Group Wholesale Banking

2018

ANNUAL REPORT

Group Wholesale

Banking

UOB Group Wholesale Banking helps companies and institutions optimise their business operations and cash flow, manage risks, expand into new markets and manage their capital needs by providing tailored financial solutions, services and sector insights. We develop trusted partnerships by focusing on our clients’ long-term interests and by helping them meet their strategic objectives. Our unique combination of local, in-country presence and expertise, astute Asian market insights and regional network connectivity enables us to help unlock Asia’s potential for our clients.

2018 Highlights

Achieved strong year-on-year revenue growth of 11 per cent from across geographies, client segments and products;
Improved the asset quality of our loan portfolios, while driving strong growth rates from non-loan products;
Deepened our product capabilities in areas such as cash management, trade finance, financial supply chain management (FSCM)
and Global Markets’ suite of products;
Expanded our industry coverage across key markets in Asia through our Sector Solutions approach which provides our clients with in-depth insights and integrated, targeted financial solutions;
Signed collaboration agreements with government, trade and commercial organisations to promote trade and investment flows into and within the region, including our first Memorandum of Understanding (MOU) in Vietnam;
Named Best Regional Bank of the Year for the Belt and Road Initiative (BRI) in Southeast Asia in recognition of our efforts in connecting companies to business opportunities arising from the BRI;
Led UOB’s debut issuances of sterling covered bonds and US Dollar Rule 144A senior notes, as well as a number of landmark event-driven capital market transactions across the region; and
Received close to 30 industry awards, including the Best Transaction Bank in Singapore at The Asian Banker Transaction Banking Awards 2018 for the second consecutive year, in recognition of our transaction banking capabilities across the region.

In 2018, we achieved strong revenue increase of 11 per cent to $3.94 billion, led by double-digit growth in cash management, trade finance, investment banking and Global Markets solutions, as well as moderate growth in loans. The growth was achieved despite challenges that arose from geopolitical uncertainities, ongoing global trade tensions and an increasingly cautious business sentiment.

We expanded our client base as a result of our continued efforts to deepen our client engagement and product capabilities. Our client coverage teams and Sector Solutions teams worked closely to provide our clients with in-depth industry insights and expertise to help them seize more opportunities and overcome the challenges they might face. We also kept our investments focused on strengthening our regional connectivity and digital capabilities in the service of our clients. These initiatives in turn enabled us to grow our revenue across geographies, client segments and product portfolios.

In terms of geography, we saw strong performance with revenue distributed evenly between Singapore and our overseas markets and double-digit growth rates in China, Hong Kong, Malaysia and Thailand. Income across our client segments also posted robust double-digit increases, led by Global Financial Institutions Group and Corporate Banking.

We remained prudent in managing our loan portfolios in 2018, improving our returns on risk-weighted assets by 58 basis points while our non-performing loans ratio was at 1.8 per cent.

Maintaining our risk-focused approach, we stayed disciplined in our expense management and increased our productivity across the region. As such, our operating profit went up by 10.5 per cent year on year, a reflection of our stable performance for the year.

In building and deepening our relationships with our clients, we encourage and support their sustainable business investments, especially those that are aligned with the United Nations Sustainable Development Goals.

Supporting the Development of Clean Energy

In 2018, UOB was appointed the co-lead arranger for
Sinar Kamiri’s Green Sustainable and Responsible Investment (SRI) Sukuk Wakalah fundraising exercise of up to RM245.0 million. The funds were for the development of a 49 mega-watt solar photovoltaic plant in support of the Malaysian government’s target of having renewable energy contributing 20 per cent of the national energy mix by 2025. Sinar Kamiri’s Green SRI Sukuk Wakalah was assigned a Tier-1 Environmental Benefit rating, the highest of three ratings,
by RAM Consultancy.

Sinar Kamiri is committed to support the development of clean energy.

