With a global network of over 500 branches and offices in 19 countries and territories in Asia Pacific, Europe, and North America, United Overseas Bank, or UOB (SGX:U11) for short, is a leading bank in Asia.
Last Wednesday (31 March 2021), the Singapore bank published its annual report for the financial year 2020 ended 31 December 2020. As a shareholder, I have gone though the report, and for the benefit of those who do not have the time to go through it, I have compiled a summary of the most important points to take note of in this post, along with details on its upcoming annual general meeting (AGM).
Let’s get started…
Chairman Wong Kan Seng’s Statement
- Covid-19 have wrought inconceivable damage to economies and upended livelihoods around the world. In light of this, the bank acted swiftly to provide support to their customers to help them tide through these tough times.
- Particularly, UOB was the first bank to announce a liquidity programme for affected businesses; for the community, the bank provided essential supplies to help those affected by the pandemic, along with stepping up programmes to help the underprivileged; finally, for the employees, 80% of them worked from home during this period. At the same time, the bank also provided them with upskilling opportunities to equip them with skills for the future.
On Long-Term Growth:
- The region across which the bank have built their franchise continues to prove its potential with trade flows and supply chains shifting in their favour.
- UOB’s significant investments to enhance their digital capabilities allowed them to roll out innovative products and services (including UOB Mighty, an all-on-one app, UOB Infinity, a customisable digital banking solution to help their corporate clients manage their company’s finances in real-time, and mobile-only digital bank, TMRW, ASEAN’s first mobile-only digital bank launched in Thailand and Indonesia), all of which allowing the bank to reap the desired results in the market, as well as enabling them to scale their businesses across the Group.
- The bank is well-positioned to serve their customers best in the changing landscape which will include the new digital bank licenses.
- In terms of protection against cybersecurity risks, and combat against increased sophistication in financial crimes, the bank have pioneered an artificial intelligence-based anti-money laundering solution that identifies suspicious transactions and connections.
Deputy Chairman and CEO Wee Ee Cheong’s Report
Financial Performance in 2020:
- Net interest income decreased 8% to S$6.04b, as policy makers reduced interest rates to support economies and market liquidity.
- Net fee and commission income was down 2% to S$2b, as customers tightened credit and spending, and business activities reduced with movement restrictions and safe distancing measures in place. The drop, however, was offset by an improvement in its wealth and fund management fees.
- Other non-interest income fell 20% to S$1.14b due to lower net trading income on the back of a volatile market in 2020, partially offset by higher gains from investment securities.
- Total expenses decreased 6% to S$4.18b on the back of the Group’s efforts to balance continued strategic investments in technology and people capabilities while reducing discretionary spend.
- Total allowances ballooned to S$1.55b (FY2019: S$435m) as the Group pre-emptively set aside additional allowances for non-impaired assets of S$916m to ensure adequate coverage even as the impact of the pandemic on credit was evolving.
- Based on their bottom-up analysis of their portfolio, the asset quality impact remains manageable as they expect non-performing loans of about S$2b in the next 12-18 months and have pre-emptively made provisions.
Driving Long-Term Strategic Growth:
The bank is well-positioned to capture three megatrends that will drive ASEAN’s growth for decades:
- Supporting Surging Economic Flows and Increase Connectivity in ASEAN and Greater China
- Geopolitical tensions continue to reshape Asia, where global fault-lines and the bifurcation of the global economy worsened in 2020, reinforcing the link between ASEAN’s future and Greater China’s increasing economic influence (with China currently being ASEAN’s largest trading partner.)
- To that end, UOB has the most extensive regional network within ASEAN among their peers, allowing them to help their clients seize regional opportunities.
- Creating Wealth and Investment Solutions for ASEAN’s Burgeoning Middle-Class
- ASEAN has one of the world’s fastest growing customer bases with 150m people in its burgeoning middle-class – and UOB is well-placed to serve the rising affluent across the region, where there are many ways for their customers to seamlessly bank with them.
- Riding the Digitalisation Wave by Attracting, Serving, and Enabling Customers through their Digital Platform, Omni-Channel Reach, and Ecosystem Partnerships
- In 2020, the bank has acquired 200,000 new retail customers (or 43% of their total new customers) through online channels.
- Two-thirds of their customers have been making use of their digital banking services.
- To make payments simpler for their customers to enjoy more benefits when they bank and pay with them, the bank have broadened their digital payments and e-commerce ecosystems with key players such as Grab, Fave, and Shopee.
Details on UOB’s 79th AGM
Due to the current safe distancing measures in place, UOB will be conducting its 79th AGM online on Friday, 30 April 2021, at 3.00pm.
Shareholders can sign up to attend the e-AGM here (the deadline to do so will be on Tuesday, 27 April 2021, at 3.00pm.) During the e-AGM itself, attendees will be able to submit any questions through the ‘Ask a Question’ feature via the audio-visual webcast platform using their phones, tablets, or computers. Questions will be addressed during the ‘Live Q&A’ session in the same meeting.
As a shareholder of the Singapore bank, I have already signed up to attend the meeting (do take note that after registering, you need to check your email for a verification link and once verified, you will be able to submit the proxy form online, as well as post any questions you may have for the management), and will be compiling a summary (for the benefit of those who are unable to do so) in due course.
- Annual Report for FY2020
- Letter to Shareholders
- Notice of AGM
- Alternative Arrangements for UOB’s 2021 AGM
- UOB 2021 AGM Frequently Asked Questions
- Proxy Form
- Additional Information on Directors Seeking Re-Election
Disclaimer: At the time of writing, I am a shareholder of United Overseas Bank Limited.
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