CEO's Message on UOB Group 1Q13 Results

Dear Investors

UOB Group started 2013 on a positive note with a record net profit after tax of S$722 million, representing a 3.8% improvement from fourth quarter last year ("4Q12"). Net interest income was maintained at S$964 million, as robust loans growth of 7.4% was offset by persistent margin pressure. Excluding the impact of some chunky loans, we remain on track to achieve our full year loans growth targets. Our emphasis on total customer profitability is bearing fruit, with fee income growing 16.9% to a new quarterly high of S$453 million. Even as we invest in our regional franchise, there was no let up in our disciplined stance. Cost-to-income ratio improved to 41.6% and overall asset quality remained sound. NPL ratio improved to 1.3% and total charge-off stable at 30 basis points even as we continued to set aside general provision to support an expanding customer franchise. Our regional platform is also progressing well, with regional profit before tax increasing 25.2% to S$313 million and offshore profit contribution higher at 38.1%.

The Group's balance sheet stays robust. Funding and liquidity were intact as we leveraged our strong credit ratings and extensive regional network to grow customer deposits, which will remain the key pillar of our funding base. The Group's loans-to-deposits ratio ("LDR") and USD LDR were healthy at 87.3% and 85.7% respectively. At the same time, we further diversified our funding mix to raise shorter-term funding under our US$10 billion commercial paper programme to further augment our funding position.

The Group adopted Basel III framework for its Capital Adequacy Ratios ("CAR") computation in accordance with MAS guidelines with effect from January 2013. Under the phased-in Basel III implementation timeline, our capital position improved with CET1 higher at 14.3%, and Tier 1 and Total CAR strong at 14.3% and 18.0% respectively. We are well positioned to fulfill regulatory requirements in an evolving banking landscape and will continue to balance growth with stability to preserve our balance sheet strength.

Whilst we are pleased with the latest set of results, we are confident of achieving more once our integrated platform takes shape, and we are able to target a bigger share of the regional wholesale and wealth management business. South East Asia, where most of our operations are centered, boasts of strong fundamentals and is expected to see continued liquidity flows and competition. We will continue to focus on our core business and build up product capabilities across the region to enhance long-term shareholder returns as well as to stay ahead of the pack.

Wee Ee Cheong
Deputy Chairman & Chief Executive Officer
2 May 2013