In another example, we have been working since 2015 with the wholly-owned subsidiary of one of the largest solar panel manufacturers in the world. We expanded our relationship with the company in 2018 to include trade and foreign exchange (FX)
solutions as it continued to grow its operations.
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The company is committed to the conservation of natural resources and harvests solar energy to reduce the consumption of electricity and water, which in turn minimises greenhouse gas emissions and pollution by waste water discharge. From 2013 to 2017, the company reduced its carbon dioxide emissions by 62 per cent, electricity consumption by 32 per cent, water use by 43 per cent and wastewater discharge by 47 per cent.
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To minimise the environmental and social impact of its operations further, the company also practices sustainable procurement and its facilities are aligned to the standards of the ISO 14001 Environmental Management System and OHSAS 18001 Occupational Health and Safety Management Systems.

Project Financing for Green Data Centre

We financed the development, construction and operation of Dodid’s 113,235-square feet data centre. The data centre operator’s facility, completed in 2018, is equipped with features such as a green façade to keep the building cool and to reduce the use of energy. In recognition of its energy efficiency, Dodid’s data centre achieved a Platinum rating from the Building and Construction Authority (BCA) and the Info-communications Media Development Authority (IMDA) in Singapore under the BCA-IMDA Green Mark for New Data Centres. In addition to financing, we also shared our insights into the data centre market in Asia to help the company identify and seize more business opportunities.

We supported the set-up of Dodid’s energy-efficient data centre in Singapore.

Contributing to Economic Development Through Infrastructure Financing

During the year, we signed an MOU with PT Sarana Multi Infrastruktur (Persero) (PT SMI) to support infrastructure development initiatives in Indonesia through the provision of infrastructure financing, corporate financing and project financing.
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PT SMI is a state-owned infrastructure financing company under Indonesia’s Ministry of Finance and works with local and international financial institutions through public-private partnerships to provide infrastructure financing. According to Indonesia’s Ministry of National Development Planning and National Development Planning Agency, the country faces a funding gap of close to Rp3,000 trillion for the completion of the infrastructure projects outlined in the country’s national development plans by 2019.

Providing Integrated Solutions to Medium-sized Businesses Across the Region

Our Commercial Banking teams are dedicated to supporting UOB’s medium-sized corporate clients by providing a full suite of Wholesale Banking solutions to help them achieve their business objectives. Our in-depth understanding of our clients enables us to meet their financial needs at every stage of their business growth and throughout economic cycles.

We collaborate with various product teams, such as Sector Solutions, Transaction Banking and Global Markets, to customise integrated solutions for our clients across the region.
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For example in Singapore, we supported a client in the food and beverage sector in growing and deepening its international presence by tapping the strengths of the Bank’s extensive regional network. We offered a comprehensive suite of
cross-border solutions, from cash management and financial supply chain management to financing and other investment banking services. We also helped the client to improve its business efficiency by digitalising its back-office processes which enabled more effective cashflow management and in turn faster access to financing.

