Even in these trying times, UOB is pressing ahead with our investments in technology, infrastructure, capabilities and new models of service.
Chairman’s Statement
2016 proved a challenging year with the prevailing effects of the volatility in commodities and currencies playing out on the global economy and local environment. Subdued economic growth and an uncertain international arena also affected many businesses. That, in turn, had some impact on ours. Nevertheless, the Group recorded an operating income of $8.06 billion, pipping the performance of 2015. The Group posted net profit after tax of $3.10 billion for the year, 3.5 per cent lower than the year before. The Board has recommended a final one-tier tax-exempt dividend of 35 cents per ordinary share, taking the total dividend for 2016 to 70 cents per ordinary share.
New Models of Service
Even in these trying times, UOB is pressing ahead with our investments in technology, infrastructure, capabilities and new models of service. We set new standards of leadership in the areas of contactless banking and payments, but always attuned to what is relevant to our customers. In 2016, we extended our lead in mobile applications to digital issuance of credit cards, turned the smartphone into a security token and through our contactless ATMs, enabled our customers to withdraw cash with their smartphones. Our customer-focused approach for the digital future was showcased in September and was well received by more than 700 delegates including customers, analysts and investors.
We have been building an ecosystem where business models are being developed and deployed through partnerships that enable innovation and growth for our clients. It begins with The FinLab – our accelerator and innovation hub for startups. We provide various funding options as they grow such as equity crowdfunding (OurCrowd) and venture debt (InnoVen Capital, a UOB-Temasek joint venture). We also help small businesses in their productivity efforts. Our UOB BizSmart solution, for instance, could cut their administrative costs by up to 60 per cent.
As global trade is facing a slowdown, we must persevere all the more in helping our corporate clients expand beyond their home markets and seize opportunities across Asia. We form strategic alliances for this purpose, such as our most recent one with International Enterprise (IE) Singapore – their first with a Singapore bank. Fundamentally, our experience and network presence position us best to help our customers benefit from the increasing openness and connectivity across the region.
Managing Risk and Maintaining Strength
Having supported home-grown businesses for more than 80 years, we are conscious that the success of these companies often depends on strong economic growth. In periods of slow growth and in keeping with our prudential discipline, we are judicious in our lending. We have made adequate provisions especially in our exposure to the oil and gas, and shipping sectors as we preserve our balance sheet strength.
The Group continued to maintain a strong capital position in 2016. We also applied our scrip dividend scheme to the 2016 interim dividend and will again to the final one. Overall, we are operating comfortably within our risk appetite.
While we remain sanguine about the region’s long-term prospects, we expect 2017 to be another challenging year for our customers and for us. In these uncertain times, the Board has worked closely with the CEO and his team on the strategy for the continued growth of the Bank as it navigates through increasing risks.
The Board
Underlying the effectiveness of any good board are capable and experienced directors committed to contributing insights and robust views to board deliberations. In this regard, I would like to highlight the outstanding contributions of Wong Meng Meng who has given more than 17 years of service to the Bank through an eventful period of change and expansion of the UOB Group. In particular, he guided us through various board transitions while he was the Nominating Committee Chairman. He retires at the forthcoming AGM with our gratitude and heartiest wishes.
In the past year, the Board reconstituted several committees and refreshed the membership. Having decided to expand the size of the Board up to 12 directors, we are in the process of recruiting new directors.
I thank my fellow Board members and the CEO and his team for their contributions this past year. On behalf of the Board, I also express my gratitude to our colleagues for upholding the UOB values. Finally, I am grateful for the loyal support of our customers and shareholders.
Hsieh Fu Hua
Chairman
February 2017