The latest round of capital injection will make UOB Vietnam the second-largest foreign-owned bank in the market in terms of charter capital

 

[SINGAPORE] United Overseas Bank (UOB) : U11 -3.31% said on Tuesday (Apr 8) that it will inject additional fresh capital of two trillion dong (S$104 million) into its Vietnam subsidiary, bringing its total charter capital of the unit to 10 trillion dong.

 

Since 2021, UOB has made three capital injections into UOB Vietnam. Its total charter capital of 10 trillion dong upon the latest injection represents a doubling from its 2021 levels, making it the second-largest foreign-owned bank in Vietnam in terms of charter capital.

 

UOB is the only Singapore bank with a subsidiary in Vietnam, having set up UOB Vietnam in 1993. The bank was also the first Singapore bank to set up a branch in Ho Chi Minh City in 1995.

 

Today, UOB Vietnam has five branches in Ho Chi Minh City and Hanoi with around 1,500 employees.

 

To &ldquo reaffirm its strong commitment&rdquo to Vietnam, UOB Group will invest in a new headquarters building in Ho Chi Minh City&rsquo s business district.

 

The new UOB Vietnam Plaza will house most of its employees and form the base for the bank&rsquo s future business growth in Vietnam. The building will also incorporate sustainable features.

 

UOB deputy chairman and chief executive Wee Ee Cheong said Vietnam is a key market in UOB&rsquo s Asean strategy, with the bank committed to deepening its presence there for the long term.

 

In 2022, UOB acquired Citigroup&rsquo s consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam. It expects the integration of Vietnamese customers to be completed by this year.

 

To better serve the changing needs of retail and wholesale customers, UOB Vietnam is also &ldquo strengthening its competitiveness and accelerating growth in digital banking&rdquo , said the bank.

 

For the retail segment, the subsidiary is making significant investments in digital technology and artificial intelligence to develop a new digital banking platform, which is set to launch this year.

 

Meanwhile, it will support corporate clients across their supply chains and enable them to &ldquo seize new opportunities and to advance their sustainability goals&rdquo .

 

With the completion of UOB Vietnam&rsquo s headquarters, UOB will have local headquarters buildings across all five of its key Asean markets, including Singapore, Malaysia, Indonesia and Thailand.

The bank also issues a warning to Ken Koh says it will take &lsquo appropriate actions&rsquo against him

 

[SINGAPORE] UOB has rejected allegations by Yang Kee Logistics&rsquo former chief executive officer, Ken Koh, that the bank had acted against the company&rsquo s interests and breached legal and regulatory standards. 

 

In a statement to the media on Friday (Mar 28), UOB said Koh&rsquo s claims were &ldquo baseless and defamatory&rdquo . 

 

&ldquo The bank has issued a warning letter to Mr Koh, and we will be taking appropriate actions against him and any parties who publish these allegations,&rdquo it said. 

 

The Monetary Authority of Singapore (MAS) also clarified in a statement that it had earlier responded to the matters raised by Koh in February and March. &ldquo Allegations of any legal or regulatory breach will be looked into,&rdquo it added. 

 

The statements came after The Online Citizen published an article on Thursday, along with a video and audio recordings, alleging that UOB acted against the interests of Yang Kee Logistics in the sale of its properties to real estate company Logos. This included the handling of confidential information. 

 

Koh claimed that he had reported the bank&rsquo s actions to the authorities, including MAS, and sent them evidence but received no response after five weeks. 

 

He had signed a statutory declaration affirming that the events transpired were true. Once the declaration is sworn, no changes can be made unless a commissioner for oaths is present. 

 

Yang Kee Logistics was founded in 1990 by Koh&rsquo s father, Koh Yang Kee. The logistics services provider had warehouses and offices across Asia, and in 2017 acquired Australian freight management company Axima. It became insolvent and went into receivership in May 2022.

They are priced during a stable window and ahead of Trump&rsquo s tariffs

 

[SINGAPORE] UOB : U11 +0.95% is set to issue US$2 billion in a three-tranche US dollar-denominated senior bond offering, it said on Thursday (Mar 27).

