Investor Highlights
Embracing Citigroup’s ASEAN-4 consumer banking business into the UOB family
In the last two years, we scaled up our retail customer base to about 8 million customers through the acquisition of Citigroup’s consumer banking business in Indonesia, Malaysia, Thailand and Vietnam (ASEAN-4). This accomplishment realised our goal of doubling our retail franchise in these four markets and accelerating our growth targets by five years.
Our priority is now on seamlessly integrating the acquired business, with particular emphasis on a smooth transition for customers, leveraging our TMRW digital banking platform to cater to the expanded customer base. Notably, we have migrated about 700,000 former Citigroup customers in Malaysia and another 500,000 in Indonesia onto the UOB platform as of July and November 2023, respectively. The operational integration for the acquired businesses in Thailand and Vietnam is on track to be completed in 2024-2025.
Our strengthened Southeast Asian franchise has placed us among the top five credit cards issuers in Indonesia, Malaysia and Thailand, while maintaining our top rank in Singapore. Our credit card fees reached an all-time high in the fourth quarter of 2023, driven by contributions from the expanded regional franchise and robust consumer spending throughout the region. Ongoing cross-selling initiatives of UOB offerings to our newly acquired customers are expected to further enhance our revenue. At the same time, the one-off costs relating to the integration should largely taper off by mid-2024.
Our increased presence has also enabled us to forge strategic partnerships with established brands across the region, enhancing our offering of exclusive perks and privileges tailored to the unique lifestyles of our enlarged customer base. These developments have firmly positioned us to achieve our ambition of becoming the preferred bank for aspiring ASEAN customers.
Throughout the year, our Management and the investor relations team shared regular updates on the integration progress through one-on-one meetings, conferences, roadshows and financial results briefings. Such updates have been well received by market participants and investors, who have recognised the positive financial impact of the acquisition.
Our priority is now on seamlessly integrating the acquired business, with particular emphasis on a smooth transition for customers, leveraging our TMRW digital banking platform to cater to the expanded customer base. Notably, we have migrated about 700,000 former Citigroup customers in Malaysia and another 500,000 in Indonesia onto the UOB platform as of July and November 2023, respectively. The operational integration for the acquired businesses in Thailand and Vietnam is on track to be completed in 2024-2025.
Our strengthened Southeast Asian franchise has placed us among the top five credit cards issuers in Indonesia, Malaysia and Thailand, while maintaining our top rank in Singapore. Our credit card fees reached an all-time high in the fourth quarter of 2023, driven by contributions from the expanded regional franchise and robust consumer spending throughout the region. Ongoing cross-selling initiatives of UOB offerings to our newly acquired customers are expected to further enhance our revenue. At the same time, the one-off costs relating to the integration should largely taper off by mid-2024.
Our increased presence has also enabled us to forge strategic partnerships with established brands across the region, enhancing our offering of exclusive perks and privileges tailored to the unique lifestyles of our enlarged customer base. These developments have firmly positioned us to achieve our ambition of becoming the preferred bank for aspiring ASEAN customers.
Throughout the year, our Management and the investor relations team shared regular updates on the integration progress through one-on-one meetings, conferences, roadshows and financial results briefings. Such updates have been well received by market participants and investors, who have recognised the positive financial impact of the acquisition.
“We expect its (UOB’s) earnings to catch up in 2024 with Citi integration close to completion… Citi integration costs rolling off and contribution from new business should help drive earnings growth and defend the return on equity (ROE) at 13% even with rates normalising.”
Jefferies Hong Kong Limited
“… UOB has delivered ROE with the least volatility among Singapore banks over the past 20 years... The Citi acquisition is an important driver of ROE in 2024 and beyond as the bank gets through a phase of investments in 2023. The underlying ROE of the existing business is steady, with the bank focusing on niche segments in emerging ASEAN markets to ensure balanced risk-adjusted returns.”
J.P. Morgan Securities Singapore Private Limited
“We reaffirm our Outperform rating on attractive recurrent yields as the outlook for core earnings per share growth for 2024-25 remains intact, which would support sustainable and progressively increasing dividend per share in the coming years with potential upside revenue surprise from the Citi integration and stronger ASEAN economic growth.”
Daiwa Capital Markets
Continuous regular and transparent engagement
Consistent and transparent communication is key to maintaining investors’ trust and confidence and to helping them with their investment decisions. Throughout 2023, we continued this commitment by providing pertinent disclosures on portfolio quality, with particular focus on addressing investors’ specific area of concerns. Simultaneously, we showcased thought leadership on various themes, including digitalisation and sustainability.
