UOB, one of the city-state's oldest lenders, has gained support among young people across the region by acquiring Citibank's consumer banking business and partnering with global superstar Taylor Swift.
by Jonathan BurgosForbes staff
aWee Yi Chong, an avid bonsai collector, has nine ornamental trees planted around his headquarters. United Overseas Bank (UOB) overlooks Singapore's Raffles Place business district and nearby picturesque heritage buildings. Similarly, the Vice Chairman and CEO has expanded UOB's roots across South East Asia, grown its wholesale and consumer banking business and, more recently, shone its image to attract younger generations. I have dedicated my career to making this happen.
The 50-year-old bonsai (Podocarpus Macrophyllus) outside the UOB Plaza 1 lobby at Raffles Place was hand-selected by Vice Chairman and CEO Wee Ee Cheong.
Courtesy of UOB
Founded in 1935 as a merchant bank by Mr Yi Chong's grandfather Wee Keng Cheng, UOB has assets of S$524 billion ($402 billion) as of December 2023 from a single branch in Singapore. It has transformed into a major regional bank. Since succeeding his late father, Wee Cho Yeo, as CEO in 2007, Mr Wee has maintained an energetic pace and expanded as growth opportunities are limited in the small and crowded Singapore market. emphasized that it is important. “If UOB continues to be just a Singaporean bank today, we will be very vulnerable,” the 71-year-old said in an exclusive interview. forbes asia.
Forbes Asia Photo by Munster Chong
The bank posted a record core net profit (excluding special items) of S$6.1 billion on a gross profit of S$13.9 billion in 2023, before posting net profit of S$7 billion to S$3.1 billion in the first half of this year. It remained unchanged at S$1 billion. In terms of profits. Singapore accounted for 57% of the total, while 43% came from overseas. The bank's goal is to change this ratio from 54% to 46% by 2026. “Being number one in Singapore is not important to us,” Mr Wee added. , “We have the most comprehensive footprint in ASEAN.”
big picture
The acquisition of Citibank increased UOB's core net income and expanded its asset base.
*Excluding one-of-a-kind items
Source: UOB
UOB was the official bank for superstar Taylor Swift's sold-out concert in Singapore.
UOB is Singapore's third-largest financial institution by assets, behind domestic rivals DBS Group and Oversea Chinese Bank (OCBC), which had assets of S$739 billion and S$581 billion respectively at the end of 2023. The Singapore-listed bank's share price has risen 12% since the beginning of the year, closing at around S$32 in early October.
To solidify UOB's regional banking ambitions, Mr Wee will make his boldest bet yet on Southeast Asia in 2022, spending S$4.9 billion to build Citibank in Indonesia, Malaysia, Thailand and Vietnam. Acquired consumer banking business, including retail deposit and wealth management businesses. Secured and unsecured loan portfolio. Mr Wee has spent his 50-year banking career closing deals across Southeast Asia, including the acquisition of Singapore's Overseas Union Bank in 2001 for S$10 billion (approximately $5.5 billion at the time). His late father said the move was “aggressive, but supportive. He gave me the confidence to say yes,” Wie says.
ASEAN Gateway
More than 90% of foreign direct investment in Southeast Asia flows through UOB's key markets: Singapore, Indonesia, Malaysia, Thailand and Vietnam.
Source: UOB, government data
UOB's large stake is the main source of the family's $7.8 billion fortune, inherited by eldest son Wee and his four siblings after their father died in February at the age of 95, making him one of Singapore's richest people. Ranked 7th out of 50. The family also owns real estate developer UOL Group, which is chaired by Mr Wee's brother Wee Yee Lim, Ken Leung and his other brother Wee Yee Chao, maker of the iconic painkiller Tiger Balm. He is also interested in Mr. Ho Par, who serves as the company's chairman.
The acquisition of Citibank, funded by internal capital, gave UOB 24 additional branches and nearly 5,000 staff. At the end of 2023, the bank had more than 32,000 employees and a network of 500 branches and offices in 19 countries and territories, mostly in the Asia-Pacific region but also in Europe and It has a small presence in North America. The bank also said that through this transaction, it acquired approximately 2.4 million credit card customers, bringing the total number of customers to more than 8 million, making it among the top five credit card issuers in Indonesia, Malaysia and Thailand. “This gives us a huge head start in competing with our peers,” said Wee, adding that UOB aims to have more than 10 million credit card customers by 2026. He added that
The acquisition is expected to close in November 2023, and the rebranding of the assets is expected to be completed by mid-2025. UOB licensed the Citibank trademark during the transition, which will be phased out as customers migrate to the UOB platform. More importantly, UOB said the four markets are expected to add S$1 billion to the bank's annual revenue once fully integrated next year. Wee says the acquisition is a game changer. “This acquisition has increased our profile,” he said, allowing UOB to attract more talent and strengthen its pool of professional managers.
UOB aims to have more than 10 million credit card customers by 2026.
UUnlike DBS and OCBC, which have increased their presence in North Asia through acquisitions, Mr Wee said he wanted to focus on his own backyard in Southeast Asia, adding that the Citibank acquisition would limit UOB's penetration in the region for at least five years. He added that it had accelerated. “The whole image of UOB is coming to life,” says Wee. “The image of banks has changed.”
