United Overseas Bank Stock

Good morning, and thank you for joining us. I think given the global environment remain uncertain, I think the three local Singapore banks, generally, I think, has been quite resilient, which is very encouraging. And even on our side, we see healthy trade and investment flow, stronger connectivity in Greater China and ongoing supply chain shift into the region. As businesses look to ASEAN for growth and diversification, I believe we are continuing to well position to support them. ASEAN is our home, our competitive advantage and our engine of growth.

Over the years, we have built a differentiated franchise with deep local strong customer relationships and value-added ecosystems. We will continue to invest in our growth drivers. Okay. Let me just very briefly touch on three areas: Wholesale banking, retail and our priorities. Our wholesale banking franchise continues to benefit from growing trade, investment and connectivity across ASEAN. As clients increasingly operate across multiple markets, our regional footprint is a key differentiator. ASEAN-4 is key growth region, contributing about 27% of wholesale growing faster than. Transaction banking is a key pillar, contributing to nearly half of wholesale banking income. Trade loans grew over 30%, while wholesale CASA deposits increased 9% year-on-year in the first half.

We see encouraging momentum in foreign direct investment in Southeast Asia with larger and more strategic. Over the past decades, foreign direct investment into ASEAN more than doubled even as global foreign direct investment declined by about [indiscernible]. Through our FDI advisory unit, supported more than 300 cross-border deals into the region in the last 6 months with projected investment totaling SGD 5.6 billion.

More than 60% of these investments are in industrial sectors, reflecting digitalization, ongoing supply chain shift. This growth also create opportunities to deepen customer relationships across our retail and wealth businesses through our One Bank approach.

On the asset quality front, we are addressing a few legacy accounts, Greater China real estate. These are well provided for, and total credit costs remain within our guidance.

In retail banking, we have one of the region's largest franchises. ASEAN-4 markets now contribute about 35% of retail banking income and are growing faster. The scale we have built strengthened our brand, deepen partnership and enhances our ability to serve customers across markets. Our differentiated lifestyle solution help us in customer acquisition and engagement. Our wealth income, which every one of you are paying a lot of attention, grew 16% year-on-year in the first half with ASEAN-4 up 30%. Growth was particularly strong in Malaysia, 29%, and Thailand, 8%.

Now looking ahead, we are focused on these growth priorities. First, to unlock the full value of our franchise. With more than 8 million customers across ASEAN, the opportunity is to deepen and become the primary bank for more customers. Our new value proposition for affluent and emerging affluent customer is gaining traction, and we will continue to build on this momentum.

Second, to accelerate wealth growth, we see significant opportunities across our SME and business owner segments, and we are investing in talent, platform and products, while expanding our North Asia presence to support regional wealth.

Our strategic distribution partnership with Allianz, we just announced yesterday, will further support our growth ambitions. We will sharpen our focus on wealth advisory and distribution by combining UOB customer reach and advisory strength with Allianz investment capabilities. We will strengthen our wealth proposition. This positions us well to meet customer evolving needs and support their long-term wealth growth.

Third, to continue to capture a larger share of the trade and investment flows across ASEAN and between ASEAN and the Rest of the World. ASEAN see more than USD 200 billion annual FDI and more than USD 2 trillion of trade flow. With our transaction banking platform, sector expertise and regional network, we are well placed to support businesses as they expand.

Fourth, to reposition our Hong Kong franchise for more diversified and asset-light growth. Hong Kong remain an important gateway between Greater China, ASEAN and the Rest of the World. Our focus is on building a more balanced franchise, including private banking and global markets. We, as usual, remain disciplined in how we allocate capital to drive long-term strategic priorities. As you can see from recent announcement, we seek to unlock value, drive sustainable earnings and enhance long-term shareholder value.

At the same time, we are investing in our core business franchise, including digital platform, data infrastructure, cybersecurity and customer experience. We are committed to completing our $2 billion capital distribution plan by end 2027. Our ASEAN strategy is gaining traction. The opportunities ahead are significant. We are well positioned to capture them through our regional network, strong customer franchise and one bank approach.

With that, I will hand over to my CFO to provide some financial details. Thank you.

Good morning, everyone. Before I go through the financial details, let me take you through a few key messages. The first, our franchise continues to deliver resilient performance amid external uncertainty. The second quarter numbers for us in terms of net profit after tax was $1.5 billion, representing a 10% up year-on-year against the same period last year. The underlying business momentum remained healthy across all customer segments, complemented by some non-recurring gains from asset divestments.

Secondly, our diversified franchise drives earnings stability. I mentioned earlier across customer segments, but it's also within the segments in terms of product categories such as wealth, cards and CASA in retail. And in the wholesale business, trade lending and CASA continues to contribute to our balanced and sustainable earnings.