 

The notes will be issued under the bank&rsquo s US$30 billion global medium-term note programme.

 

The issuance includes an US$800 million three-year fixed-rate note bearing a coupon rate of treasuries plus 0.40 per cent, payable semi-annually in arrears. The notes will mature on Apr 2, 2028.

 

The coupon for its US$900 million three-year floating-rate note bears a rate of compounded Secured Overnight Financing Rate (SOFR) plus 0.58 per cent, payable quarterly in arrears and maturing on Apr 2, 2028.

 

Its US$300 million five-year floating-rate note bears a coupon rate at compounded SOFR plus 0.65 per cent, payable quarterly in arrears. The notes will mature on Apr 2, 2030.

 

All three series of notes are expected to be rated &ldquo Aa1&rdquo by Moody&rsquo s, and &ldquo AA-&rdquo by both S& P Global Ratings and Fitch Ratings. The notes are expected to be issued on Apr 2, 2025.

 

UOB said that it has re-entered the US dollar market to take advantage of recent constructive markets, a stable window without any key market-moving events, and ahead of US President Donald Trump&rsquo s proposed tariffs on Apr 2. It said that the USD market remains among its deepest liquidity sources.

 

Koh Chin Chin, head of group treasury, research and customer advocacy, UOB, said: &ldquo The USD market continues to be one of our deepest liquidity sources. After a brief hiatus, we set out to re-engage the widest global investor community and establish new benchmarks across different formats and tenors.&rdquo

 

She added: &ldquo Notwithstanding the growing headwinds, it has been very heartening to see such a solid reception from our real money investors, allowing us to surpass our size expectations at very competitive funding levels.&rdquo

 

The deal saw strong interest from global institutional investors, with 59 per cent of the three-year floating-rate notes allocated to US investors, and 40 per cent of the three-year fixed-rate note tranche also going to the US. Asian investors accounted for the bulk of demand in the five-year floating-rate note tranche at 93 per cent.

 

UOB said the transaction marked the tightest spread for three-year fixed-rate notes and floating-rate notes issued by an Asia-Pacific ex-Japan and ex-China bank since early 2022.

The bank has, for the first time, screened its corporate lending portfolio to assess the extent of its exposure to nature&rsquo s dependencies

[SINGAPORE] Close to 20 per cent of UOB&rsquo s : U11 +0.4% corporate lending portfolio have medium-to-high exposure to nature-related risks, said the lender in its 2024 sustainability report released on Friday (Mar 21).

 

These are mainly from loans to three sectors: building and construction mining and quarrying as well as agricultural production.

 

This is the first time South-east Asia&rsquo s third-largest lender has screened its corporate lending portfolio to assess the extent of its exposure to nature&rsquo s dependencies. It mapped its portfolio against a tool known as Encore (Exploring natural capital opportunities, risks and exposure), which was developed by the World Wide Fund for Nature.

 

This was part of the bank&rsquo s commitment to report disclosures aligned with the recommendations made by the Taskforce on Nature-related Financial Disclosures (TNFD). UOB was the first bank in Singapore to adopt TNFD recommendations after it was finalised in September 2023.

 

Through this screening exercise, UOB also found out that 60 per cent of its sustainable financing portfolio already took into account several nature elements, though some of these deals had been classified as green financing, rather than nature financing.

 

Speaking during a media briefing on the same day, UOB&rsquo s chief sustainability officer Eric Lim said that this shows that there is &ldquo a sizeable opportunity&rdquo to scale both climate and nature financing &ldquo to help our companies not only address climate issues, but also become much more resilient and positive in terms of nature issues&rdquo .

 

Nature-related risks

The building and construction portfolio makes up the largest exposure among all three sectors. It is mainly concentrated in markets that have adaptation measures to mitigate potential physical risk such as storms, floods and landslides, noted the report.

 

Transition risks in Singapore are more likely to be higher than the rest of South-east Asia due to the government&rsquo s target to green 80 per cent of its buildings by 2030. Existing green building requirements already include nature criteria.

