United Overseas Bank Limited (SGX:U11), or UOB for short, is one of the leading banks in Asia with a global network of around 500 branches and office across 19 countries and territories in Asia Pacific, Europe, and North America. The Singapore headquartered bank is also one of the constituents of the benchmark Straits Times Index (STI.)

After market hours last Wednesday (23 March 2022), the bank made available its latest annual report for the financial year ended 31 December 2021 (FY2021), and as a shareholder, I have gone through the report to keep abreast on the latest developments.

In this post, you’ll find some of the important takeaways from the report which I’ve compiled for those who do not have the time to go through it.

Let’s begin:

Chairman Wong Kan Seng’s Statement:

  • After the sharp recession in 2020 (brought about by Covid-19), economic activities are now gradually recovering towards pre-pandemic levels.
  • With the further opening of economies, the hope is that recovery will broaden to include more businesses and sectors, and the management remains optimistic about the future of Asia and ASEAN region.
  • He updated that the Board have been working closely with the Management to review and refresh the bank’s strategy to ensure investments were directed to capabilities that will propel its future growth (post-pandemic), taking into account the risk environment of the markets it is in, and some of them include:
    • Unification of their 2 industry-leading digital services – UOB Mighty and TMRW – and place them on one platform, UOB TMRW, enabling the bank to acquire and serve the huge base of digital-first customers across Southeast Asia, along with complementing their omni-channel approach;
    • Significant progress have been made on the bank’s sustainability journey – including the launch of more sustainable financing frameworks and programmes to help their retail and business customers, on top of their appointment of its first Chief Sustainability Officer and establishment of a Corporate Sustainability Office to drive the implementation of policies, programmes, and practices that can create a positive environmental and social impact;
    • Successful bid for Citigroup’s retail business in Indonesia, Malaysia, Thailand, and Vietnam (in January 2022), subject to regulatory approval – the acquisition will enable UOB to achieve its growth targets earlier, double their retail customer base in ASEAN 5 years ahead of schedule, as well as strengthen their competitiveness and reinforce their position as a leading bank in the region.

Deputy Chairman and CEO Wee Ee Chong’s Report:

Financial Performance in 2021:

  • Total income grew 6.7% to S$9.8b (FY2020: S$9.2b), as a result of growth in its net interest income (by 6% from a year ago to S$6.4b, lead by a healthy loan growth of 10%), as well as in its net fee and commission income (by 21% to a record S$2.4b, driven by loan fees hitting a new high of S$698m as trade and investment transactions picked up momentum, and wealth management fees growing to a record S$823m), offset by a 13% decline in its other non-interest income (due to lower non-customer trading income compared to a year ago.)
  • Net profit climbed 39.8% to S$4.1b (FY2020: S$2.9b) contributed by a stronger total income growth, along with a lower credit allowance (down 58% compared to last year to S$657m as preemptive general allowance taken last year remained adequate) as Singapore and regional economies gradually recovered in 2021. Correspondingly, Return on Equity increased to 10.2% for the year.
  • With a proactive balance sheet management, net interest margin was kept stable at 1.56% amid a low interest rate environment.
  • As at 31 December 2021, its capital position remained strong with Common Equity Tier 1 ratio and Total Capital Adequacy Ratio at 13.5% and 16.6% respectively, well above the Monetary Authority of Singapore’s minimum requirement.

Support for Customers, Colleagues, and the Community through the Pandemic:

  • UOB was the first Singapore bank to offer its own relief assistance to businesses, along with actively supporting the relief measures from governments around the region as they worked to cushion the impact of the pandemic – and this was critical to the bank being named as the World’s Best Bank for SMEs by both Euromoney and Global Finance based on their understanding and anticipation of customer needs, in good times and bad.
  • The bank also provided support for its people through the holding of regular Mental Wellness Days activities, providing extended care measures, and also through their annual #Better Future of Work and Appreciation Month. On top of that, the bank have added a new track on artificial intelligence to their flagship Better U training programme to help their people prepare for the future (and stay relevant in the fast-paced and changing society.) UOB is also the first bank in Singapore to launch a gig employment model for their retired employees.
  • For the community, in 2021, its people have volunteered more than 32,700 hours to community building and through their UOB Heartbeat Programme, where they contributed more than S$6.1m to communities in need, including more than S$2.6m specifically for Covid-related efforts.

Sustaining Long-Term Growth through their Strategic Priorities:

UOB continues to invest in 3 key areas (to help build a sustainable future in Southeast Asia):

  • Deepening connectivity capabilities that facilitate increased trade and economic activity within ASEAN (particularly, they injected VND2 trillion in fresh capital to their Vietnam subsidiary as they help their clients tap opportunities in one of the region’s fastest growing economies – with that, UOB became the first Singapore bank to be awarded a certificate of merit by Vietnam’s Ministry of Planning and Investment) and other regions, particularly Greater China (one of which is the bank’s launch of the first China-Thailand cross-border Renminbi cash sweeping solution between ASEAN and China; it also became the first Singapore bank to become an Appointed Cross-Currency Dealer in Renminbi and Indonesian Rupiah);
  • Creating innovative and personalised omni-channel financial solutions that enable their customers to achieve their individual and business goals – through UOB TMRW (which positioned the bank well in advance of the emergence of digital banks across the region), UOB Rewards+ Programme (one the largest in Singapore and offers personalised reward recommendations based on customers’ spendings and saving behaviour), TMRW Pay (launched in Indonesia, it is an e-commerce check-out loan launched within Bhinneka’s mobile app and website), and UOB Infinity (which provides clients with essential business intelligence such as real-time tracking of cross-border payments);
  • Delivering meaningful climate action and social impact through their suite of sustainable financing and investing solutions, where they appointed their first Chief Sustainability Officer and formed a dedicated Corporate Sustainability Office.

Notice of Annual General Meeting (AGM):

The bank will be conducting its 80th AGM on Thursday, 21 April 2022, at 3.00pm. However due to the current safe management measures in place (as a result of Covid-19), the meeting will be held online (and no physical attendance allowed.)

If you are a shareholder of the bank, you can register to attend the meeting here (the deadline to do so will be on Monday, 18 April 2022, at 3.00pm.)

As a shareholder of the Singapore-listed bank, I have already signed up to attend the meeting, and as usual, I will be providing a summary of the meeting in due course. Along with my registration, I have also submitted the following question to the bank’s management:

“I understand from the bank’s annual report that, it has 1 branch in the United Kingdom, and 1 branch in France. As such, I’d like to find out whether or not the 2 branches in Europe (or the bank’s other branches in other geographical locations) has any clients with business dealing with Russia – and if so, may I know how much is the risk, considering all the sanctions in place on the country at the moment.”

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

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