Next, we continue to have adequate provision buffers. Our credit costs remain within guidance. There is one specific exposure, which I'll talk about as I go through the asset quality slides later on. And lastly, in terms of capital position, our strong capital position allows us to support consistent shareholder returns. The Board has declared an interim dividend of $0.88 per share. This is consistent with our commitment to give a 50% payout ratio to shareholders. And as CEO mentioned, our $2 billion share return program is on track. We have completed 40% of the share buyback, and we'll commit to complete or return a total of $2 billion by the end of 2027.

Let me now move to some details around the recently announced deal with AGI, which is short form for Allianz Global Investors. The purchase consideration was $535 million. This amounts to roughly a $330 million gain and an increase of CET ratio by around 14 basis points once completed. The price reflects a valuation of about 2.5x price to book and 1.3% of AUM. The partnership strengthens our wealth management franchise by allowing UOB to focus on open architecture investment solutions for our customers and reinforces our advisory-led approach to customers. This allows us to focus on driving sustainable earnings growth and enhancing long-term shareholder value.

I'll next go into the second quarter results in more detail. I mentioned earlier on, the second quarter results delivered a net profit of $1.5 billion. That translates to an ROE of 11.8%. Net interest income did ease marginally quarter-on-quarter. But with healthy loan growth and active balance sheet management, we were able to cushion the impact of margin pressure from the lower interest rate environment. Net fee income maintained positive momentum, rising 4% from the last quarter, supported by record wealth fees, which has helped to offset a moderation in investment banking activities.

Trading and investment income saw a 6% decline amidst fewer liquidity management and market opportunities. However, the customer treasury flows continued to hold steady, underpinned by healthy demand for hedging and investment solutions. Asset quality was at 1.6%. NPA coverage, including collateral, improved to 306%. Our capital and funding positions remain strong with CET ratio at 15.4% and NSFR at 114%.

I'll next move to the first half of 2026 numbers. Net profit stood at $2.9 billion, resilient performance amid macroeconomic headwinds. This was a 3% increase year-on-year. Total income was flat compared to a year ago, reflecting the impact of lower benchmark rates and softer investment banking fee income. Other non-interest income remained resilient, supported by customer-related treasury activities and divestments. Expenses remained well controlled, modest increase of 2%, underscoring our disciplined approach to cost management. Allowance for credit losses declined 27% as the release of general allowance more than offset the specific allowance for a single real estate account in Greater China.

Now let me take you through the business lines. In our group retail business, the franchise continued to demonstrate a consistent and disciplined delivery. Group retail income held steady at $2.6 billion, supported by strong growth in wealth and cards, which helped to offset margin pressures. Wealth delivered invested AUM and wealth income rising about 15% and 16%, respectively, year-on-year. Net new money flows was $4 billion for the first half of this year. CASA mix has also improved from 57% to 58%, reflecting the strength and stability of our deposit franchise.

I'll next move to the Wholesale Banking business. Despite the twin headwinds of lower interest rates and heightened competition for quality assets, the transaction banking business remained a key driver of our wholesale banking franchise, contributing to nearly half of the segment's income. Strong growth in CASA balances and trade loans supported that. Trade loans actually grew about 33%. Customer treasury income rose 2% year-on-year on the back of sustained client engagement amid a competitive environment. Gross loans expanded 8% year-on-year, mainly led by demand from the technology and financial sectors. Our diversification strategy continues to underpin earnings stability with non-real estate sectors accounting for 72% of the portfolio and cross-border income at 28%, demonstrating our regional connectivity and client franchise.

Next, in Global Markets, we saw a double-digit 15% growth year-on-year. The treasury income from customer activities rose to a record half year high of $584 million for the first half of 2026. This uplift was driven primarily by proactive asset liability and funding management, effective deployment of liquidity as well as timely capture of market opportunities.

Next, I'll touch on net interest income and margin. There was indeed loan margin compression but mitigated by asset growth. On the left-hand side, you would see that the average interest-bearing assets actually grew 7% over the period and net interest income declined 3%.

I'll cover a little bit more detail in terms of net interest margin movements. The first quarter of 2026, we disclosed a 1.82% net interest margin. It saw 8 basis points decline to 1.74%, and we are exiting the July -- end of July time line with 1.71%. This was largely due to loan repricing in a lower rate environment. During the quarter, we did see healthy customer deposits and other funding inflows, but loan growth opportunities helped, and we deployed excess liquidity to support the net interest income.

