5 Profit before Tax & Minority Interests 496 427 69 16.2 Less: Tax & Minority Interests 130 92 38 42.0

Net Profit After Tax 366 335 31

11.7

366 9.2

542

Higher Profits despite Difficult Economic Conditions in 2003

Inc / (D ec)

2003 $m

2002 $m $m %

Net In terest Incom e 2,071 2,128 (57) (2 .7) Non-Interest Incom e 1,089 906 183 20.2 Total Incom e 3,160 3,034 126 4.1 Less: O perating Expenses 1,095 1,074 21 2.0 O perating Profit before G oodw ill

and Provisions 2,064 1,960 104 Less: G oodw ill am ortisation 202 196 6 3.1

P rovisions 362 465 (103) (22.2)O perating Profit after G oodw ill

and Provisions 1,501 1,300 201 15.4 Exceptional Item # - (48) (48) (100.0) Share of Profit o f Associates 107 123 (16) (13.1) Profit before Tax & M inority In terests 1,608 1,376 232 16.9 Less: Tax & M inority In terests 406 370 36 9.9

Net Profit After Tax 1,202 1,006 196 # C om pris ing restructuring and integration costs as a resu lt of the acquis ition and m erger of O U B

5.3

19.5

2,064

1,202

Change in Accounting Policy – Impact to Profits

Note: The change in accounting policy has been applied retrospectively and the 2002 figures in this presentation materials had been restated accordingly

Net Profit After Tax - $m

2003 1,169 1,202 33

2002 1,064 1,006 (58)

Inc / (Dec) 9.9% 19.5%

Old PolicyOld PolicyOld Policy New PolicyNew PolicyNew Policy Inc / (Dec)Inc / (Dec)Inc / (Dec)

Lower Net Interest Income from Inter-bank Money Market Activities

2.342.22

2.06

2.22

2.25

1.5

1.8

2.0

2.3

2.5

2.8

1999 2000 2001 2002 2003

(%)

1,133 1,198

1,429

2,128 2,071

0

500

1,000

1,500

2,000

2,500

1999 2000 2001 2002 2003

($m)

Net Interest IncomeNet Interest IncomeNet Interest Income Net Interest MarginNet Interest MarginNet Interest Margin

336

143

8394

330

14979

146

355

217

110113

501

136110

159

588

254

115133

0

200

400

600

800

1,000

1,200

1999 2000 2001 2002 2003

Fe e & Commission Profit fr Se c / De riva tive s/ FX Divide nd & Re nta l Othe r Inc ome

($m)

Non-Interest Income (Non-NII)NonNon--Interest Income (NonInterest Income (Non--NII)NII)

Non-NII / Total Income :

36.6% 37.0% 35.7% 29.9% 34.5%

795655 704

1,089

906

20.2%

Robust Growth in Non-Interest Income

Stronger Fee and Commission Income

2003 2002$m $m $m %

Credit card 94 96 (2) (2.3) Fund management 78 74 4 4.6 Futures broking & stockbroking 35 49 (14) (27.5) Investment-related 98 29 69 235.9 Loan-related 97 86 11 12.0 Service charges 49 44 5 12.0 Trade-related 111 101 10 10.3 Other 26 21 5 23.8

Fee and Commission Income 588 501 88 17.2

Increase / (Decrease)

235.9

17.487588

Effective Cost Management Inc / (Dec)

2003 $m

2002 $m $m %

Staff Costs 532 536 (4) (0.9)

Other Operating Expenses 564 538 26 4.8

Total 1,095 1,074 21 2.0

34.735.4

39.339.5

32.5

30.032.034.036.038.040.0

1999 2000 2001 2002 2003

(%)Expense-to-Income RatioExpense-to-Income Ratio

Lower Provision Charges

Provisions Charged to Income StatementProvisions Charged to Income Statement

1999 2000 2001 2002 2003$m $m $m $m $m

Specific provisions for loans 239 69 165 422 345

Specific provisions for investments and other assets (4) 74 70 43 16

General provisions 19 (53) (70) - -

Total provisions 253 91 165 465 362

253

91

165

465

362

0

100

200

300

400

500

1999 2000 2001 2002 2003

($m)

22.2%

Higher Return on Average Shareholders’ Funds (ROE)

10.8

7.9

9.3

12.6

13.5

11.3

9.5

10.9

6.0

8.0

10.0

12.0

14.0

1999 2000 2001 2002 2003

(%)

Cash ROE

ROE

Improved Loans Demand

27.3 30.0

60.9 58.9 59.3

0.0

20.0

40.0

60.0

80.0

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

($b)Net Customer LoansNet Customer Loans

Increase in Customer Deposits

($b)

Customer DepositsCustomer Deposits

40.7 43.4

74.567.9 69.9

0.0

20.0

40.0

60.0

80.0

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03% of Total Deposits 86.3% 76.4% 80.4% 77.9% 78.8%