Enabling Enterprise Grow Through Digitalisation and Internationalisation

We are also committed to helping our clients grow and scale their business through digitalisation and internationalisation.
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In 2018, we entered a collaboration with Synagie Corporation, a provider of end-to-end e-commerce solutions, to help our clients in Singapore’s distribution and retail sectors expand into and manage multiple online sales channels more effectively. With Synagie’s solutions, our clients can manage every process across multiple e-commerce platforms centrally and efficiently, from inventory management, digital marketing and
multi-channel sales to distribution and fulfilment of customer orders, without the need for large investments in technology and logistics infrastructure. The consolidated view of their sales and distribution channels will also enable them to have a better understanding of their cashflow needs and in turn, enable us to provide them more timely financing support.
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During the year, we also launched an innovation and internationalisation programme for our clients in Singapore. Together with our ecosystem of partners, we help our clients upgrade and scale their technology capabilities by identifying areas for process improvements that can be transformed through advanced technology. We also support them in the acquisition and implementation of the technology or equipment by offering them working capital loans or equipment financing. For companies that have successfully upgraded their technology capabilities and wish to replicate their efforts in other markets, we offer cross-border cash management and treasury solutions to help them improve their regional business performance.
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Our FDI Advisory Unit, which was established in 2011, has been at the forefront of helping our clients expand into new markets and connecting them to business and investment opportunities overseas. Harnessing the strengths of UOB’s extensive network, over the last seven years, the team has supported more than 2,100 companies from around the world in their expansion into Asia and facilitated capital flows of $137 billion into the region.
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Through nine FDI Centres located in China, Hong Kong, India, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam, we actively promote regional connectivity in the areas of trade, finance and logistics by working closely with government agencies, trade and industry associations and professional service providers.
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To help companies gain a deeper understanding of and to identify business and investment opportunities in the region, we regularly host trade delegations and organise seminars in collaboration with our partners. For instance in 2018, we worked with the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM) to share with clients our insights into Indonesia’s economy and investment opportunities. For companies interested in venturing into Thailand, we held another event in Bangkok during which participants learnt more about Thailand’s Eastern Economic Corridor and its potential to provide greater regional connectivity.
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During the year, we also invited business leaders from across Asia to visit the Vietnam Singapore Industrial Park (VSIP) in Vietnam’s Binh Duong Province. We connected them with strategic business partners and key local government agencies, including the Foreign Investment Agency of Vietnam, to help them understand the requirements when expanding into Vietnam. The event was part of our collaboration with VSIP JV, a joint venture between Singapore’s Sembcorp Development and Vietnam’s Becamex IDC, with whom we signed our first MOU in Vietnam to encourage and to facilitate FDI inflows.

We signed an MOU with VSIP JV to encourage FDI into Vietnam.

Following our UK-ASEAN corridor initiative in 2017, we entered into an alliance with Santander UK to help 200 companies from our respective markets in their cross-border expansion.
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In addition, we reaffirmed our commitment to contribute to bilateral cooperation between Singapore and China when we signed an MOU with the Suzhou Industrial Park Administrative Committee to help more companies tap the BRI for their cross-border expansion.

In recognition of our ongoing efforts to connect companies to business opportunities arising from the BRI, we were named the Best Regional Bank of the Year for the BRI in Southeast Asia at the 2018 Asiamoney New Silk Road Finance Awards.

Supporting Large Corporate Clients in Their Regional Expansion

Our Corporate Banking teams support large Asian corporates as well as North American and European multinational corporates (MNCs), including Fortune 500 companies, operating in Asia.
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Through UOB’s established and integrated network, our global and local teams of relationship managers offer our clients seamless connectivity and specialised expertise as they expand across Asia. We also provide a suite of integrated solutions to meet their financial needs, including support for cross-border merger and acquisition opportunities.
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In 2018, we supported Raffles Medical Group in the set-up of its first international tertiary hospital in Chongqing, China. We also provided a comprehensive merchant collection solution to help the client increase its efficiency in cashflow management.

During the year, we also extended a bilateral term loan to one of ST Telemedia’s investee companies, U Mobile Sdn Bhd, to support the expansion of its infrastructure network in Malaysia. The loan enabled the client to improve its competitiveness and quality of services to its customers as it embarks on its journey to be a leading Malaysian telecommunications company.
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Our product teams worked with Razer Inc (Razer), a leading provider of gaming hardware, software and services, to support the upcoming launch of Razer Pay in Singapore by enabling e-wallet top-ups and processing payments for its global network of merchants. Our digital FX solution also enables Razer to access wholesale FX rates when making payments to its merchants. Upon launch, Razer Pay users in Singapore will also enjoy competitive FX rates when making in-app purchases in a foreign currency. Our multi-product offering to Razer also includes workplace banking solutions to help the company improve its operational productivity.

“…UOB brings best-in-class payment solutions to help make the experience faster and more seamless for all our customers. We are confident that this partnership will accelerate the use of cashless payments in Singapore and across the region.”

