The global economy continued to navigate turbulent waters in 2023.
The US regional banking crisis last March triggered worries about the global banking system. Financial sector regulators responded swiftly and decisively, which helped to minimise contagion effects. Amid the ongoing Russia-Ukraine war and US-China tensions, the Israel-Hamas conflict further heightened the lingering geopolitical uncertainties.
Chinese consumer sentiments remained subdued, weighed down by a weak housing sector and labour market. Global interest rates stayed higher for longer as central banks tightened policy stance.
Despite these headwinds, the global economy turned out to be more resilient than expected, defying expectations of a recession. GDP growth in 2023 largely surpassed initial expectations. Global inflation had fallen considerably from its peak, though it remains elevated above major central banks’ targets.
ASEAN stands out to be a bright spot in the global economy, backed by strong fundamentals, including a young population, a dynamic labour force and rising foreign direct investments. We see ASEAN’s GDP growth recovering to 4.9 per cent in 2024, up from 4 per cent in 2023.
We will continue to monitor all developments closely and ensure that our business remains resilient and responsive to the evolving environment.
Amid the global economic uncertainties and challenges, UOB achieved a record high core net profit of S$6.1 billion, up 26 per cent year on year. Including one-off Citigroup integration expenses, net profit was at S$5.7 billion. Given our resilient performance, the Board recommends a final dividend of 85 cents per ordinary share. This brings the total dividend for 2023 to S$1.70 per ordinary share.
The US regional banking crisis last March triggered worries about the global banking system. Financial sector regulators responded swiftly and decisively, which helped to minimise contagion effects. Amid the ongoing Russia-Ukraine war and US-China tensions, the Israel-Hamas conflict further heightened the lingering geopolitical uncertainties.
Chinese consumer sentiments remained subdued, weighed down by a weak housing sector and labour market. Global interest rates stayed higher for longer as central banks tightened policy stance.
Despite these headwinds, the global economy turned out to be more resilient than expected, defying expectations of a recession. GDP growth in 2023 largely surpassed initial expectations. Global inflation had fallen considerably from its peak, though it remains elevated above major central banks’ targets.
ASEAN stands out to be a bright spot in the global economy, backed by strong fundamentals, including a young population, a dynamic labour force and rising foreign direct investments. We see ASEAN’s GDP growth recovering to 4.9 per cent in 2024, up from 4 per cent in 2023.
We will continue to monitor all developments closely and ensure that our business remains resilient and responsive to the evolving environment.
Amid the global economic uncertainties and challenges, UOB achieved a record high core net profit of S$6.1 billion, up 26 per cent year on year. Including one-off Citigroup integration expenses, net profit was at S$5.7 billion. Given our resilient performance, the Board recommends a final dividend of 85 cents per ordinary share. This brings the total dividend for 2023 to S$1.70 per ordinary share.
Positioning for growth
At our annual strategy session last year, the Board and Management reviewed the Group’s progress on its business strategy and transformation journey. Our focus for the next few years will be to leverage the product capabilities and systems built up over the years, and to use these as a springboard to propel UOB towards the next chapter of growth.
With the banking industry facing profound changes, particularly in global economic flows, digital currencies and sustainability, it is vital that we keep pace with developments and capitalise on growth opportunities.
2023 was a significant year for the Bank as we scaled up our regional business after the acquisition of Citigroup’s consumer banking business in four ASEAN markets. We completed the integration of the acquisitions in Indonesia and Malaysia in 2023. Integration for Thailand is on track to be completed by the first half of 2024, while Vietnam will be integrated by end-2025. Our strengthened market position and larger customer base provide the foundation for us to become the preferred bank of choice in ASEAN.
The Board is committed to guiding the Group to drive the sustainability agenda. In 2023, we set up the Sustainability Advisory Panel comprising three independent industry experts to advise the Board and Management on UOB’s sustainability strategy, targets and initiatives. We published our first progress report on our net zero commitment made in 2022, detailing the opportunities and challenges faced in meeting the net zero targets across six of our key sectors.
People are our greatest asset to the Bank’s long-term growth and success. Guiding the Group to foster a culture of care, growth and trust, growing our own timber and future-proofing our workforce remain key to the Board and Management. In this regard, we continue to provide opportunities for our colleagues to grow professionally and in their personal lives.
With the banking industry facing profound changes, particularly in global economic flows, digital currencies and sustainability, it is vital that we keep pace with developments and capitalise on growth opportunities.
2023 was a significant year for the Bank as we scaled up our regional business after the acquisition of Citigroup’s consumer banking business in four ASEAN markets. We completed the integration of the acquisitions in Indonesia and Malaysia in 2023. Integration for Thailand is on track to be completed by the first half of 2024, while Vietnam will be integrated by end-2025. Our strengthened market position and larger customer base provide the foundation for us to become the preferred bank of choice in ASEAN.
The Board is committed to guiding the Group to drive the sustainability agenda. In 2023, we set up the Sustainability Advisory Panel comprising three independent industry experts to advise the Board and Management on UOB’s sustainability strategy, targets and initiatives. We published our first progress report on our net zero commitment made in 2022, detailing the opportunities and challenges faced in meeting the net zero targets across six of our key sectors.
