Surprise at UOB as unusual group of employees boosts its recovery

UOB enjoyed a strong opening quarter as profits increased 18% year-on-year and 46% quarter-on-quarter to S$1bn. Income rebounded to pre-Covid levels.

As at DBS and Standard Chartered, traders and wealth managers at UOB helped to drive some of this recovery. More surprisingly, UOB singled out investment bankers for their Q1 performance and deal-making. Singapore’s third largest bank isn’t known for its prowess in IBD, and its quarterly earnings reports don’t typically draw much attention to the unit.

Within group wholesale banking, there was “strong momentum in investment banking advisory”. Meanwhile, UOB’s 24% overall rise in fee income was supported by “large” investment banking deals across Singapore, Hong Kong and the US. Operating profit from the entire wholesale division was up 9% year-on-year, while income reached record levels, with “robust credit demand by large corporate and institutional clients across key markets”.

Elsewhere in wholesale banking, UOB highlighted a 7% growth in cross-border income in the first two months of the year as trade flows picked up between ASEAN and China (figures for the full quarter are not yet available). This represents a 29% contribution to the division’s total income. Wholesale banking is also focused on increasing its coverage industry specialisation – financial sector income was up 10% over the same period. UOB’s technologists continued to work on “deepening digitalisation” for wholesale clients, with cashless payments to businesses in Singapore rising 43% QoQ.

In the global markets division, operating profit increased 25% YoY, “driven by stronger trading performance”. Compared with the previous quarter, trading and investment income improved 62% “from stronger customer flows, trading income and higher gains from investment securities”.

UOB registered record AUM performance in wealth management and “strong momentum in wealth management fees boosted by a pick-up in the equity market”. Fee income for wealth increase 19% year-on-year. This performance will be particularly pleasing for senior managers because UOB is competing against larger banks – notably Citi, HSBC and Standard Chartered – which have expansionist business plans in Asian wealth management.

The bank’s overall earnings exceeded analyst forecasts. They follow strong financial results from DBS and for the regional units of global banks, including Credit Suisse, Morgan Stanley and Goldman Sachs.

“We expect this momentum to continue as economic and business activity picks up and market sentiment improves across the region, starting with Singapore and Greater China,” said UOB chief executive Wee Ee Cheong.

UOB today joined local peers DBS and OCBC in announcing that it will look at Citigroup’s assets in the 13 markets the US bank is exiting. “We are always open to acquisition opportunities...as long as it's a strategic fit and at a right price, and it has to make sense for the long term,” said Wee.

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