 

As for the mining sector &ndash which is the second-most exposed to nature-related risks in UOB&rsquo s portfolio &ndash the report found that upstream activities had greater exposure. This is due to its dependencies on rainfall as well as soil and sediment retention to prevent landslides, in addition to its impact on nature such as air, water and noise pollution.

 

However, the sector&rsquo s risk to the bank is mitigated by the relatively intact ecosystems in which its clients operate, said the report.

 

Transition risks in UOB&rsquo s portfolio would come from policy changes in jurisdictions where its clients operate, and pressure from the European Union&rsquo s import regulations. The EU Battery Act, for example, requires due diligence on the environmental practices of critical mineral suppliers in the battery value chain. However, these risks are not yet material in its clients&rsquo markets, noted the report.

 

UOB&rsquo s agricultural sector loan book was found to be primarily located within relatively intact systems that have sufficient capacity to manage its reliance on soil fertility, water and pollination, in addition to its impact on land use change, as well as water, air and soil quality resulting from pesticide use.

 

Nonetheless, there are still specific geographic hotspots across South-east Asia and China that may be more affected, though these are not expected to be widespread in its portfolio.

 

Transition risks for this sector are also rising due to increasing ambitions among governments in the region to tighten nature protection laws. Companies exporting to the EU market may also be affected by the bloc&rsquo s deforestation laws. But these transition risks are not yet material in the markets that UOB&rsquo s portfolio have exposure to.

 

While the oil and gas as well as waste management sectors were also identified to be highly exposed to nature-related risks, the bank did not focus its analysis on these two sectors due to their relatively small loan book. UOB had previously ceased the financing of upstream oil and gas activities from 2023.

 

Nature-financing opportunities

With a better idea of how its clients are exposed to nature-related risks, Lim said, the bank is better able to support and partner its clients in the kind of investments they want to commit to, as well as the changes they can make to their business models.

 

The report noted &ldquo significant business opportunities&rdquo from nature risk management, given that there are already many companies within the bank&rsquo s portfolio initiating commercial nature-focused activities. These include circular economy and waste management, sustainable water management and sustainable material selection.

 

&ldquo Our funding resources will be most effectively used by identifying existing nature-related activities that are scalable and financing more of them... These will be the activities with the greatest commerciality, with the widest possible adoption and highest potential impact,&rdquo said the report.

 

Future developments

UOB noted that it will progressively embed nature in its business and strategy by tracking its nature financing, conducting nature scenario analysis and setting nature targets when industry guidelines and data are available.

 

However, industry guidance on nature for financial institutions are relatively nascent. Key stakeholders have not focused on nature in a big way though discussions on this topic are picking up, said Lim.

 

He highlighted the need for more granular data on nature, a mechanism to translate nature-related risks into financial impact, and detailed pathways towards achieving the global biodiversity target of conserving 30 per cent of the world&rsquo s terrestrial, inland water, as well as coastal and marine areas by 2030.

 

&ldquo We need to get the concept of nature &ndash being this critical part of our value chains to maintain our economies, our communities, our societies &ndash into the language of government, into the real economy, into financiers, so that as an ecosystem, we can all come together to build the right monitoring tools, the right scenarios, the right targets,&rdquo he added.

 

When asked if the regulator here should mandate companies here to disclose nature-related risks and opportunities, such as the case for climate, Lim said that &ldquo the right level of disclosure&rdquo that takes into account the capabilities and resources of smaller companies would be helpful.

 

For nature-related financing to become more mainstream overtime, it would be important for stakeholders to learn from the issues that came up over the last few years when sustainability considerations were being integrated into financial markets, said Lim.

 

The environmental, social and governance momentum &ndash which reached a fervour during the Covid-19 pandemic &ndash is now facing setbacks as climate action has taken a backseat in the United States under President Donald Trump.

 

&ldquo Don&rsquo t be overly idealistic about it, but focus on pragmatic impact that create value and resilience for our economies and our communities. And I think nature will find a good platform in terms of reporting and disclosures,&rdquo he said.

This comprises a salary of S$1.44 million and a bonus of S$13.56 million

[SINGAPORE] UOB : U11 +0.4% chief executive officer Wee Ee Cheong&rsquo s annual salary for 2024 dipped, despite the bank reporting a record net profit for the full year.

