Singapore's best domestic bank 2019: UOB
UOB is in the middle of a radical transformation. It is shedding its image as a cautious, conservative bank and adopting an ambitious digital strategy so that it can change with the times. And it is doing so while its financials are strong.
Net earnings rose 18% to a new high of S$4.01 billion ($2.9 billion) for 2018; net interest income jumped 13% to S$6.22 billion, boosted by loan growth and stronger net interest margins, beating rival OCBC’s 9% growth and coming in just under DBS’s 15% increase.
UOB’s net profit before tax also rose, up 15% to S$4.83 billion.
What stands out at the bank, led by chief executive officer Wee Ee Cheong, is the balance it has maintained among its various business divisions. Total income at the retail banking arm rose 4% in 2018 to S$3.95 billion, while at the wholesale bank it climbed 11% to S$3.94 billion and in global markets it increased 6% to S$465 million. Profit before tax at the three units climbed 4%, 10% and 16%, respectively.
Return on average ordinary shareholders’ equity rose from 10.2% to 11.3% in 2018, as return on average total assets improved to 1.07% from 0.98%.
The numbers show one side of UOB’s story. But the bank also experienced internal change last year. Wee Cho Yaw, Ee Cheong’s father, stepped down from UOB’s board in early 2018 after six decades at the bank. While from an operational point of view, it was business as usual, his departure was still monumental internally; it marked the first time that Ee Cheong, who has been CEO since 2007 and is the third generation of the Wee family to lead the bank, was running the business on his own.
That coincided with the digital transformation. UOB partnered with companies such as Chinese fintech company Pintec Technology Holdings, Israeli firm Personetics, and ride-hailing service provider Grab. It also launched a new digital bank. These efforts also make it Asiamoney’s best digital bank for 2019.
The Wee family owns slightly more than 20% of UOB, and this family ownership has held the bank in good stead. Its revenue channels are sustainable, its balance sheet is robust and its liquidity position is stable. In a country such as Singapore, where the domestic market is dominated by three banks (the other two being DBS and OCBC), UOB stood out for its investment banking prowess too, working for Housing Development Board and Keppel Infrastructure Trust. It ranked sixth in terms of Singapore investment banking revenues during the awards period, earning $17 million for a 4.66% market share, according to Dealogic.