CEO’s Message on UOB Group
1H17/2Q17 Results

Dear Investors,

The UOB Group (the "Group") registered net profit after tax of S$845 million in the second quarter of 2017 (2Q17), a 4.6% increase over the preceding quarter. With that, our half-year profit amounted to S$1.7 billion, up 5.5% from a year ago on the back of a broad-based growth in revenue streams.

Net interest income of S$2.7 billion was 7.0% higher year-on-year, supported by loan growth and wider margins. Non-interest income grew 9.3% to S$1.6 billion, as fee income, notably from wealth and fund management products, and trading gains were buoyed by favourable market conditions. Cost-to-income was stable at 45.3% as we paced our investments, with expenses rising 7.2% to S$2.0 billion.

Asset quality was stable, with non-performing loan (NPL) ratio unchanged at 1.5% and specific allowances easing further to 30 basis points in 2Q17 over the previous quarter. Total credit costs were kept at 32 basis points as we began to shore up our general allowances, which inched up to 1.2% of gross loans. Putting in place strong buffers has been our key priority, as it ensures that we are well-positioned to cope with the impact of a normalising credit cycle and lingering oil and gas woes.

Our funding and capital positions were robust. Our loan-to-deposit ratio was stable at 86.1%, and average all-currency liquidity coverage ratio for 2Q17 was high at 157%. We were well-capitalised, with the Group's fully-loaded Common Equity Tier 1 (CET1) Capital Adequacy Ratio of 13.3% and leverage ratio of 7.8% as of 30 June 2017. This year, the Board is pleased to declare an interim tax-exempt dividend of 35 cents per share, representing a payout ratio of 35%. The Board is proposing to apply the Scrip Dividend Scheme to give shareholders the option of receiving dividends in the form of new ordinary shares of the bank in lieu of cash.

Asia continues to hold much promise and UOB's presence and expertise enable us to connect our customers with the opportunities across the region arising from burgeoning consumer affluence and growing intra-regional trade and investment. The recent signing of two Memoranda of Understanding in China are further examples of how we facilitate cross-border activities between China and Southeast Asia. We will continue to enhance our capabilities and productivity to strengthen our franchise further and to continue creating value for our shareholders.

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



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