 

Wee, who is also deputy chairman of the bank, was paid S$15 million, which comprises a salary of S$1.44 million and a bonus of S$13.56 million, UOB&rsquo s 2024 annual report showed on Friday (Mar 21).

 

Other benefits in kind, including transport and event-related perks, amounted to S$46,944.

 

His annual package is down 5.5 per cent from the S$15.9 million he was paid in 2023. His 2024 salary was 2 per cent higher than the year before, even as his bonus fell 7.7 per cent from the S$14.69 million in 2023.

 

The report noted that 60 per cent of his variable pay is deferred and will vest over the next three years. Of the deferred variable pay, 40 per cent will be issued in deferred cash, while the remainder will be in the form of share-linked units.

 

The CEO&rsquo s remuneration fell even though UOB posted a 5.8 per cent increase in net profit to a record S$6.05 billion.

 

Wee&rsquo s total salary is also lower than that of outgoing DBS CEO Piyush Gupta, who received a 56.5 per cent year-on-year pay bump to S$17.6 million for the same period.

 

In UOB&rsquo s annual report, Wee noted that the bank&rsquo s financial performance remained resilient in 2024, with total income for the financial year ended Dec 31 up 3 per cent year on year to S$14.3 billion.

 

He added that UOB&rsquo s acquisition of Citigroup&rsquo s consumer banking businesses in South-east Asia has &ldquo supercharged&rdquo its retail customer base to 8.4 million across Asean, accelerating the lender&rsquo s regional growth by five years.

Between Feb 28 and Mar 3, UOB chairman Wong Kan Seng purchased 10,050 shares at an average price of S$38.157 per share. With a consideration of S$383,480, this increased his total interest in the lender to 75,120 shares.

 

His preceding acquisition on the open market was on Mar 1, 2023, with 3,700 shares acquired at S$29.74 apiece. Wong was appointed to the board of UOB in July 2017 and assumed the role of chairman in February 2018.

 

He is also the chairman of CapitaLand Group as well as CLA Real Estate, and a director of Bo&rsquo ao Forum for Asia.

 

In its March 2025 investor presentation, UOB said it planned to reward shareholders with a S$3 billion capital distribution package to return surplus capital over the next three years. This includes a special dividend of S$0.50 per share in 2025, and a S$2 billion share buyback programme to be completed by 2027.

 

For the year ahead, the bank intends to continue capitalising on the region&rsquo s long-term fundamentals, including growing intra-regional flows and rising consumer affluence, by intensifying cross-selling efforts and expanding its range of products and services.

 

Additionally, UOB intends to keep investing in talent and technology to build capabilities in delivering its integrated regional platform.

On Feb 19, UOB deputy chairman and CEO Wee Ee Cheong acquired 200,000 shares at an average price of S$38.65 per share. This increased his direct interest to 0.35 per cent, and total interest from 10.73 per cent to 10.74 per cent.

 

This followed the bank reporting a record net profit of S$6 billion for its FY2024, ended Dec 31.

 

Wee highlighted that the record net profit was driven by strong fee, trading, and investment income. He added that the group&rsquo s long-term investments in regional platforms are paying off, and that he expects continued revenue growth this year.

 

Despite global uncertainties, he also relayed confidence in Asean&rsquo s resilience, supported by higher domestic retail spending and increased foreign direct investment.

 

He pointed out that UOB&rsquo s strengthened market position, enlarged customer base, and enhanced platforms will help it seize regional opportunities amid global trade and supply chain reconfiguration.

 

With more than 35 years of banking experience, Wee is actively engaged in the group, industry, and community through various industry bodies.

 

UOB also announced a significant capital distribution strategy, which includes a new share buyback programme worth S$2 billion. This will involve acquiring shares from the open market and subsequently cancelling them.

 

This move is in addition to the existing share buybacks designed for the bank&rsquo s long-term incentive plans for employees. This programme is part of a larger S$3 billion package aimed at rewarding shareholders and optimising the bank&rsquo s capital position.

