United Overseas Bank Limited (SGX:U11), or UOB for short, held its 79th annual general meeting (AGM) for the financial year ended 31 December 2020 (i.e. FY2020) last Friday (30 April 2021) afternoon, which I have attended as a shareholder to receive the latest updates from the bank’s management.

Similar to the other 2 Singapore banks (in DBS and OCBC), attendees were allowed to submit their questions during the meeting, with the management addressing them after the CEO’s presentation.

In this post, you will find a summary of the presentation by Deputy Chairman and Chief Executive Officer of the bank, Mr Wee Ee Chong, live Q&A session, as well as results of the resolutions put to vote during the meeting…

Deputy Chairman and CEO Wee Ee Chong’s Presentation

Bank’s Response to Covid-19:

  • Mr Wee updated that it has been about a year and a half since Covid-19 hit the world, and the bank have continued to remain resilient throughout the entire period, where they have worked closely with all the stakeholders to help them navigate through the pandemic:
    • Customers, where the UOB is the first bank in Singapore to pledge relief assistance to businesses. Mr Wee also shared that the bank had provided support to over 1.4m customer accounts, and that it had also set up a dedicated restructuring Taskforce to help their customers manage their financial obligations
    • Employees, where during the pandemic, the bank had activated remote access for 80% of their employees to work from home within 4 weeks. For individuals who had to work in the office, staggered working arrangements were put in place. Mr Wee also added that even after the restrictions are lifted, the bank also allowed all its eligible employees to work from home twice a week
    • Community, where the bank distributed food essentials, masks and educational materials to over 8,000 families across Asia, along with over 1 million pieces of personal protective equipment to the healthcare workers and the vulnerable community

2020 Performance Review:

  • Net profit fell by -33% compared to the year before (to S$2.9b), mainly due to a built-up in pre-emptive allowance to shore up buffer.
  • Non-Performing loans rate remained stable even as the bank provided support to its customers. Mr Wee said that the bank will continue to conduct comprehensive reviews and provide support to businesses affected by the pandemic. At the same time, it will continue to monitor its portfolio closely and conduct stress test for resilience.
  • CET-1, at 14.7%, is well above regulatory requirements which provides a cushion for macro-economic headwinds, as well as help to support selective growth.
  • Total dividend per share, at 78.0 cents, represents a payout rate of 45.0%. As advised by the MAS, shareholders are given the option to receive scrip. Mr Wee updated that the bank is awaiting for directions by the Monetary Authority of Singapore (MAS) on the payout of dividends for the financial year 2021, with announcements to be made by July 2021. He added that the bank will resume its 50.0% payout rate once it receives the approval by the MAS to do so.
  • In terms of the bank’s performance in the financial year 2021, Mr Wee is of the opinion that its loans will record a single-digit growth with a stable net interest margin, and its wealth management fees will record a double-digit growth.

Outlook Ahead:

  • While Mr Wee is confident of a strong recovery in the year 2021 ahead (particularly in the second half of the year), aided by an increase in business activities and improvements in customers’ sentiments, but he reckoned that the pace of recovery will be different between countries, largely dependent on the rate at which they vaccinate their population. That said, he is of the opinion that Singapore, Vietnam, and China should see a faster recovery as the three countries due to their success in containing the pandemic.
  • Mr Wee also shared about how the ongoing geopolitical tensions between the United States and China had resulted in companies seeking to relocate their business operations to ASEAN countries, and that UOB, with a strong business presence in the region, will benefit from this shift.
  • Another area Mr Wee touched on was in the area of digitalisation, where he shared that the bank have been investing S$500m every year into areas such as artificial intelligence, data analytics, cloud computing, machine learning, etc., to make banking seamless for its customers, and they will continue to do so. Apart from that, the bank have also been investing in cybersecurity to safeguard its customers’ interests. Moving forward, the bank will continue to pursue innovation across its entire franchise to better serve its customers.
  • On forging a sustainable future, Mr Wee said the bank remains committed to help businesses advance in their sustainability agenda. He also shared that the bank have launched Singapore’s first sustainability bond offering in April, as well as appointed its first Chief Sustainability Officer (in Mr Eric Lim) the same month.
  • In an effort to build a future-ready workforce, Mr Wee shared that the bank had spent S$20m to up-skill more than 10,000 of their employees, in-line with Singapore’s move to transit into a Smart Nation.
  • Looking ahead, Mr Wee said that the bank will continue to forge ahead stronger, and work closely with its stakeholders to achieve sustainable growth and returns.