Mr Preecha Praipattarakul

Senior Vice President, Razer Pay

Grab is another client with whom we formed a strategic alliance. The company’s services have grown to become one of the most frequently used online-to-offline mobile platforms in Southeast Asia, providing consumers everyday services such as transport, food and package delivery, mobile payments and financial services. Our alliance with Grab will help fuel its ambition to build ASEAN’s first everyday “super app” and to accelerate the use of digital services among the region’s consumers. As a preferred banking and strategic credit card partner, we help Grab offer privileges to its customers using UOB cards for payment. We will offer cash management services to provide Grab’s consumers the convenience of topping up their GrabPay wallet directly from their bank account. As part of our alliance, we will also explore greater support to Grab in areas such as fleet financing, regional and centralised liquidity management solutions and workplace banking services.

“We are thrilled to welcome UOB as our strategic partner in Singapore and across the region… By combining our strengths, we will offer consumers more convenient payment services regionally and help more people move from cash to cashless.”

Mr Anthony Tan

Co-founder and CEO, Grab

We entered into a strategic alliance with Grab to accelerate the use of digital services among ASEAN’s growing base of digital consumers.

Providing Structured Trade and Commodity Financing Solutions for Global Trade and Business

Our Structured Trade and Commodity Finance team complements the commodity value chain through trade finance structures ranging from pre-export, shipment sales, inventory/borrowing base to receivables financing. We provide these solutions to clients who produce, trade and purchase commodities such as energy, metals and soft commodities.
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Despite headwinds in global commodity markets in 2018, our performance for the year remained stable, reflecting the resilience and the vigilance of the team in driving growth and in managing our commodity risk exposure. Improvements in key sectors such as oil and gas and the resilience of other commodities enabled us to continue driving overall revenue growth as we stood steadfast in support of our clients.
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Our coverage teams in China, Hong Kong and Singapore also continued to make progress, collaborating and tapping the regional connectivity to foster deeper client relationships, and achieving stronger momentum in sales. In growing our business, we worked with our key product partners, including Transaction Banking and Investment Banking, to offer our clients domestic and cross-border cash management solutions, as well as advisory on mergers and acquisitions.

Partnering Financial Institutions as They Grow and Expand Across Borders

Our Global Financial Institutions Group combines our local market knowledge with regional expertise to support our financial institution clients including banks, non-bank financial institutions (central banks, diversified financial, public sector, insurers and real money funds), global property funds and financial sponsors. We help them to grow their business and to drive their profits across Asia and gateway cities in Australia, US and UK. We do this by offering comprehensive solutions in cash management, trade financing, interest rate and currency derivatives, hedging, specialised finance structures and capital markets.
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As the trusted partner to our clients, we are committed to creating value for them and to supporting their regional business. Our team of more than 100 dedicated, sector-specific bankers and analysts across UOB’s global network is focused on growing our client portfolio and deepening our existing partnerships with leading financial institutions.
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For example, as business opportunities continued to emerge from the BRI and infrastructure development initiatives across the region, we signed MOUs with Shanghai Pudong Development Bank and China CITIC Bank Corporation Limited to collaborate in providing financial solutions covering investment advisory, cross-border renminbi transactions, syndicated loans, and project and trade finance.
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Structured finance and infrastructure financing remained among our key initiatives and focus areas. During the year, we also entered into a collaboration with PT SMI to support national and provincial infrastructure projects in Indonesia.

Enhancing Our Expertise and Sharpening Our Specialisation to Meet Our Clients’ Risk Management Needs

During the year, we continued to build on our specialised client coverage capabilities, working with various product partners to provide customised and distinctive financial solutions to meet the risk management needs of our Financial Institution clients.