Maybank forecasts return on equity to increase, thereby driving higher valuations

 

ANALYSTS have raised their target prices for UOB after the lender on Wednesday (Feb 19) posted full-year net profit that reached a record of S$6.05 billion.

 

It also announced a S$3 billion package to distribute surplus capital over the next three years, through special dividends and share buybacks.

 

Maybank Securities raised its target price for UOB by nearly 15 per cent to S$44.32 from S$38.75, with a &ldquo buy&rdquo rating. RHB maintained its &ldquo buy&rdquo rating, and raised its target price to S$41.60 from S$40.20.

 

OCBC investment research maintained its &ldquo hold&rdquo rating, but raised its fair-value estimate of the stock to S$41.50 from S$37.50.

 

Morningstar also raised its fair-value estimate for UOB to S$41 from S$40.

 

Shares of UOB closed S$0.07 or 0.2 per cent lower at S$38.58 on Wednesday.

 

Maybank said: &ldquo While margins should be under pressure, the group&rsquo s integrated Asean strategy can catalyse fees and credit growth going forward. This can also help diversify the loan book towards growth sectors with better credit quality such as digital economy, data centres and consumer device production.&rdquo

 

Alongside capital management, Maybank Securities&rsquo head of equity research Thilan Wickramasinghe forecasts UOB&rsquo s return on equity (ROE) for FY2025 to FY2027 to be &ldquo at least three percentage points higher than the past 10 years&rdquo .

 

&ldquo A structurally higher ROE should drive higher valuations, in our view,&rdquo he said.

 

UOB on Wednesday announced a special dividend of S$0.50 per share to be issued over two tranches in 2025. This represents a payout of S$800 million of the lender&rsquo s surplus capital.

 

After factoring in the capital distribution, RHB&rsquo s estimate for UOB&rsquo s FY2025 dividend per share is lifted to S$2.12 from S$1.94.

 

The research house said that in the near term, investors stand to enjoy an estimated dividend yield of 6.1 per cent for 2025. It thinks that the lender is &ldquo well-poised to capture trade and investment flows arising from the shift in supply chains&rdquo .

 

OCBC&rsquo s Carmen Lee, head of investment research, also projected an increase in base dividend. From a base dividend in FY2024 of S$1.80 and S$0.50 special dividend, OCBC is projecting an increase to S$1.90 for FY2025. That does not take into account any special dividend.

 

From 5 per cent in FY2024, Maybank&rsquo s net dividend yield estimates for UOB are 6.4 per cent by the end of FY2025, 5.4 per cent by the end of FY2026, and 5.9 per cent by the end of FY2027.

 

For 2025, UOB is aiming for high single-digit loan growth, as well as double-digit fee increase led by cards, wealth, trade and loan-related fees.

 

Morningstar senior equity analyst Michael Makdad said: &ldquo While we believe the loan and fee growth targets may be somewhat ambitious, we remain positive on UOB&rsquo s earnings outlook for 2025 and expect its ROE to increase from 12.6 per cent in 2024.&rdquo

 

He said that UOB&rsquo s one-time Citigroup integration costs had been inflating its cost-to-income ratio by two to three percentage points through the first half of 2024.

 

He added: &ldquo These costs, which continued to add 50 to 100 basis points to the ratio in the second half of 2024, are expected to no longer weigh on efficiency starting in 2025.&rdquo

 

OCBC investment research revised its earnings estimates for UOB for FY2025 and FY2026, taking into account fewer interest rate cuts and better fee income.

 

Carmen Lee, head of OCBC investment research, said: &ldquo While geopolitical tensions remain and trade tariffs could disrupt regional trades, we believe that South-east Asia is more resilient due to rising inter-regional trades.&rdquo

 

On Wednesday, UOB chief executive Wee Ee Cheong said at the results briefing that mega trends &ndash such as supply chain diversification, digitalisation and the green economy &ndash are driving investments into the region.

 

There has also been closer cooperation among Asean countries, such as the Johor-Singapore Special Economic Zone and integrated cross-border retail payment systems.

 

&ldquo These should help boost intra-Asean connectivity and growth, and reinforce the region&rsquo s position as a key player in the global economy,&rdquo he noted.