Although face-to-face investor meetings have fully resumed, we continued to use digital meeting tools to broaden our outreach to the investment community. We conducted close to 600 meetings during the year, both virtually and in-person, to keep investors updated on our strategy, performance and business outlook.
These meetings included:
Although face-to-face investor meetings have fully resumed, we continued to use digital meeting tools to broaden our outreach to the investment community. We conducted close to 600 meetings during the year, both virtually and in-person, to keep investors updated on our strategy, performance and business outlook.
These meetings included:
Quarterly financial results briefings and post-results investor calls and luncheons;
Investor roadshows, conferences and meetings with North American, European, Asian and Australian institutional investors;
Securities Investors Association (Singapore) Corporate Connect Webinar with retail investors;
Engagement with credit rating agencies; and
Our annual general meeting.
Our dedication to investor engagement was recognised with the Best Investor Relations – Gold award – at the Singapore Corporate Awards 2023. Additionally, our Board of Directors received the Best Managed Board – Gold award – at the same event.
UOB Group CFO, Mr Lee Wai Fai, receiving the Gold award for Best Investor Relations during the Singapore Corporate Awards 2023.
Committed to regional and global capital markets
Since 2013, UOB has undertaken multi-year efforts to build market access and funding capacity in key regional and global funding markets. Regular investor engagements and issuances in these markets have enabled UOB to time and execute its funding initiatives across its key markets for optimal outcomes.
UOB’s regional capital markets activities augmented its expansion into the key ASEAN markets, following the acquisition of Citigroup’s consumer banking portfolio
In Thailand, UOB Thailand made breakthroughs with the market’s first THB Additional Tier 1 (AT1) public bond issuance on 23 May 2023 with its THB12 billion Perpetual Securities callable in 2028, which will serve as a key structuring precedent for subsequent bank issuers. UOB also successfully launched its debut THB5 billion senior bond for UOB Capital Services, a newly incorporated subsidiary under UOB Thailand on 20 July 2023, following the acquisition of Citigroup’s consumer portfolio in Thailand. This further demonstrated UOB’s strong name recognition built over many years in the domestic THB market.
In Malaysia, UOB Malaysia announced the establishment of its inaugural RM5 billion Islamic debt programme on 21 December 2023, under the Shariah principle of Wakalah Bi Al-Istithmar. This was followed by the successful pricing of its debut RM500 million Sukuk Tier 2 in the MYR market on 23 January 2024, on the back of a successful investor townhall with strong reception of more than 72 participants from 38 institutions across the investing community. This was the first Sukuk Tier 2 public bond issuance in the domestic market achieved by a foreign-owned bank. It achieved the tightest ever credit spread for a Tier 2 capital instrument in the MYR market to date.
In Malaysia, UOB Malaysia announced the establishment of its inaugural RM5 billion Islamic debt programme on 21 December 2023, under the Shariah principle of Wakalah Bi Al-Istithmar. This was followed by the successful pricing of its debut RM500 million Sukuk Tier 2 in the MYR market on 23 January 2024, on the back of a successful investor townhall with strong reception of more than 72 participants from 38 institutions across the investing community. This was the first Sukuk Tier 2 public bond issuance in the domestic market achieved by a foreign-owned bank. It achieved the tightest ever credit spread for a Tier 2 capital instrument in the MYR market to date.
In anticipation of rates volatility and spread normalising post pandemic, UOB front-loaded more issuances during the low-spread environment from the fourth quarter of 2020 to the first quarter of 2022 and sat out of the global market volatility since the second quarter of 2022 and for most of FY2023
On 19 January 2023, UOB swiftly reopened the SGD AT1 market with its SGD850 million Perpetual Securities callable in 2028. On 16 March 2023, UOB Sydney Branch issued AUD1,500 million Senior Bonds maturing in 2026, the largest AUD senior bond on record for an Asia (ex-Japan) bank, and achieved the tightest pricing among three-year AUD senior bonds offered by financial institutions in 2023, including those from Australian domestic major banks.
In 2023, UOB won honours for its multi-year efforts in strategic balance sheet management and wholesale term funding
UOB was named the Best Issuer for Financial Institutions by FinanceAsia in 2023. Ms Koh Chin Chin, Managing Director, Head of Group Treasury, Research and Customer Advocacy, was awarded Best Treasurer for Financial Institutions by CorporateTreasurer.