SORA appears to be bottoming out and is expected to trend higher in the second half of this year, and that will support NIM. We continue to maintain a disciplined approach, balancing between NII optimization and NIM management. While we proactively pursue opportunities to enhance NII, we recognize that such actions may result in measured pressure on NIM in support of overall earnings performance.

Next is on the gross fee income. Despite record wealth fees underpinning our second quarter performance, loan-related fees did soften. So overall fees stayed flat. In terms of expenses, we grew expenses 7% over the period, reflecting our continued investments in strategic priorities such as our people, technology and regulatory activities. We will continue to maintain a disciplined approach in terms of cost management.

Next, I'll move to NPA formation and NPL ratios. NPL ratio at 1.6% with new NPAs at $902 million. This is largely the result of one real estate account in Greater China, which we have been monitoring closely. The provisions that we have set aside in the third quarter of last year had taken this into account. And we continue to remain very proactive in reviewing and monitoring our credit portfolio. In terms of total credit cost, it stood at 28 basis points this quarter or 27 basis points for first half, both within our guided range.

Next. In terms of provisions coverage, it continues to remain adequate with an NPA coverage at 88%, but when NPA coverage includes collateral, that's 306%. We're confident of the provision coverage that we have put in place and our credit cost guidance of 25 to 30 basis points.

Briefly on customer loans, it's up 5% year-on-year. It is broad-based across business segments and sectors. Healthy growth in wholesale term and trade lending as well as continued expansion of our mortgage portfolio underpins these numbers. On funding, liquidity and funding positions remain very strong with LCR at 159% and NSFR at 114%.

Capital. CET ratio at 15.4% post dividend payout on a fully loaded basis at 15.0%.

Next, on dividend. I mentioned earlier on, the Board has approved $0.88 per share. That's consistent with our payout ratio of 50%. Our share buyback program is guided by a disciplined capital management framework. We have, as I mentioned, completed about 40%, which amounts to $794 million. We remain committed to delivering this $2 billion capital return plan, either through share buyback or other means by the end of 2027.

In summary, the four key messages again is a set of resilient performance amid external uncertainty, a very diversified franchise that drives earnings stability, adequate provision buffers to navigate uncertainties in the credit portfolio and capital strength supporting consistent long-term shareholder returns.

On the right side of the page, the 2026 outlook and guidance from us for loans, low single-digit growth, full year NIM of about 1.75% to 1.8%, fee income at low single-digit growth, operating costs of low single-digit increase and credit cost of total credit cost 25 to 30 basis points.

With that, I conclude my presentation, and we open the floor to questions.

[Operator Instructions] Any questions.

I'm Rthvika Suvarna with Bloomberg. I have a couple of questions for you. Let's start with MAS data roughly shows healthy loan growth in Singapore. Why is UOB still in the low digits -- low to single digit?

Fee or loan growth?

Loan growth, sorry.

Loan growth at 8% in wholesale banking growth is low.

Yes. Yes. Okay. Let me recheck that. What is your outlook for loan growth in the second half of this year?

Sure. I think our full year guidance for loan growth is at low single digits. If you look at wholesale banking loan growth was about 8% and our retail banking loan growth was about 4%.

How come UOB kept its targets largely unchanged compared to the other two banks?

Which targets are you referring to?

The 2026 outlook.

Earnings outlook?

Yes.

Our outlook for 2026 earnings is flat to 2025. It's consistent with what we've projected.

Yes. There are no changes. Okay. And is there -- what we do with the proceeds from the sale to Allianz?

Firstly, the sale proceeds from Allianz will only come in when the deal is completed, and that's expected sometime in 2027. I think it's premature to look at the allocation of the use of proceeds. But suffice to say, it will be used in terms of investing in capabilities to ensure sustained earnings for our shareholders. If you're asking that in the context of potential dividends and so on, we will look at it holistically, taking into account the needs of the organization and where we are operating at the point in time.

You mentioned that the new NPA formation was largely linked to one account in Greater China. Can you give us more color on what drove that? And which market is it in? Is it in Hong Kong?

Sure. It's one real estate client in China but booked in Hong Kong. That explains why the complication around using the Greater China terminology.

Could we get any other question?

I have two questions. The first one, the 2026 outlook fee income and low single-digit growth. The previous quarter, I think you mentioned high single digits. So just wondering what's the reason for the lower forecast? And secondly is just wondering if -- what UOB's exposure to the iron ore trader Radiant World that was in the news overnight regarding Deutsche Bank freezing some of the Singapore accounts.

On the second question, first, we never comment on customers specifically. On the first question, it was around fee guidance, right?

Yes.

