Ours is an era that is marked by immense change. Uncertainty and volatility shape markets, diverse and divergent economic and political beliefs challenge international relations, while advances in technology propel how businesses are run and lives led. At the moment, many countries are grappling with the impact of COVID-19 which is affecting global growth over the near term.

As unsettling as change can be, change can also bring about positive outcomes if we know our purpose, focus on the fundamentals and persevere towards attaining our goals. Navigating well through choppy seas also requires experience, discernment and agility. UOB, with more than eight decades of presence in the region, has been through and taken learnings from past storms, be they wars, financial crises or epidemics.

Storms will pass. We stay the course. This is because we take seriously our duty of care to our customers, our colleagues and our communities, as we strive to be their trusted financial partner and steward for the long term.

We are mindful of the unintended consequences of taking the short-term view. The painting on the cover of this year’s Annual Report, Wastescape, illustrates the impact of myopic views and immediate gratification. Not for UOB. Thinking ahead on behalf and in support of our stakeholders is core to us given our entrepreneurial roots and the ownership mentality rooted in our origins. Our long-term approach and commitment enable us to weather the storms, to emerge stronger each time and to be better equipped to grow sustainably.
Focusing on ASEAN’s strengths and potential
As we start this new decade, UOB, as an ASEAN-based bank, reaffirms our confidence in this region.

ASEAN’s real gross domestic product growth rate averaged about five per cent over the past decade – the third fastest in the world after China and India. Its per capita income doubled from US$2,554 in 2009 to US$4,500 in 2019.

After years of consistent high growth, ASEAN’s markets are now more diversified, draw more foreign direct investment (FDI) and hold more wealth than before. By 2030, the region’s economy is expected to double to US$6.6 trillion from US$3.1 trillion in 2019. The young and growing middle class in its population of more than 650 million people is one of the world’s fastest-growing consumer bases. Sixty per cent of them are under 35 years of age. ASEAN’s fundamentals remain sound and strong.

Recent global developments, whether geopolitical dynamics, trade tensions or COVID-19, have accelerated structural shifts in key trade corridors, as businesses diversify their global supply chains. This presents opportunities for ASEAN.
Driving strategic and sustainable growth
UOB, with our established Asian heritage and franchise, is well positioned. We connect our corporate clients to regional opportunities and provide financial solutions to our retail customers as their needs evolve with rising affluence.

We fulfill our purpose by pursuing a strategy based on the following pillars:
  • Deepening our regional connectivity through our network, sector solutions and cross-border advisory capabilities;
  • Offering the complete customer experience with best-in-class products and services, through our holistic, omni-channel approach and Digital Bank;
  • Investing in people and technology for the long term; and
  • Being disciplined in risk and balance sheet management to navigate through economic cycles.
Deepening our regional connectivity
Expanding across the region
UOB has built the most extensive network in ASEAN among our peers through a series of strategically-timed acquisitions and organic growth over the past decades. In 2019, we deepened our connectivity within Vietnam with a new branch in Hanoi after our first in Ho Chi Minh City, to help our customers tap opportunities in one of the world’s fastest-growing economies. In China’s Greater Bay Area (GBA), we established our seventh branch in Zhongshan, Guangdong, a transportation hub set to support the ASEAN-GBA trade flows arising from the manufacturing, information technology and logistics sectors.

Providing end-to-end sector solutions
In enhancing our support for sectors that drive the region’s economic growth, we provide sector-specific solutions to help synergise businesses across their value chains. For example, through our regional U-Solar Programme launched last year, we finance solar power developers and partner solar power solution providers in Malaysia, Indonesia, Singapore and Thailand to offer installation and financial solutions to our corporate and retail customers. It demonstrates the Bank’s commitment to sustainable financing as the region adopts more renewable energy sources. As at end-2019, we had extended more than $6 billion in sustainable financing, including green loans, sustainability linked loans and loans for green-certified buildings.

Connecting customers to cross-border opportunities
Our bankers and FDI Advisory team harness the strengths of our integrated franchise and provide local insights, market entry support and customised banking solutions to help businesses expand into new markets. Since 2011, we have helped close to 2,600 clients in their expansion into Asia and facilitated almost $190 billion in business flows into our region. Last year, we achieved a 10 per cent increase in our cross-border income, which accounted for 28 per cent of Group Wholesale Banking’s income.

Deepening our SME franchise
Given our Asian heritage and entrepreneurial roots, we are passionate about nurturing the next generation of business leaders from Asia’s family-led firms. Launched in 2019, the Business Circle enables the younger generation to learn from successful entrepreneurs, to have cross-industry and cross-border connections, and to accelerate their own companies’ growth.

