Our Customer-focused Business
GMIM provides a comprehensive suite of financial products and solutions to help our clients manage market risks, and to create investment opportunities for them across asset classes including foreign exchange (FX), interest rate, credit, commodities and equities. We also offer our clients investment management services through our subsidiaries, providing them the opportunity to invest in our retail unit trusts, exchange-traded funds, funds of funds, private equity funds and customised portfolio management services.
To help our clients make informed decisions in the volatile market environment, we tap on our extensive knowledge of Asian markets to provide them with in-depth market insights and timely advice. Working together with client segment relationship managers, we develop customised solutions based on our deep understanding of the unique needs of each client. We approach the management of our clients’ investments and business risks with the same dedication and care that we apply to our own business. In this way, we build strong and enduring client relationships.
Income derived from the products and services we offer to the Bank’s Group Retail and Group Wholesale Banking customers is reflected in the performance results of the respective customer segment.
Overall, income reported in the customer segments grew by more than 20 per cent in 2015 as we expanded our Sales and Structuring teams to attend to more clients and helped them address concerns over rising interest rates and volatile FX markets. In addition, greater interest for yield-enhanced investment structures especially from our non-bank financial institution clients had also contributed to the income growth. GMIM’s profit, however, decreased 32 per cent in 2015, mainly due to lower income from market-making and banking book/central treasury activities.
The economic slowdown across the globe and in the region looks set to continue in 2016. Divergence of monetary policies among the central banks and concerns over China’s outlook and currency are expected to be among the key factors affecting the financial markets. GMIM will continue to invest in resources and capabilities to build a sustainable customer-focused business franchise and to assist our clients in mitigating the impact of these market risks.
As a result of the implementation of more stringent financial regulatory requirements to strengthen the resilience of the global banking system through the Basel III reforms, greater emphasis had been placed on banks’ capital quality and liquidity. In this regard, GMIM is committed to ensuring UOB’s long-term stability through the prudent management of the Bank’s liquidity. We will maintain our disciplined and measured approach in ensuring a robust capital position and strong balance sheet strength which have earned us top credit ratings.
Global Markets Sales and Structuring
Helping our clients manage market risks and volatility
In January 2015, the Swiss National Bank unexpectedly gave up the FX rate cap that limited the value of the Swiss franc against the euro. Adding to the resulting FX volatility was China’s surprise devaluation of its currency during the year as markets remained cautious of the potential impact from the increase in US interest rates. On the commodities front, the market was weighed down by an oversupply in crude oil and the slowdown in China’s manufacturing sector.
Amid these developments, we helped our clients manage their FX and interest rate risks, with our Global Markets specialists keeping in close contact with them, providing deep market insights to enable our clients to make timely hedging decisions. Through understanding our clients’ requirements, priorities and risk appetites, we were able to customise solutions tailored to their needs and also to introduce financial derivatives to reduce further their cost of hedging. We also helped clients to capitalise on market opportunities arising from interest rate differentials between onshore and offshore markets to lower their funding costs while keeping FX risks in check.
The drop in oil prices provided opportunities for companies who relied on oil for their operations to hedge against price risk. We engaged our clients to recommend suitable hedging strategies and executed hedge programmes which provided much-needed cash flow stability for their business planning. Apart from oil hedging, our Global Markets specialists also offered hedging solutions for precious and base metals clients, especially for those in the Greater China region. Catering to the increasing demand in hedging for a wider range of commodities, we began offering hedging solutions for sugar, soybean and gasoline for clients in Asia.
To help meet the investment objectives of our retail and corporate clients, our Global Markets specialists capitalised on market opportunities to provide customised structured investment and yield enhancement solutions appropriate for their risk profiles. In 2015, equity-linked and currency-linked structured products as well as corporate bonds remained the most popular investment products. However, with commodities falling to fresh lows, we also offered short-term yield enhancement opportunities with notes linked to commodity markets. For example, we introduced to our Privilege Banking, Private Bank and corporate clients a short-term structured note linked to crude oil which proved profitable for the investors.
In line with the Bank’s regional strategy, we expanded our sales and structuring teams across Asia extending the reach of our Global Markets specialists to clients. With our extensive regional network, we are best-positioned to assist companies seeking expansion beyond their home country into Asia. Our deep understanding of the regulatory restrictions of Asian currencies enable us to provide solutions to address clients’ concerns about market risks across geographic borders. A regional sales team, based in Singapore, was also set up to provide clients with holistic cross-border funding and hedging solutions.
Group Bullion, Brokerage and Clearing
Connecting clients to exchanges around the world
In line with the growing sophistication of the derivatives market in Asia, we have seen an increase in client trading volumes in products such as leveraged FX, bullion, over-the-counter derivatives, futures and options, commodities and securities on exchanges around the world.
