CEO’s Message on UOB Group
1Q 2017 Results

Dear Investors,

The UOB Group (the "Group") reported net profit after tax of S$807 million in the first quarter of 2017 (1Q17). This was a 9.3% rise over the last quarter, backed by a steady growth trajectory from our core businesses.

Net interest income grew 2.2% to S$1.3 billion quarter-on-quarter, driven by expansion in loans and margins. Non-interest income increased 8.8% to S$819 million, as buoyant market conditions drove the stronger trading and investment income. The backdrop was also conducive for wealth management and fund management fees, but overall fee income fell by 4.2% to S$508 million on lower loan-related and credit card fees. Total expenses were flat at S$957 million, with cost-to-income improving to 45.1%.

Balance sheet strength is still our key focus. Asset quality remained sound, with non-performing loan (NPL) ratio unchanged at 1.5%. Specific allowance eased from the previous quarter, even as we made further provisions on existing NPLs in the oil and gas and shipping industries. Combined with a release in the general allowance, total credit costs were maintained at 32 basis points. Our NPL coverage ratio stayed high at 118%, with general allowance standing at 1.1% of gross loans. While we are confident of our overall portfolio health, we are mindful of the less predictable and volatile macro backdrop and will set aside adequate buffers to ensure the continued resilience of our balance sheet.

We maintained our strong funding position and capitalisation. Our loan-to-deposit ratio was stable at 86.7%, and all-currency liquidity coverage ratio for 1Q17 averaged at 154%. Reflecting the confidence investors have in us, we successfully issued a total of S$2.2 billion in covered bonds, senior bonds and subordinated notes over 1Q17. Our capital ratios were well above regulatory requirements. As of 31 March 2017, the Group's fully-loaded Common Equity Tier 1 Capital Adequacy Ratio stood at 12.8% and leverage ratio was 7.6%.

Amid lingering global uncertainties, we will stay disciplined in pacing our growth, tapping the increasing connectivity and affluence in the region through targeted investments to build a sustainable franchise. The recently announced preliminary approval to establish a subsidiary bank in Vietnam will further strengthen our ability to participate in the growing intra-regional flows and to serve our customers' needs more comprehensively.

On behalf of the management, thank you for your continued support as our valued investors.



Wee Ee Cheong
Deputy Chairman & Chief Executive Officer
28 April 2017