UOB may be better known for its prowess in retail and digital banking, but employees in its group wholesale banking (GWB) division enjoyed a particularly strong 2021.
GWB profit before tax rose 29% to S$3.01bn year-on-year in 2021. Income in the unit expanded 8% to S$4.39bn as “robust credit demand from large corporate and institutional clients drove strong loan growth, supplemented with healthy loan-related and investment banking fees”, according to UOB’s financial results, which were announced on Wednesday.
Investment banks in Singapore made a record US$1bn in fees last year, largely through a 91.1% growth in advisory fees for completed M&A, according to data from Refinitiv. While Southeast Asian IB league tables are dominated by global firms, UOB’s strong results suggest that Singapore banks have also benefited from the surge in fees, and that their bankers may also enjoy good bonuses. At local rival DBS, profit in institutional banking – which includes corporate finance and advisory banking – rose 65% to S$3.76bn last year.
As at other banks, the global markets division at UOB performed less well in comparison to 2020, when markets were more volatile. Profit declined by 20% to S$396m. Total income decreased by 16% to S$644m in 2021, “arising from lower sale of investment securities and narrower spreads than at the beginning of the global pandemic”.
In wealth management, UOB said its assets under management increased by 4% from 2020 to a record S$139bn, with wealth fees growing by double-digits to a record as sales grew across most investment products and investor confidence returned.
While total expenses increased only 3% last year, this was as a result of UOB’s “discipline spend” and appears not to have been at the expense of compensation, or tech investment and hiring. The firm “prioritised strategic investments in people and technology including scaling up digital offerings in Singapore and ASEAN”.
UOB reported an overall net profit of S$4.07bn, 40% higher from a year ago, driven by stronger income growth and lower credit allowances.
Like his DBS counterpart Piyush Gupta, UOB CEO Wee Ee Cheong struck a cautiously upbeat note about 2022. “We believe the worst is behind us. In Singapore, there are signs of market recovery where we see strong institutional loan growth and a rebound in card spending and wealth management activities,” he said in a statement.