How UOB is weathering trade tensions: Key insights from Corporate Connect webinar

UOB's share price has been volatile in recent weeks, as global markets experienced sharp swings following sweeping tariffs announced by the US. 

Against this backdrop, we spoke to the investor relations team of UOB at a Corporate Connect webinar hosted by SIAS.

We find out more about Lendlease REIT’s prospects, and what they may mean for the company's dividends in the coming years.

We explore how UOB is navigating the current environment and this may mean for the company's dividends in the coming years.

UOB Corporate Connect: How UOB is weathering trade tensions

1.  Group Overview & Financial Strength

• Celebrating its 90th anniversary in 2024, UOB continues to be led by the founder’s family, with CEO Wee Ee Cheong representing the third generation and holding an 18% stake.
• Maintains AA credit ratings across all three major agencies.
• Reported 13.7% ROE in FY2024 and a CET-1 ratio of 15.5%, up 200bps following Basel IV implementation.
• Announced a $3 billion capital distribution package, comprising a $0.50 special dividend and a $2 billion share buyback program spanning three years.

2.  Core Banking Business Performance

• Operates across retail, wholesale, and global markets segments.
• Commands 21% market share in SGD deposits and 25% in SGD loans within Singapore.
• Wholesale banking is a key strength, particularly in the SME and large corporate space

3.  Growth Through Acquisition and Diversification

• Has maintained profitability every year since 1965, including during major economic crises.
• The Citigroup consumer banking acquisition added 2 million customers across Malaysia, Thailand, Indonesia, and Vietnam.
• Aims to balance its portfolio further between retail (currently ~1/3) and wholesale (~2/3) banking in the coming years.

4.  Loan & Deposit Franchise

• Loans are 50% Singapore-based, with the remainder spread across ASEAN-4 and Greater China.
• Real estate exposure comprises ~50% of the portfolio, half of which are mortgages — a segment with strong asset quality.
• Maintains a non-performing loan ratio between 1–2%, reflecting disciplined risk management.
• On the funding side, fixed deposits make up 41% of total customer deposits, supported by strong customer trust and a scalable digital infrastructure.

5.  Income & Profitability Resilience

• Loan growth and stable funding have enabled consistent income growth across decades.
• Continued to post positive earnings even during periods like the Asian Financial Crisis (1998), Global Financial Crisis (2008), and COVID-19.
• Income may fluctuate year to year but has shown a clear upward trend over time.

6.  Dividends and Capital Return

• Maintains a 50% dividend payout ratio of net profit.
• FY2024 dividend per share was $1.80, with an additional $0.50 special dividend split into two tranches.

• $2 billion share buyback to be executed over three years, supported by strong capital buffers.

  

7.  Strategic Priorities Moving Forward

• Targets higher income contribution from ASEAN-4, despite short-term uncertainty from tariff changes.
• Aims to boost non-interest income via wealth management, cards, and customer treasury solutions.
• Continuing to invest in cost efficiency and technology, shifting expense mix from manpower to digital enablement.

8.  Wholesale Banking Focus

• Seeks to lead in ASEAN cross-border trade, supported by $800M+ investments over the past decade.
• Pivoting towards trade finance, treasury, and cash management, moving away from real estate-heavy lending.

9.  Retail Banking Focus

• Aims to deepen engagement with mass affluent and high-net-worth clients.
• Growing lifestyle offerings through Citi integration and regional credit card programs.
• Capitalizing on Singapore’s position as a wealth hub to attract regional inflows.

Q&A with UOB: Navigating interest rate volatility, and impact on dividends

Question: How would the trade tensions potentially impact UOB, and how significant do you expect the impact to be?

Answer from UOB:

The situation remains fluid, but short-term disruptions to global trade and investment flows are expected. UOB anticipates modest credit growth due to a “wait-and-see” approach from clients, particularly for capex loans. Trade loans (10% of group loans) may be affected temporarily. However, UOB believes trade will eventually rebound as countries diversify partnerships beyond the U.S. - shifting toward China, Europe, Japan, and intra-ASEAN trade. The bank is also conducting stress tests on direct and indirect U.S. exporter exposures. SME risk is viewed as manageable due to diversified customer bases and segmental exposure (~10–12% of total loans). Asset quality risks are expected to be contained, supported by potential fiscal coordination across ASEAN.

Question: What is UOB’s wealth management strategy across different client segments?

Answer from UOB: 

UOB manages approximately SGD 190 billion in assets under management (AUM), with about 40% currently invested. The AUM is split between two main segments:

• Private banking clients with SGD 2 million and above
• Affluent clients with SGD 350,000 to SGD 2 million

Private banking clients are typically served by relationship managers, while affluent clients are supported through UOB’s digital banking platform, TMRW, which offers access to CIO views, investment tools, and transaction capabilities such as purchasing mutual or money market funds.

UOB adopts a wealth preservation approach, favoring more conservative investment advice. Unlike some peers, UOB does not recommend aggressive assets like cryptocurrencies or speculative stocks. The philosophy focuses on growing wealth sustainably across a range of products, including life insurance, money market funds, and fixed income instruments.