We also extended the Smart Business Transformation Programme by our innovation accelerator, The FinLab, from Singapore to Malaysia and Thailand. Through the programme, SMEs are guided on implementing digital solutions and can seek the expertise of our ecosystem of partners including leading private companies and technology solution providers.

Through UOB BizSmart, we continued to collaborate with digital solution providers to offer small businesses an integrated suite of solutions, from payroll management to e-commerce. This helps them improve productivity and frees up their time for more strategic areas of their businesses. More than 31,000 SMEs across ASEAN are currently using UOB BizSmart.

We will continue to connect with like-minded partners to forge ecosystems and to create comprehensive solutions that address our customers’ needs and wants in a sustainable way.
Offering the complete customer experience
Providing an omni-channel experience
Even with the array of digitalised banking options, many of our customers prefer to make their significant financial decisions in person with their bankers. In Singapore, 39 per cent of our customers use our omni-channel touchpoints.  

With our customers’ needs always at the centre of what we do, we piloted in 2019 a new high street wealth banking branch concept in Singapore where the digital meets the physical seamlessly. Leveraging artificial intelligence (AI), advanced data analytics and our purpose-built digital wealth advisory tool, our relationship managers can recommend to our customers the most suitable investment solutions for them. To help our digitally-savvy customers save and spend more wisely, we added Mighty Insights, powered by AI, to our all-in-one
UOB Mighty app.

Launching the digital bank of TMRW across ASEAN
In targeting the region’s young and entrepreneurial generation, which presents a $10 billion market opportunity based on their lifetime revenue, we created a distinctive, mobile-only digital bank – TMRW. It is the first in ASEAN to tap data insights to make every digital interaction personal to each customer.

TMRW was launched last year in Thailand, one of the most sophisticated digital markets in our region. Its Net Promoter Score is now ranked among the top five banks in Thailand. We plan to roll out TMRW across the region where we see opportunities in the populous and underserved markets. We next launch in Indonesia. Our ongoing investment in digital capabilities equips us well to serve our customers and to respond to competition arising from digital bank licences being issued across various markets.
          "Our integrated network enables us to achieve scale and speed to market in rolling out solutions regionally while ensuring robust risk management. This may affect immediate returns, but we believe it lays a solid foundation for long-term growth."
Realising our customers’ financial goals
We aim to help our customers build and grow their wealth sustainably through our risk-first wealth management advisory and investment solutions. Last year, our wealth management assets under management rose 14 per cent to $127 billion, of which 61 per cent came from overseas customers through our regional network of 48 wealth management centres.

In addition to our flagship deposit product, UOB One, we rolled out the UOB Stash savings account into the region in 2019. We also renewed our strategic bancassurance arrangement with Prudential Group, through which we co-develop complementary solutions relevant to our customers’ financial planning needs.
Investing in people and technology for the long term
With our strong balance sheet, quality franchise and solid earnings, we can support our commitment to investing in the right capabilities and infrastructure for the long term.

Over the last six years, we have invested $2 billion in information technology and plan to maintain similar levels for the next few years. Our regional subsidiaries have been transformed into an integrated network, backed by a standardised platform which gives our customers a seamless experience across the region. Our integrated network enables us to achieve scale and speed to market in rolling out solutions regionally while ensuring robust risk management. This may affect immediate returns, but we believe it lays a solid foundation for long-term growth.

Attracting the right talent and preparing our people to be future-ready are part of our business strategy. At UOB, we foster a work culture which enables us to attract and to retain the best talents globally. Last year, we enhanced the robustness of our performance management process and established accelerated career development programmes for our top talents. We believe in growing our own timber and creating a cohort of future industry leaders with a regional mindset to carry our business deeper and further. We want our people to ride the technology wave and to remain relevant for our customers always. As such, we launched Better U, a learning and development programme to equip our global workforce of more than 26,000 with knowledge and skills in complex problem-solving, digital awareness, human-centred design and data storytelling.
Being disciplined in risk and balance sheet management
With the increasing influence of technology also comes the responsibility for the ethical use of data. In 2019, we embedded the Monetary Authority of Singapore’s fairness, ethics, accountability and transparency principles for AI and data analytics across our business. We were also one of the founding members of the Veritas initiative which provides a framework for financial institutions in Singapore to use AI and data analytics responsibly.

Given our holistic approach for the region and focus on sustainable growth, we will continue to maintain our strong risk culture and to uphold the strength and quality of our franchise.

As such, we are also sharpening our focus on sustainability, in particular the integration of environmental, social and governance considerations in our day-to-day decision-making. In this year’s report, we have included a dedicated Sustainability Report to explain how we address such effects, risks and opportunities.
Achieving responsible growth in 2019
Our disciplined focus has served us well over the decades. In 2019, we made steady progress achieving a strong balance sheet, quality franchise and solid earnings.