So some of the fee deals in the pipeline have been pushed into the second half of the year. I think with some of the pushback in terms of our pipeline, it does not look like a high single-digit fee income guidance would be accurate to reflect. So we're guiding to a low single-digit income -- fee income.

[indiscernible]

Earlier, Mr. Wee mentioned about the accelerate wealth growth you see significant opportunities across SME business owners. Could you expand what these opportunities are? And then you also mentioned investments [indiscernible] platform and products, what this investments mean? And is this also sort of a way for UOB to differentiate itself in the wealth acquisition?

I think it's a good question. I think generally, we focusing on one side, right? Yes, besides the private banking side on the standalone, we will continue to improve the platform, improve the product, taking in more headcount. And the fact is we are selling our asset management to Allianz, and Allianz' global fund managers that will accelerate and that will continue to sharpen, continue to make our capability stronger as well as better customer outcome. So that itself is taking care of, right? So when I talk about one bank, that cut across a wholesale part of corporate banking, the SME, the whole regional franchises, right? You can see the growth is actually double digits. So this is where I do think we have the competitive advantage. First of all, we have the most comprehensive footprint. Secondly, you know UOB, we started this foreign direct investment unit 12 years ago, and you can see the traction of getting people to invest. That has nothing to do with the wealth that we are talking about, companies who are interested and company to a certain extent are owner driven, some of them. So the wholesale piece will double up to complement our private banking, right? Are they able to do it because given our footprint, all these foreign direct investments when they come to Singapore, they will see UOB has the most comprehensive, the likelihood, everything equal, they will [ bank ] with us. And when we support them in the business, no reason for them, everything equal, they will give us a piece of the wealth business. This is where I think -- at the moment, this is our competitive advantage that we will continue to push, right? At this point in time, we are continuing to improve our infrastructure. No point to push something if your infrastructure is not ready. End of the day, we are going back to the customer service, going back to the accuracy of reporting. We don't want to short change our customer. We want to make sure that the whole infrastructure is well in place, and we [ move. ] Actually, we are already in place. We are just fine-tuning some of this. We align our interest, right, within wholesale and retail. So I think for the next 1, 2 years, you'll start to see the growth. And we are openly articulate that we want to double our wealth fee. And this is where we are coming from. I don't know, Yung-Chee want to add?

I think that's absolutely right. And I think that was what was driving the whole partnership with Allianz, right? We did earlier communicate the ambition to double down on wealth. If you sequence through the steps that we are taking, record wealth fees, the shifting of our AUM, invested AUM mix up to 42%. If you look at the partnership that focuses on open architecture platform, but with a long-term partnership that enhances the products that we make available to customers, I think that reinforces what we said we were going to deliver. And if I may, sorry, there was one other item regarding the fee outlook conversation. Aside from some of the sizable deals that are shifting into the second half, they are delayed. They're not going away. But there was also an element where credit card fees, which today roughly accounts for about 1/3 of our fee income, the outlook has changed for that as well. And that outlook has changed primarily because there have been some shift in spending patterns of consumers and the shift in the patterns have resulted in lower interchange fees in the buckets which they spend on. There are also cost pressures arising from higher miles redemption as people travel more, and there have been higher scheme fees by the interchange as well, primarily from Mastercard and Visa. So that's the basis of some of the fee adjustment.

And also just to answer you again Mike, [Indiscernible] with Allianz, given the very overcrowded wealth activities generated by every bank. And even every bank is having an open architecture, that arrangement will give us a lot of broader strength, right? We just want to focus on distribution. I don't want distribution manufacturing that aggregate, I will have a bigger problem to solve -- bigger challenge to solve. Based on the product capability for us, we focus on the platform, the customer base that we build. Hopefully, we are in a better position.

That partnership allows us to co-create solutions with the capabilities that they bring, but with the very local knowledge that we have in the markets that we operate in, that ability to co-create solutions is one of the reasons why we've tied up with a global asset manager.

Any other question?

Two questions. One is on just manufacturing of fund management product take up capital.

Sorry, not so much taking up capital. It's the people that you have to attract. It's the infrastructure that you have to build. And today, with AI, with all the infrastructure, with a continuous challenge on protecting the customer on scam, we have to focus as a bank to protect them, right? Because otherwise, my focus will be -- my technology is going to have a challenge, fund management, banking, insurance company, too much attention. We just want to focus what we think we can do better. And just remember, we acquired Citibank portfolio. We have to make it, the [ 8 million ] customer, in fact, is growing organically, right? And we have the beautiful product, consumer product. We just have to approach one bank approach to sell them. The mortgages, the credit card and need the fund management because fund management is a big industry. You need scale. Without the scale, by the time you invest, your return is not going to be good. And we are very focused on ROE, okay? We just want to make sure that we want to make sure it's asset-light, do the right thing. So hopefully, the next few years, we'll start to see UOB will navigate into a different shape of the bank.