Together with our product partners from Global Markets, Transaction Banking and Investment Banking, we offered solutions ranging from bullion and commodities, secured financing and bank risk trade financing, to cash and liquidity management and global funds origination. We also established our capabilities in structured finance origination across the capital structure spectrum, from debt and equity to hybrid security and financial derivatives to assist more clients with their various financial needs. In 2018, we continued to help our clients to optimise their capital and liquidity positions and to manage the risks arising from ongoing market volatility and potential disruption by financial technology companies.

With global economic expansion expected to slow and market volatility to continue into 2019, we remain committed to supporting our clients through our targeted solutions and by tapping the strengths of UOB’s credit ratings and extensive network.

Enhancing Regional Connectivity Through Comprehensive Solutions

Transaction Banking is committed to providing a comprehensive suite of cash management, trade finance and FSCM solutions to help our clients enhance their operations and cashflow and optimise their working capital. Through our integrated, regional network and cross-border solutions, we offer our clients the connectivity they need as they internationalise and set up regional treasury centres to facilitate their expansion across Asia. Our experienced teams of product specialists in China, Hong Kong, Indonesia, Malaysia, Myanmar, Singapore, Taiwan, Thailand and Vietnam also provide timely and seamless support for our clients.

In 2018, we continued to invest in our electronic delivery channels and product capabilities to help our clients enhance their business efficiencies. Our initiatives in electronic banking led to an increase of more than 20 per cent in the number of clients using our online banking solutions and double-digit growth in online transaction volume. We also developed new products via our open application programming interface architecture to create more seamless digital solutions for our clients.

We have been playing an active role in the launch of several industry-wide cash and trade initiatives. In 2018, these initiatives included PayNow Corporate in Singapore, PromptPay in Thailand, DuitNow in Malaysia, Faster Payment System in Hong Kong and NAPAS IBFT in Vietnam. These digital payment initiatives enable a faster and more transparent payment process, which in turn helps businesses to manage their cashflow better and to offer convenient payment options to their own customers.

We also contributed to the digitalisation of trade finance through the Networked Trade Platform, a Singapore government-driven initiative that enables businesses to submit trade transactions electronically and conveniently via a single digital platform.
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We invested further in our FSCM capabilities across Asia, helping our clients connect seamlessly with their strategic supply chain partners. Compared with the year before, we increased by 25 per cent the number of programmes we offered to support an ecosystem of suppliers and distributors across industries in 2018, resulting in more than 50 per cent business growth for the year.

In 2018, we achieved a record revenue increase of 21 per cent, contributing to more than one-third of Group Wholesale Banking’s
total income. Our cash management business posted solid income growth of 27 per cent while trade finance income was up by 10 per cent, due to our efforts to offer end-to-end solutions that meet our clients’ needs.
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We received 28 industry awards in 2018, including Best Transaction Bank, Best Cash Management Bank and Best Trade Finance Bank in Singapore at The Asian Banker Transaction Awards 2018. We also won Best Service Providers, Liquidity Management, Singapore, as well as Best in Treasury and Working Capital, LLCs and Best Service Providers, Cash Management in Indonesia at The Asset Triple A Treasury, Trade, Supply Chain & Risk Management Awards 2018.

We continued to be recognised by the industry for our transaction banking capabilities.

Providing Corporate Finance Advisory and Capital Markets Solutions to Our Clients Across Asia