Net earnings for 2019 reached a record $4.3 billion, eight per cent higher than in 2018. Total income rose 10 per cent to a new high of $10.0 billion, underpinned by broad-based franchise growth across business segments. This led to return on equity rising to 11.6 per cent.

Net interest income grew six per cent to $6.6 billion as healthy loan growth helped offset thinner net interest margin amid keen competition and lower interest rates. We will focus on quality growth and total customer profitability to offset some downward pressure on net interest margin.

Fee income increased three per cent to $2.0 billion, led by growth from credit cards and wealth management. Other non-interest income rose 54 per cent to $1.4 billion, due to improved customer flows and higher gains from investment securities. For 2020, we will sustain our momentum in fee income growth led by wealth management.

Total expenses rose 12 per cent, leading to a cost-to-income ratio of 44.6 per cent, as we prioritised strategic investments in talent and technology to serve our customers better with more personalised experiences and to drive performance. We aim to keep our cost-to-income ratio stable with our paced investment approach.

Asset quality was sound, with non-performing loan ratio stable at 1.5 per cent. Total credit costs on loans increased slightly to 18 basis points. The coverage for non-performing assets stood at 87 per cent, or 202 per cent after taking collateral into account. Given current conditions from the ongoing COVID-19 outbreak, we expect a slight uptick in credit costs. Nonetheless, such impact should be cushioned by our healthy provision buffers. We will stay vigilant in credit monitoring and will conduct regular stress tests while setting aside adequate buffers to maintain our balance sheet resilience.

Our funding and capital positions remained robust. All-currency liquidity coverage ratio for 2019 averaged 146 per cent while the loan-to-deposit ratio and net stable funding ratio remained healthy at 85.4 per cent and 111 per cent respectively as at 31 December 2019. The Common Equity Tier 1 Capital Adequacy Ratio remained strong at 14.3 per cent and leverage ratio was 7.7 per cent. We remain well-capitalised to navigate the macro uncertainties ahead.

In 2019, we were the first in Singapore and the second financial institution in ASEAN to access the Panda bond market, marking another milestone in our support of greater financial market connectivity across Asia. The offering also enabled us to diversify our funding sources and investor base by currency and geography.

We continued to maintain our position as one of the world’s strongest banks, with ratings of ‘Aa1’ from Moody’s Investors Service and ‘AA-’ from both S&P Global Ratings and Fitch Ratings.
          "While there is a saying that the only constant is change, the new reality is that the only constant is accelerated change. This, together with macro uncertainties and market volatilities, reinforces the need for our measured stance, even as we stay nimble in seizing opportunities."
Connecting with our communities
Alongside strong financial results, we are committed to being a responsible member of our communities.

In 2019, we collaborated with our customers and business partners across Asia to contribute more than $5.4 million to our communities. Our heartfelt efforts have been recognised through accolades such as the Pinnacle Award, the highest honour by Community Chest Singapore for being a role model in holistic corporate giving. In 2019, our people also volunteered more of their time, devoting close to 60,000 hours in activities aligned to our corporate social responsibility focus areas of art, children and education, as well as environmental sustainability and inclusivity.

We believe that by embracing diversity, we can bring out the best in each other and create more good together. It is with this philosophy that we launched The Unlimited, an initiative to promote sustainable employment for persons with disabilities. Collaborating with SG Enable and social service agencies Autism Resource Centre, Movement for the Intellectually Disabled of Singapore and SPD, we champion inclusive hiring by connecting our clients with persons with disabilities for suitable and meaningful employment.
Balancing growth with stability
While there is a saying that the only constant is change, the new reality is that the only constant is accelerated change. This, together with macro uncertainties and market volatilities, reinforces the need for our measured stance, even as we stay nimble in seizing opportunities.

We maintain our balance sheet strength so we can continue to support our customers and to weather volatilities. We continue to invest in our infrastructure and franchise, especially in ASEAN, for the long term. We operate with prudence and discipline, guided by our values of Honour, Enterprise, Unity and Commitment, to balance growth with stability and opportunity with responsibility. This will ensure we continue to generate sustainable value for our stakeholders through trying times and business cycles.
Throughout 2019, the team at UOB – from the Board to all our colleagues – remained steadfast in supporting our customers and each other. I thank them all for their commitment, perseverance and enterprising spirit.

Finally, to our valued and loyal customers and shareholders, thank you for your continued confidence in and support of UOB.
Wee Ee Cheong
Deputy Chairman and Chief Executive Officer
February 2020