Targeted client segments also include professionals and SME business owners, many of whom are already banking with UOB for their companies. The bank supports these clients by managing their personal wealth with a more risk-averse strategy, offering both protection and investment solutions tailored to individual needs.

Question: Your insurance business might be smaller than some of the other peers. Any plans to be expanding your insurance business?

Answer from UOB: 

Unlike some peers, UOB does not operate its own insurance subsidiary. Instead, it follows a bancassurance model, partnering with external insurers to market their products. UOB has a long-standing partnership with Prudential, which was recently renewed for another 15 years.

Under this model, UOB sells Prudential’s insurance products to its customers, rather than manufacturing or underwriting policies directly.

Question: What is the exposure that UOB has to U.S. treasuries in terms of some of the longer-term securities and any concern if both the U.S. treasuries as well as USD were to decline? 

Answer from UOB: 

UOB’s exposure to U.S. Treasuries is not significant, as the bank does not operate in the U.S. Its securities portfolio accounts for about 15% of total assets, which is in line with other local and global peers.

This portfolio primarily comprises high-quality liquid assets held for regulatory compliance, and consists mostly of government securities from Singapore and regional markets.

Given the minimal direct holdings in U.S. Treasuries, the impact from the recent yield spike is expected to be limited for UOB.

Question: We have seen quite a bit of volatility in terms of movements within some of the regional markets. How will some of this weakness in regional currencies relative to the Sing dollar affect UOB?

Answer from UOB: 

UOB’s loan book is naturally hedged across currencies: 50% in SGD, 20% in USD, and 30% in ASEAN currencies.

The bank does not artificially hedge ASEAN currencies due to illiquidity and high cost. While weaker ASEAN currencies (e.g., rupiah, ringgit) may reduce short-term profit contributions from subsidiaries, these effects are often offset by gains in USD-denominated loans, given the inverse relationship.

Additionally, each local UOB subsidiary is self-funded, meaning loans are only issued if matched by local currency deposits. This eliminates currency mismatch and helps ensure FX-related risks remain well contained.

Question: Is UOB closing branches to go more digital and shift focus to high-net-worth clients?

Answer from UOB: 

Yes, UOB has been rationalizing and streamlining its retail branch network, particularly after acquiring Citigroup’s consumer banking business across four ASEAN markets, where overlapping branch presence was identified. However, this shift does not mean branches will disappear entirely. Instead, their role is evolving.

With increasing digital adoption, many basic transactions can now be handled through UOB’s TMRW digital banking app, making physical visits unnecessary for day-to-day banking. That said, branches continue to serve an important function — especially for higher-value advisory services. For instance, wealth management transactions involving hundreds of thousands or even millions of dollars are better handled in person, where clients value the face-to-face interaction and trust.

UOB is repurposing its branches to support these advisory needs, allocating more space and resources to serve private wealth and high-ticket transactions. However, this approach is not exclusive to high-net-worth clients. It applies across all segments — from mass market customers to affluent individuals — depending on the complexity of the service required. The broader industry trend supports this shift, where branches move from transaction hubs to centers for personalized, advisory-driven banking experiences.

Question: Will UOB offer scrip dividends this year?

No, UOB will not be offering a scrip dividend for this year. The last time scrip dividends were issued was in 2020, and since then, UOB has consistently paid out cash dividends, supported by a strong capital position. With the implementation of Basel IV, UOB — like other Singapore banks — has maintained robust capital buffers.

For FY2024, shareholders will receive a final dividend of $0.92 per share, along with a special dividend of $0.25, reflecting UOB’s continued commitment to delivering shareholder returns in the form of cash distributions.

Question:  Where does UOB see itself in the next 5 to 10 years?

Answer from UOB: 

UOB’s medium- to long-term strategy remains anchored in building a more resilient, diversified, and regionally integrated business model. On the wholesale banking front, the bank is shifting away from traditional real estate-backed lending and moving toward more holistic solutions for corporates — including cross-border trade financing, cash management, and supply chain support. This approach is expected to generate more fee-based income, improving earnings stability across economic cycles.

In retail banking, the key growth drivers will be wealth management and cards, supported by digital advisory tools and strong private banking relationship management. Mortgage lending and deposits will remain foundational, but rising consumer affluence in Singapore and ASEAN presents further opportunities to expand wealth offerings and lifestyle-driven card programs, especially in entertainment, travel, and dining.

UOB aims to increase the share of non-interest income, particularly to offset potential margin pressure when interest rates decline. This strategy supports the development of a more balanced and sustainable earnings mix over time.

Reflecting on its 90-year heritage, UOB emphasizes that it has weathered multiple economic shocks and remains committed to ASEAN as a long-term growth engine. The bank continues to stand by shareholders and customers, supporting them through uncertainty and working toward a stronger, more connected financial future in the region.

Related links:

• UOB share price and share price target
• UOB dividend forecast and dividend history

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