A Breakdown of United Overseas Bank Ltd’s Loan Portfolio

United Overseas Bank Ltd (SGX: U11) is one of the three main local banks listed in Singapore.

As a lender, UOB is exposed to credit risk, amongst other forms of risk. In simple terms, credit risk is the risk of borrowers defaulting on their loans.

Therefore, investors in the bank must have a good understanding of its credit risk. To do so, one must first have a rough idea about the composition of UOB’s loan portfolio.

In this article, I want to breakdown UOB’s loan portfolio according to both geography and industry.

Here’s a table showing the geographical distribution of the bank’s gross customer loans as of 31 December 2016:

Source: UOB 2016 annual report

We can see that Singapore was the biggest contributor to UOB’s loan book in 2016 with a 55.6% share. Singapore was followed by Greater China and Malaysia at 12.1% and 11.4%, respectively.

Another point to make here is that five Asian countries accounted for more than 90% of UOB’s gross customer loans in 2016, with the named South East Asian countries alone taking up a share of 78.2%.

The table below shows a breakdown of UOB’s gross customer loans (as of 31 December 2016) by industry:

Source: UOB 2016 annual report

As you can observe, UOB’s gross loans come from a wide range of industries. But,  two industries – housing loans, and building and construction – collectively accounted for 50.4% of UOB’s gross loans at end-2016. So, there’s still some form of concentration there.

A Foolish conclusion

In sum, the key takeaways are that (1) UBO’s business is centred on South East Asia, with Singapore being the most crucial country, and (2) the bank’s loans are pretty diversified, although there is still a large exposure to the housing, and building and construction markets.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for United Overseas Bank.