Lower L/D Ratio

Loans / Deposits RatioLoans / Deposits Ratio(%)

84.986.7

81.8

69.266.9

50.0

60.0

70.0

80.0

90.0

100.0

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

Total NPLs($m)

($m)

5,6792,462 5,968 5,1602,834

750 7511,620 1,613 1,458

447497

174229

396

3,6193,851

1,5371,855

3,306

8.1%9.0%9.3%

7.8%

9.8%

0

2,000

4,000

6,000

Dec-99 Dec-00 Dec-01 Dec-02 Dec-032

4

6

8

10

12

Loss Doubtful Substandard NPLs / Gross Customer Loans

(%)

Declining Non-Performing Loans (NPLs)

Total NPLs($m)

($m)

5,6792,462 5,968 5,1602,834

135121

362 182161

3,5303,819

1,3541,642

3,935

1,378

1,005929

1,600 1,458

91

5258

187 104

0

2,000

4,000

6,000

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

Singapore 5 Regional Countries Greater China Other

Reduction in NPLs across Regions

Reduction in NPLs across Sectors

Dec-03 Dec-02 $m $m $m %

Transport, storage and communication 105 124 (19) (15.3)Building and construction 756 843 (87) (10.3)Manufacturing 745 874 (129) (14.8)Non-bank financial institutions 984 1,029 (45) (4.4)General commerce 702 769 (67) (8.7)Professionals and private individuals 926 1,014 (88) (8.7)Housing loans 632 668 (36) (5.4)Other 231 294 (63) (21.4)Sub-total 5,081 5,615 (534) (9.5)

Debt securities 79 64 15 23.4

Total NPLs 5,160 5,679 (519) (9.1)

Inc / (Dec)

NPLs By Industrial ClassificationNPLs By Industrial Classification

Improved NPLs Ratio for Major Sectors

Dec-03 Dec-02 Inc / (Dec) % % % pts

Transport, storage and communication 5.0 6.0 (1.0)Building and construction 10.3 9.2 1.1 Manufacturing 12.7 16.2 (3.5)Non-bank financial institutions 9.5 9.5 - General commerce 11.4 12.4 (1.0)Professionals and private individuals 9.6 10.9 (1.3)Housing loans 4.3 4.8 (0.5)Other 3.7 5.3 (1.6)

NPLs* / Gross Customer Loans 8.1 9.0 (0.9)

NPLs Ratio By Industrial ClassificationNPLs Ratio By Industrial Classification

* Excluding debt securities

Decrease in Cumulative Provisions in Tandem with the Drop in NPLs

1,899 2,079 1,910

896955

819 768

1,4351,425

1,422

2.3%2.4%2.3%2.5%

2.9%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Dec-99 Dec-00 Dec-01 Dec-02 Dec-030.0

1.0

2.0

3.0(%)

GP / Customer Loans (net of SP)Specific Provisions General Provisions

1,774Total Provisions ($m)

($m)

1,664 3,334 3,504 3,332

Increase in Provision Coverage

55.9

64.6

61.7

67.6

62.6

50

55

60

65

70

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

141.4

138.3

136.6136.6

145.2

120

130

140

150

Dec-99 Dec-00 Dec-01 Dec-02 Dec-03

(%) (%)

Cumulative Provisions /Unsecured NPLs Ratio

Cumulative Provisions /Unsecured NPLs Ratio

Cumulative Provisions /Total NPLs Ratio

Cumulative Provisions /Total NPLs Ratio

Strong Capital Position

17.1

11.8 12.2

21.719.8

18.515.3

18.2

12.8

18.6

0

30

60

90

Dec-99 Dec-00 Dec-01 Dec-02 Dec-030

5

10

15

20

25

Risk Weighted Assets Total CAR Tier 1 CAR

($b) (%)

Risk Weighted Assets

Capital Adequacy Ratio (BIS)Capital Adequacy Ratio (BIS)

Higher Dividend Payout to Reward Shareholders

8%

12%

25%

15%

25%

15%

25%

15%

25%

18.8%

20%

40%

0

10

20

30

40

50

60

1999 2000 2001 2002 2003

Interim Final Dividend in Specie Special

(%)

Dividend Amount $416m $316m $426m $720m $736m

Dividend Payout Ratio 54.7% 34.6% 46.0% 71.6% 61.2%

In Conclusion...

NPAT grew 19.5% to reach $1,202 million in 2003

ROE (excluding goodwill) increased to 10.9% from 9.5% in 2002

Expense-to-income ratio improved 0.7% point to 34.7%

NPLs ratio declined to 8.1% in 2003 from 9.0% in 2002

Dividend rate of 60.0% for 2003 is higher compared to 58.8% in 2002