This article first appeared in The Edge Malaysia Weekly on March 11, 2024 - March 17, 2024

NG Wei Wei, CEO of United Overseas Bank (Malaysia) Bhd (UOB Malaysia), has had two busy but eventful years at the bank.

She had to hit the ground running when she took over the helm on May 1, 2022, as the Malaysian entity was in the thick of its acquisition of Citibank’s consumer business in the country.

“My first assignment as CEO was to make sure I [got] Bank Negara Malaysia’s approval to complete the acquisition. After that [came] the integration. It was a very steep learning curve,” she says in an interview with The Edge recently.

“I would say that I took over the helm at UOB at a very pivotal time when there were a lot of progressive and significant changes happening.”

While managing the acquisition, Ng also oversaw the move of the bank’s more than 3,000 staff to its new headquarters in the city centre. She says the green building, which is certified platinum by GreenRE Real Estate, is one example of UOB Malaysia “walking the talk” when it comes to sustainability.

The year 2022 marked the bank’s 71st year in Malaysia — a big milestone for any institution — which warranted a celebration. UOB Malaysia was also concurrently undergoing a brand refresh to show it was moving with the times.

Ng says it was no small feat, managing all these in addition to the day-to-day running of the bank.

The flurry of activities at UOB Malaysia over the last two years has certainly not distracted it from achieving growth. In fact, Ng says the bank hit a record in terms of income and profitability in FY2023. Its fourth-quarter earnings will only be announced in May but based on the financial statements for the nine months ended Sept 30, 2023 (9MFY2023) that are publicly available, operating income rose 25.34% to RM3.44 billion compared with RM2.75 billion a year ago. Net profit was slightly lower at RM1.03 billion, compared with RM1.15 billion achieved previously.

As at Sept 30, 2023, the bank’s return on equity stood at 11% while its credit cost was under 30 basis points. Its Common Equity Tier 1 ratio was also healthy at 14.8%.

One can get an indication of how well the Malaysia entity did in FY2023 by looking at the financials of UOB Malaysia’s parent company, United Overseas Bank Ltd (UOB Group). Listed on the Singapore Exchange, UOB Group has already disclosed its consolidated financial report for the financial year ended Dec 31, 2023 (FY2023).

In the group’s FY2023 financial report announcement, it said the Malaysian operations reported an operating income of S$1.47 billion (RM5.17 billion) for the year, representing a 14.6% growth from S$1.28 billion. It should be noted that the results include not only UOB Malaysia’s financial performance but also that of other holdings belonging to the parent company in Malaysia.

UOB Group’s financial statements do not provide a breakdown by operating segments for its Malaysian operations.

Nevertheless, in UOB Malaysia’s 9MFY2023 financials, wholesale banking was the biggest contributor to operating income and profit before tax (PBT) at RM1.59 billion and RM1.15 billion respectively. The retail banking business, which comprises personal financial services and private banking, came in close behind with operating income at RM1.34 billion and PBT at RM327.48 million.

The bank also has a global markets business, dealing in treasury products and services, which contributed RM266.25 million to operating income and RM183.71 million in PBT.

Ng describes the contributions of wholesale banking and retail as balanced following the acquisition of the Citi consumer business franchise.

“When I look at the full-year result (for FY2023), all I can say is that we have hit record levels in terms of income and profit. I’m thankful for the team that I have, it was hard work. It is a very good set of results,” she says.

Notably, the integration of Citi’s consumer business is at the tail end, with the last step of “re-carding” expected to be completed in the second quarter of this year.

When asked, Ng says the integration exercise, involving over one million Citi cardholders, has been a success at its Malaysia franchise.

“From an integration perspective, we have been able to account for every ringgit and sen of our customers’ money. For me, it is very important that nobody loses any money. All the customers have migrated to the UOB platform.”

She does not shy away from admitting there were some teething issues during the integration process, but adds that most of the Citibank customers experienced a smooth transition.

“There were some who had a regrettable experience. With these customers, I’ve been upfront — we apologised for the inconvenience and worked hard to address and fix the issues as soon as we could. One thing for sure is that we are committed,” she says.

As a testament to the fairly smooth transition exercise, the attrition rate is only in the single digit, lower than anticipated based on the business case study UOB Malaysia had done earlier.