Our Investment Banking team provides solutions across debt and equity capital markets and complex event-driven transactions in areas such as corporate finance, mergers and acquisitions, leveraged finance, project finance and securitisation. Our multi-product focus enables us to structure solutions that are customised to Group Wholesale Banking clients’ financing and corporate advisory needs.
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In 2018, we led a number of landmark event-driven transactions, such as acting as financial adviser to the manager of ESR-REIT in relation to its merger with Viva Industrial Trust and as mandated lead arranger and bookrunner for the accompanying $700 million debt fundraising in relation to the merger. We also acted as sole financial adviser to BRC Asia Limited in its $199 million acquisition and subsequent delisting of Lee Metal Group Ltd and provided the debt finance to fund the acquisition. In addition, we were the sole financial adviser to UOL Group Limited on the mandatory unconditional cash offer for Singapore Land Limited.
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During the year, we also led acquisition financing for high quality sponsors. For instance, we acted as mandated lead arranger and bookrunner of the HK$13.8 billion term loan and revolving credit facilities for Gaw Capital Partners’ acquisition of a portfolio of shopping centres from Link REIT, the RM420 million senior secured acquisition facilities for CVC Capital Partner’s acquisition of Munchy Food Industries Sdn Bhd, the term loan facility for the Tamar Alliance-led consortium’s acquisition of Australia Nature’s Care Biotech Co Ltd., and the A$715 million syndicated loan facilities for Blackstone’s acquisition of logistic assets from Goodman Group.
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We maintained our position as one of the top mandated lead arrangers for debt capital markets (DCM) syndicated loans in Asia (excluding Japan and Australia). As at 31 December 2018, we were ranked first and second in ASEAN and Singapore respectively on Debtwire’s Mandated Lead Arranger and Bookrunner League Tables.
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In Singapore, we arranged and underwrote several high-profile syndicated loan deals across the real estate, commodities, financial institutions and transportation sectors. We also capitalised on UOB’s regional network and cross-border capabilities to arrange and to coordinate several significant financing transactions. These deals included the $5.1 billion term loan and revolving credit facilities for Marina Bay Sands Pte Ltd, the US$1.8 billion term loan and revolving credit facilities for Wilmar International Ltd, the US$1.855 billion revolving credit facility for Vitol Asia Pte Ltd and the US$1.62 billion syndicated term loan and revolving credit facilities for PT Perusahaan Listrik Negara (Persero).
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In 2018, our DCM fixed income team executed more than 100 bond transactions, including private placements across Asia and reinforced our position as a leading regional player in local currency fixed income in Singapore, Malaysia and Thailand. These included UOB’s debut issuances of sterling covered bonds and US Dollar Rule 144A senior notes, as well as UOB (Malaysia)’s RM600 million Basel III-compliant Tier 2 Subordinated Medium Term Notes.
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We increased our market share in the Singapore dollar bond market, having lead-managed seven of the ten largest deals in 2018. These included Temasek’s S$500 million five-year guaranteed retail bond which was also its inaugural retail bond; the Land Transport Authority of Singapore’s $1.5 billion 40-year fixed rate notes, which was the longest-dated statutory board issuance; and Shangri-la Hotel Limited’s $825 million seven-year senior unsecured fixed rate notes, the largest senior issue by a foreign corporate issuer. UOB also lead-managed the two largest bank capital transactions in the SG dollar bond market.
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In the Malaysian ringgit corporate bond market, we established for Daimler AG a RM3.0 billion Commercial Papers/Medium Term Notes and Medium Term Note Programme and arranged its RM250 million four-year fixed rate notes issuance. In the Thai baht corporate bond market, deals we executed included the THB2.0 billion bond for Siamgas and Petrochemicals PCL, which was the first issuance with a partial guarantee by Thailand’s Credit Guarantee and Investment Facility, and the THB5.0 billion guaranteed bond for Fraser Property Holding Thailand Company Limited.
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In the equity capital markets area, we acted as a joint lead manager and joint underwriter for the renounceable and underwritten rights issue for Keppel-KBS US REIT. We were also the sole manager for the Raffles Education Corporation Limited’s rights issue.
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In recognition of our ability to originate and to execute holistic and customised financing and merger and acquisition solutions for our clients, we continued to receive industry awards at both country and regional levels. These awards included Best FIG Bond in Singapore for UOB’s £350 million covered bond and Best Syndicated Loan in Indonesia for the US$1.15 billion term loan facilities for Indonesia Eximbank at The Asset Triple A Country Awards 2018.

The awards we received in 2018 were a testament to our capabilities across various investment banking solutions.

Other Key Sections

Corporate Governance

Five-year Group Performance

Our Awards and Accolades in 2018

Investor Reference

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