Live Question and Answer Session

  • As Mrs Lim Hwee Hwa will be retiring after the AGM, a shareholder asked about the bank’s plans to appoint another female director to succeed Mrs Lim. In response to this, Mr Steven Phan, an independent director who chairs the nominating committee, said that the bank’s stringent selection process identifies candidates not just based on their gender, but also in terms of their skills and experiences. He also updated that the bank have identified several well-qualified candidates, including several female candidates, and that there will be at least one female director being appointed, with announcements to be made in due course.
  • Another shareholder asked about the bank’s sustainability agenda, to which the Chief Sustainability Officer of the bank, Mr Eric Lim, recognises the huge increase in demand for green and sustainability-linked financing. He also shared that the bank is currently working on plans to achieve a net-zero carbon emission, with more details to be announced in due course.
  • On a question relating to the bank’s responses on challenges brought about by the new Fintech companies, Mr Kevin Lam, Head of TMRW Digital Group, said that over the past 3-4 years, UOB have been building digital banks in countries across Southeast Asia, and that the bank has plans to launch TMRW in all the Southeast Asian markets. Apart from that, lessons learnt from TMRW have also be applied into UOB Mighty to further improve their customers’ experience.
  • The last question raised was on whether or not there are any plans by UOB to downgrade its office spaces in light of the hybrid working environment post-Covid, to which Mr Dean Tong, the bank’s Group Human Resource, confirmed that there will be some reduction, but the impact will not be significant. He also added that any decisions made will have the welfare of the employees in consideration, and at the same time, maintaining the productivity of its employees in a new working environment.

Results of Resolution Put to Vote during the AGM

  • Resolution 1, which is on the audited financial statements, Directors’ statement, and Auditors’ report, was passed with 99.86% (or 1,130,969,297) of the votes for, and 0.14% (or 1,587,996) of the votes against.
  • Resolution 2, which is on the final dividend, was passed with 99.75% (or 1,135,917,474) of the votes for, and 0.25% (or 2,796,893) of the votes against.
  • Resolution 3, which is on the Directors’ fees, was passed with 99.94% (or 1,137,437,855) of the votes for, and 0.06% (or 736,094) of the votes against.
  • Resolution 4, which was on the Auditor and its renumeration, was passed with 96.27% (or 1,096,225,629) of the votes for, and 3.73% (or 42,457,218) of the votes against.
  • Resolution 5, which was on the re-election of Mr Wong Kan Seng, was passed with 86.03% (or 977,669,523) of the votes for, and 13.97% (or 158,709,533) of the votes against.
  • Resolution 6, which was on the re-election of Mr Alvin Yeo Khirn Hai, was passed with 98.62% (or 1,109,947,438) of the votes for, and 1.38% (or 15,556,621) of the votes against.
  • Resolution 7, which was on the re-election of Dr Chia Tai Tee, was passed with 99.11% (or 1,128,528,739) of the votes for, and 0.89% (or 10,186,451) of the votes against.
  • Resolution 8, which was on the authority to issue ordinary shares, was passed with 94.43% (or 1,074,816,496) of the votes for, and 5.57% (or 63,404,930) of the votes against.
  • Resolution 9, which was on the authority to issue ordinary shares pursuant to the UOB Scrip Dividend Scheme, was passed with 99.99% (or 1,138,102,087) of the votes for, and 0.01% (or 81,219) of the votes against.
  • Resolution 10, which was on the renewal of share purchase mandate, was passed with 99.86 (or 1,136,873,381) of the votes for, and 0.14% (or 1,540,042) of the votes against.

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

 

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