Ng says a factor that helped smoothen the process of Citi customers transitioning to UOB was having more than 90% of the Citi consumer business workforce joining the bank.

“One hundred per cent of senior management came over and over 90% of the workforce joined us,” she relates, adding that UOB took the unconventional step of offering jobs to all of Citi consumer business’ workforce.

UOB Malaysia is the first of the four countries in Southeast Asia to complete the integration process. UOB acquired Citi’s consumer business in Malaysia, Thailand, Indonesia and Vietnam for S$5 billion.

However, the enlarged retail banking business of UOB Malaysia is facing a cautious environment where the man in the street is more inclined to tighten the purse strings as the economic climate turns more challenging while the possibility of fuel subsidy rationalisation comes into play.

Ng is not intimidated by this.

“We wouldn’t buy it (Citi consumer business) if we’re not confident that we will do well. We know the markets of the countries we have bought into. We’re very confident that it’s synergistic and it complements what UOB is doing.

“Our labour market is conducive, businesses are expanding where it makes sense and foreign direct investment (FDI) is coming in,” she says, adding that credit card income is growing.

UOB Malaysia says that its credit card income doubled in 2023 from 2022 as a result of the acquisition.

Ng believes the potential is huge with the additional consumer business portfolio. Less than 10% of the Citibank customer base UOB acquired has a current account/savings account (Casa) with the bank.

“It’s very card-centric. Once we get them on board with a Casa, we will be able to share our wealth offerings with them and they can also experience our privileged banking services. There are lots of opportunities,” she says enthusiastically.

As CEO of the Malaysia franchise, Ng is focused on the long-term sustainability of the bank’s growth, in line with the mandate set by its majority owners, the Wee family of Singapore.

“We are one of the few banks in the world that are still family-owned. Family-owned companies would want to think long term and grow sustainably. The strategy that I’m tasked to execute has been in place for the last three years and will be as such for the next three years,” she states.

For the next three years, Ng says UOB will continue with its progressive transformation, focusing on three key areas — sustainability, connectivity (FDI and trade) as well as personalisation for its retail banking customers.

Sustainability is a strategy that is close to the bank’s heart and an aspect of the business Ng takes very seriously.

For one, UOB Malaysia’s sustainability unit reports directly to her. Secondly, the sustainability portfolio exceeded RM6 billion in 2023, she says.

“We don’t just focus on sustainability, but on transition financing. We were the earliest in Asean to launch transition financing back in 2022. This will help the critical brown sectors or those hard-to-abate sectors to transition,” she adds. (See “Walking the talk on sustainability.”)

In terms of the bank’s second strategy, which involves FDI and trade, Ng says the bank has facilitated 51 FDI transactions from China alone into the country. This is an area it will continue to focus on in the next three years.

“Our purpose is to build the future of Asean and to connect the people within Asean with Asean,” she explains.

UOB Malaysia will also continue to grow its enlarged consumer business, focusing on personalisation for its retail customers and working on the potential she sees in the retail business.

That said, Ng is aware that there will be external challenges ahead. But she also believes there are bright spots to be found that will give the bank growth opportunities.

“We forecast 4.9% growth for Asean and 4.6% growth for Malaysia in 2024. The first half of 2024 may be a bit more patchy. We do expect the US to cut rates, and naturally the ringgit will increase. Our forecast for the ringgit is 4.5 against the US dollar by the end of the year.

“We also see China growing in the 4% range. If China grows, the US fed rates come down, then the ringgit will have a higher chance to strengthen.”

Ng says it is not all doom and gloom, pointing out several areas where she sees the bank growing in the next few years.

“Our growth area will be in line with Malaysia’s growth. The electronics up-cycle is coming. Manufacturing, industrial and consumer are the key new growth sectors that will power our growth over the next three years for UOB Malaysia.

“UOB Malaysia has also always been in the real estate, hospitality, construction and infrastructure sectors. That will continue as our core sectors.”

On the back of the three key strategies, Ng targets to have the bank’s income, profitability, assets and deposits grow in the teens in the next three years. She adds that liquidity, capital ratios and return metrics will be healthy while credit cost will be well managed.

She did not disclose specific targets.

“There has to be growth because we invested a lot into buying the Citibank portfolio. We also invested into our digital banking platform for both retail and wholesale banking. All these investments will add value to my portfolio of customers,” she says. 

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