At the same time, the company is working to appeal to younger customers, such as by cooperating with celebrity events. UOB was the official bank for superstar Taylor Swift's sold-out concert in Singapore in March, giving customers priority access to tickets. As a result of this partnership, credit card applications during the ticket pre-sale period from June 21 to July 7, 2023, increased by almost 120% compared to a month earlier. UOB cardholders spend around S$30 million on flight tickets alone, with nearly a quarter of the total charged to cards outside Singapore. 40% of this was held by former Citibank customers. Additionally, spending by credit and debit cardholders in Singapore using UOB's payments infrastructure increased by 35% week-on-week during the week Swift ran. Credit card fees for all of 2023 jumped 66% to $382 million. “There will be more concerts in the future,” Wie vows. “We want to meet the needs of young people.”
Song Seng-woong, a Singapore-based economic advisor at Chinese financial services firm CGS International, agrees that UOB's image has been refreshed. “UOB used to have the image of being an old man's bank, but in recent years that image has been changing,'' said Song. “The Citibank acquisition and UOB's innovations are resonating with young customers.” 1 billion Singapore dollars. “Investing in IT infrastructure never ends; it is a continuous investment journey,” says Wee.
Wee Yi Chong
Munster Chong, Forbes Asia
Wealth management is another growth driver for UOB. Singapore remains an attractive financial hub for the wealthy. The number of retail offices in Singapore rose to 1,650 as of August, up from about 400 in 2020, according to the Monetary Authority of Singapore. Dominique Volek, head of private clients at Singapore-based British investment advisory firm Henley & Partners, said in an email that the city-state is “the fastest growing in the world, supported by tax incentives. “It is a relatively safe and stable city that is home to a growing number of family offices.” It's a safe environment with clear and transparent rules. ”
UOB did not disclose details of the wealth management business it acquired from Citibank, but said most of it will fall under its privileged banking business, which caters to clients with assets under management of S$350,000 to S$2 million. He said he is doing so. The company's wealth management services cover several tiers, from clients with total assets under management of S$350,000 to top-tier private banking for clients with assets under management of S$5 million and above.
UOB said it acquired 1,600 new wealth management customers from across Asia in the two years to 2023, taking its total to 10,600, adding S$22.5 billion in new assets in the same period. Assets under management reached S$88 billion last year, and the bank aims to increase that to S$145 billion by 2026, by which time it plans to increase the number of relationship managers to 400 from 278 last year. “Certain transactions still require human interaction,” Wee says.
“The image of banks has changed.”
aAlthough consumer banking and wealth management businesses have experienced strong growth, UOB's traditional wholesale banking business continues to account for approximately half of total revenue. However, the sector's first-half revenue fell 4% year-on-year to S$3.4 billion as Singapore's economic growth slowed in the second quarter and credit demand slowed.
The prospect of lower interest rates poses new risks as central banks around the world consider easing monetary policy following the U.S. Federal Reserve's 0.5 percentage point cut in September. There is. “Lower interest rates translate into lower net interest margins,” Harsh Wardhan Modi, a Singapore-based analyst at JPMorgan Chase & Co., wrote in an August research note. However, a weaker currency “will also support credit demand across ASEAN,” he added. He predicts that “Malaysia will be an important driving force going forward.” [credit] In addition to growth, confidence in Indonesia and Vietnam is also recovering. ” According to UOB, it has 55 branches, is the sixth largest commercial bank in terms of net profit and gross profit, and is Malaysia's leading overseas bank.
growing footprint
UOB currently has over 8 million credit card customers across its core markets in Southeast Asia.
Source: UOB
UOB's headquarters are located in Singapore.
Courtesy of UOB
In fact, UOB is bullish on ASEAN as a whole, predicting GDP growth will accelerate from 4% in 2023 to 4.9% this year. It highlights the region's strong fundamentals, including a young population, dynamic workforce and rising foreign direct investment. (FDI). Mr Wee said in a speech in late August that the companies the bank supports in cross-border trade have invested an estimated S$42 billion in Asia since 2020 and created about 200,000 jobs. said. Government data collated by UOB shows FDI in the region will increase by 2.7% in 2023 to a record $230 billion, with more than 90% of that total going to the bank's key markets of Singapore, Indonesia and Malaysia. , via Thailand and Vietnam. This is a stepping stone for UOB to achieve its stated goal of becoming ASEAN's top cross-border trade bank, with plans to increase its market share from 1% in 2023 to 5% in 2026. “UOB has better overseas access and a stronger network,” Sam Wong, an analyst at Hong Kong-based investment bank Jefferies, said in an email.
Meanwhile, Wee said the bank is committed to developing young talent who can lead the bank to its next stage of growth. He added that he is not ready to retire yet, but is ready to hand over the reins to a professional manager when the time comes. “It’s not necessary for family members to take over,” he says. Mr Wee has three adult children, but unlike his father, who joined the bank in 1979 after earning a bachelor's degree in business administration and a master's degree in applied economics in the United States, none of them are involved in UOB's day-to-day work. I am not involved in the management. University in Washington DC.
Whatever happens next, Mr Wee believes UOB's bold moves in Southeast Asia and efforts to attract younger customers have set it up for the future. “Before, people perceived us as very traditional,” he says. “Now we are seen as more progressive.”