People are our greatest asset to the Bank’s long-term growth and success. Guiding the Group to foster a culture of care, growth and trust, growing our own timber and future-proofing our workforce remain key to the Board and Management. In this regard, we continue to provide opportunities for our colleagues to grow professionally and in their personal lives.
Striking a balanced risk culture
In keeping with our longstanding focus on balancing growth with stability, the Board continues to guide Management to ensure the resilience of our franchise across different markets.
With the COVID-19 pandemic behind us and governments worldwide scaling back support measures in 2023, the Board and Management stayed vigilant and monitored the operating environment closely. We performed regular stress-testing of various scenarios and assessments of emerging risks, given the ongoing and evolving economic, geopolitical and environmental uncertainties.
Our commitment to uphold high standards of corporate governance and transparency earned us the “Best Managed Board – Gold Award” at the Singapore Corporate Awards 2023. We also received the Singapore Corporate Governance Award at the Securities Investors Association Singapore Investors’ Choice Awards.
Mindful of the new challenges and opportunities amid rapid digitalisation and recalibration of global supply chains, the Board will continue to guide Management on sharpening our capabilities to support our three key growth drivers – connectivity, personalisation and sustainability.
Banking security is our foremost concern and protecting our customers is a priority. The Board and Management remain vigilant to money laundering and terrorism financing risks and will continually ensure we have robust security controls in place.
We will also continue to enhance our security features in an agile manner to protect the interests of our customers against scams in the evolving threat landscape. These measures, however, are never foolproof. Fighting scams requires the whole ecosystem to work together. Our customers remain the most important line of defence. We will continue to raise customer awareness and help them exercise vigilance and caution to safeguard themselves against scams.
With the COVID-19 pandemic behind us and governments worldwide scaling back support measures in 2023, the Board and Management stayed vigilant and monitored the operating environment closely. We performed regular stress-testing of various scenarios and assessments of emerging risks, given the ongoing and evolving economic, geopolitical and environmental uncertainties.
Our commitment to uphold high standards of corporate governance and transparency earned us the “Best Managed Board – Gold Award” at the Singapore Corporate Awards 2023. We also received the Singapore Corporate Governance Award at the Securities Investors Association Singapore Investors’ Choice Awards.
Mindful of the new challenges and opportunities amid rapid digitalisation and recalibration of global supply chains, the Board will continue to guide Management on sharpening our capabilities to support our three key growth drivers – connectivity, personalisation and sustainability.
Banking security is our foremost concern and protecting our customers is a priority. The Board and Management remain vigilant to money laundering and terrorism financing risks and will continually ensure we have robust security controls in place.
We will also continue to enhance our security features in an agile manner to protect the interests of our customers against scams in the evolving threat landscape. These measures, however, are never foolproof. Fighting scams requires the whole ecosystem to work together. Our customers remain the most important line of defence. We will continue to raise customer awareness and help them exercise vigilance and caution to safeguard themselves against scams.
Looking to ASEAN
The macroeconomic environment is expected to remain bumpy in the year ahead. Against a backdrop of growth uncertainties and moderating inflation, financial market participants are anticipating global interest rates to start easing after rising for two years.
Global growth is expected to moderate amid weaker consumer demand and tighter monetary policies to control inflation. China’s economic situation remains challenging with growth likely to stay soft in 2024. A further escalation of geopolitical tensions in Eastern Europe and the Middle East may drive up energy and food prices, as well as shipping costs worldwide, putting pressure on consumer prices and central banks.
Despite these challenges, we continue to be optimistic about ASEAN’s potential on the back of improved domestic demand and rebounding exports.
Global growth is expected to moderate amid weaker consumer demand and tighter monetary policies to control inflation. China’s economic situation remains challenging with growth likely to stay soft in 2024. A further escalation of geopolitical tensions in Eastern Europe and the Middle East may drive up energy and food prices, as well as shipping costs worldwide, putting pressure on consumer prices and central banks.
Despite these challenges, we continue to be optimistic about ASEAN’s potential on the back of improved domestic demand and rebounding exports.
Board acknowledgements
It was with deep sadness that in February 2024, we bade farewell to Chairman Emeritus and Honorary Adviser, Dr Wee Cho Yaw. Dr Wee was a truly remarkable person who contributed greatly to the development of Singapore, and in particular to the banking sector. His exceptional leadership, astute business acumen, strong decision-making skills, a sense of timing and a penchant for hard work will never be forgotten. All of us in UOB are forever grateful to Dr Wee for his lifelong dedication in building up UOB into one of the most admired banks in the world today.
On behalf of the Board, I thank the Management and all our colleagues for their steadfast contributions and service throughout the year.
We also thank our shareholders, customers, partners and the community for their continued support and trust in the Bank.
On behalf of the Board, I thank the Management and all our colleagues for their steadfast contributions and service throughout the year.
We also thank our shareholders, customers, partners and the community for their continued support and trust in the Bank.
Mr Wong Kan Seng
Chairman
February 2024