United Overseas Bank, or UOB in short, is one of the three Singapore banks I have in my long-term investment portfolio (for those of you who want to find out what other companies I have in this portfolio, you can check them out here.)

The bank just released their annual report for financial year 2019 which ended on 31 December 2019 on 08 April 2020, and in this post, you’ll find a quick summary of the key pointers you need to know (good for those who do not have the time to go through the report – I have done a summary for you):

Chairman Wong Kan Seng’s Statement:

  • Despite the challenges in 2019 (arising from trade tensions between US and China), the bank still managed to record a net profit of S$4.3 billion for the full-year, an improvement of 8% compared to the previous year.
  • Given the robust performance, the board had recommended a final dividend payout of 55 Singapore cents/share, and a special payment of 20 Singapore cents/share (hence a total of 75 Singapore cents/share), in appreciation to shareholders’ for their continued support.
  • In 2019, the bank saw step changes made in the digitisation of their processes and through their products and services such as UOB Mighty, and TMRW launched in Thailand (TMRW is a mobile-only digital bank for ASEAN’s millennials.)
  • Moving forward in the year 2020, the bank will continue to invest in capabilities to stay at the forefront of change ahead of new entrants to the field.
  • Also, the year ahead (2020) is proving to be more testing than the previous year, as a result of the spread of Covid-19 worldwide, which casted a long shadow on the global economy.

Deputy Chairman & Chief Executive Officer Wee Ee Chong’s Report:

  • UOB, as an ASEAN bank, reaffirms their confidence in the region, where its gross domestic product growth rate (which averaged at about 5% over the past decade) was the third fastest in the world, after China and India, and that ASEAN’s economy is expected to double to US$6.6 trillion in 2030 (from US$3.1 trillion in 2019.) Also, recent global developments, whether is it geopolitical dynamics, trade tensions, or Covid-19, have accelerated structural shifts in key trade corridors, as businesses diversify their global supply chains – all these presents opportunities for ASEAN.
  • In 2019, the bank expanded across the region with a new branch in Hanoi, Vietnam, after their first in the country in Ho Chi Minh City, to help their customers tap on opportunities in one of the world’s fastest growing economies. The bank have also established their seventh branch in Zhongshan, Guangdong (UOB is the first foreign bank to open a branch in the location), a transportation hub set to support the ASEAN-Greater Bay Area trade flows arising from the manufacturing, information technology, and logistics sectors.
  • Apart from its expansion activities, some of the other main business activities the bank carried out during the year include providing support for sectors that helped to drive the regions’ economic growth, helping businesses expand into new markets by providing local insights, market entry support, and customised banking solutions, as well as launching the Business Guide, to enable the younger generation to learn from successful entrepreneurs, to have cross-industry as well as cross-border connections, and to accelerate their own companies’ growth.
  • Moving forward, I note that UOB also plans to roll out their mobile-only digital bank, TMRW, across the region, with their next launch in Indonesia.

UOB’s Financial Performance in the Year 2019:

  • Net interest income grew 6% to S$6.6 billion as healthy loan growth helped offset thinner net interest margin amid loan competition and lower interest rates. To offset the downward pressure on net interest margin ahead, the bank will focus on quality growth and total customer profitability.
  • Fee income increased 3% to S$2.0 billion, led by growth from credit cards, as well as in wealth management.
  • Other non-interest income rose 54% to S$1.4 billion, due to improved customer flows, and higher gains from investment securities.
  • Total income, as a result of growth across all its business segments above, rose 10% to a new high of S$10.0 billion, with net earnings also reaching a record high of S$4.3 billion.
  • As a result of improvements in the bank’s net earnings, its return on equity also improved to 11.6% for the year 2019.
  • In terms of total income contributions by geographical locations, Singapore contributed the lion’s share, at 57%, followed by Southeast Asia at 27%, North Asia at 10%, and the rest of the world at 6%.
  • UOB also continued to maintain their position as one of the world’s strongest banks, with ratings of “Aa1” from Moody’s Investors Service and “AA-“ from both S&P Global Ratings and Fitch Ratings.
  • In the year ahead (2020), given the conditions arising from the Covid-19 outbreak, the bank expects a slight uptick in credit costs. However, they added that the impact would be cushioned by their healthy provision buffers.

Details of the Upcoming Annual General Meeting (AGM):

Along with the annual report, the bank also published a note stating that, pending legislative amendments to address the Covid-19 situation, details of the bank’s upcoming AGM has not been fixed. As a result, the payment of final dividend will be delayed as well.

In the note, the bank also added that should shareholders have any questions pertaining to their 2019 annual report, or businesses of the bank, they can send them (along with their full names, NRIC/Passport/UEN No. for verification of their shareholding status) to uob_agm@uobgroup.com. The bank will provide responses to questions before the closing date for submission of proxy forms.

You can check out the full note here.

Download Your Copy of UOB’s 2019 Annual Report

You can download your copy of UOB’s latest 2019 annual report here.

Disclaimer: At the time of writing, I am a shareholder of United Overseas Bank Limited.

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