Our clients have access to 21 major Asian and global exchanges including the ICE Clear Singapore clearing membership that our brokerage arm, UOBBF, obtained in 2015. This membership has enabled us to provide timely and reliable clearing services to support our clients’ trading needs for ICE products during regular business hours in Asia. UOBBF was also one of the first clearing brokers to clear contracts listed on ICE Clear Singapore on its launch day, clearing more than half of the contracts available that day.
We also became an SGX Securities Trading Member during the year to serve our clients engaging in more cross-asset trading to diversify their risks amid the market volatility. The trading membership complements our existing derivatives clearing membership and allows us to offer equity trading services to institutional clients, and accredited and expert investors.
UOBBF also signed a Memorandum of Understanding (MOU) with KOSCOM Corporation (KOSCOM), a Korean financial IT solutions company, in May 2015. This enables our clients to tap on KOSCOM’s technology and infrastructure to gain better access to Korea’s financial markets. This collaboration also allows KOSCOM’s clients in Korea to capitalise on our trading network to transact in stocks, derivatives, FX and commodities that are available on the major exchanges in Asia, Europe and the US.
Our enterprising spirit and comprehensive clearing and brokerage services were recognised when UOB was named Bank of the Year at the Futures and Options World Magazine Awards for Asia 2015.
UOB Asset Management
Facilitating our clients’ investments across asset classes and geographies
GMIM’s suite of investment products extends to retail unit trusts, exchange-traded funds and customised portfolio management services through the Bank’s asset management arm, UOBAM. In 2015, we tapped on our multi-asset expertise to launch the Asia Multi-Asset Monthly Income Scheme in Singapore to help clients invest in income-generating funds while also protecting their savings from erosion through inflation.
As part of our continuous efforts to widen our range of products, UOBAM signed an MOU with Wellington Management in May 2015 to develop investment solutions specifically for UOBAM’s increasingly sophisticated client base in Asia. One such product is the United Income Focus Trust, a global multi-asset fund that provides investors with a secure income stream through a flexible asset allocation strategy.
The collaboration with Wellington Management brings together the complementary strengths of UOBAM’s strong investment expertise and extensive distribution capabilities across Asia and the Wellington Management Group’s global asset investment industry experience. During the year, we also deepened our strategic partnerships with Ping An Trust and with Sumitomo Mitsui Asset Management to expand the range of investment opportunities for our clients in China and Japan.
UOBAM is now able to provide onshore RMB solutions to both institutional and retail clients, offering them direct access to mainland China’s onshore equity and fixed income markets. This is enabled by a RMB1.2 billion Renminbi Qualified Foreign Institutional Investor (RQFII) quota we received from the State Administration of Foreign Exchange of China in June. The United China Onshore Fixed Income Fund was introduced in December 2015 while another two China onshore RQFII funds, the RMB onshore money market fund and RMB onshore equity fund, will be launched in the region in 2016.
UOBAM’s performance continued to garner industry recognition. We won a total of six awards including those for the United SGD Fund at The Edge-Lipper Singapore Fund Awards and for the United Global Healthcare Fund at Lipper Fund Awards Taiwan. In addition, the United Emerging Markets Bond Fund was awarded the Best Fund over 10 Years in Fixed Income Funds by Taipei Foundation of Finance-Bloomberg. UOBAM (Thailand) was named by World Finance as the Best Investment Management Company in Thailand, and was ranked second among Thailand’s Top Investment Houses in Asian currency bonds at The Asset Benchmark Research Awards. UOBAM (Thailand) was also named the Rising Star by Asia Asset Management for its financial achievements, integrity, product innovation as well as high quality of service.
UOB Venture Management (UOBVM)
Providing financing to high-growth privately-held companies
UOBVM focuses on investing in high-growth privately-held companies in Southeast Asia and China through private equity funds. In 2015, it continued to seek investment opportunities in companies seeking growth and expansion. One of our significant investments of the year was in Appier, a Taiwan-based startup that uses artificial intelligence to predict consumer behaviour across various electronic devices. UOBVM was the lead investor in Appier’s US$23 million Series B funding, accounting for about one-third of the total funds raised.
UOBVM is also committed to investing in socially responsible companies by incorporating environmental, social and governance assessments in the investment evaluation process. During the year, UOBVM partnered with Credit Suisse AG to launch the Asia Impact Investment Fund, which invests in high-growth companies in Southeast Asia and China that integrate low-income communities into their operations and supply chains. Through this fund, investors have the opportunity to improve the livelihood of low-income workers in the region.