Did you have a target for the ROE, because you say that you want to focus...

12%, 13%, this is what we want to target. I can tell you I want more, but end of the day, let's be realistic. I don't want to set sort of -- 12% to 13%, we still need to invest, right? Our data center, our call center, we still need to invest to provide better customer service.

Last question. You said you are selling non-core assets such as the asset management.

I know your question, yes.

You know my question. [indiscernible] you've been talked about selling One Raffles Place. Are there any other non-core assets in your...

Yes. I think this is something from time to time we review, okay? That is also our strength, right? A lot of other banks, they don't even have non-core to sell, okay? That is our strength. That is our operating model. For the last 10 years, we have been selling properties. Some branches we buy, we sell. That is part of our model. It's no different than any investment banking. They buy stock, they sell at a high price. That is our business model. The visible one, of course, is OUB. That was during the takeover, right? We happens to inherit [indiscernible]. At no point -- you put yourself, you are in this building, my next building is also owned by us, Singapore. And you know two months ago, we were in Vietnam, we want to build our Vietnam center.

Did you buy that? Is that...

Yes, yes. So I'd rather have the money and diversify, right? And Vietnam is also a good bet, 100 million population. It will grow. This is where opportunity is, right? Otherwise, in Singapore, I have no confidence in Singapore, but the concentration.

If I may supplement, I think the buying and selling of properties is very much linked to the operations and the footprint that we need, and that happens quite regularly. Just like we've repositioned some of the assets in Orchard Road. We bought assets in Vietnam. But for the asset management transaction, I would say, look at it on the merits of the business opportunity. It's not reflective of a broader program to start divesting everything in our portfolio, yes. Our strategy, our medium-term strategy is always about constantly reviewing our business mix towards capital-light, higher ROE activities. And this is driven by our wholesale and retail banking business. Wealth is an important part of that. We do all that while maintaining prudent risk management and making sure that the balance sheet is resilient for us to navigate.

I think I echo what Yung-Chee said, right? You look at our capital [ strong. ] I don't need to divest something, just not. Otherwise, too much capital, then you are asking me the next question...

ROE is too low, right?

And then can we pay more dividend. I need a bit of -- I need to stake it. I need the saving in case of crisis, right? So this is part and parcel of prudent management, okay? Non-core is a good thing. After selling all the non-core, they have nothing, right? Then the next thing I will sell all the loan assets, right?

But sometimes do sell assets.

Yes. This is why some of the banks are doing all this. So I think we are in a good position. So we have to stake it. We have to optimize it. We have to see right opportunity. Then you have the trust management to do the right thing. As far as we are concerned, you have to be guided by ROE, the return, the prudent, the relevant. Size in banking is not everything, right? To be a good bank, you have to be relevant. You have to be relevant to the economy. You have to be relevant to the SME. It's not just size. It's just a size is easy for me. I can buy a government bond. I can buy bonds. I don't have to deal with all this. The government, I'm sure, will appreciate us, right? Being relevant to the society, being relevant to the SME, we're all helping the economy to grow.

I think Vivian had a question from BT.

So I have two questions. The first is regarding China's new tax rules on outbound investment and trust. So what would the potential impact on the bank be? Have you seen any change in client behavior following these changes? My second is on AI. Do you see AI becoming a meaningful growth driver in the bank? Is this showing up in income?

Yes, on top of all this is AI.

Maybe on the first question, first, I think it's a fairly recent development. We are still assessing the impact. We don't see any material impact at the first instance, but it's still something we're watching carefully. On AI, it has become something very ingrained in the bank. More than 30,000 of our staff have Copilot -- Microsoft Copilot at their fingertips. There have been more than 300 use cases rolled out across the bank, and they come in various forms. And it's no longer a buzzword that we are using. This has become organic in terms of how our staff operate. I think even within the branches today, if a customer was to walk into a branch and ask a question where the teller may not have access to information readily, they have beside them a laptop that's already equipped with what we call -- we call them BYOB, which is Bring-Your-Own-Bots, but -- Build-Your-Own-Bots, rather, which has been curated with all the knowledge and frequently asked questions that helps them as a team. For example, if a customer comes in and ask what's your latest rates and so on. This ensures that the consistency of information and accuracy of information is available at the fingertips of our people. It augments what they have to do.

So in terms of income, is this kind of showing up in [indiscernible]?

We are measuring some of the impact, but the measurement of this impact is through a very deliberate approach where we've hired an external auditor to help us with the structuring and modeling of a framework. We expect this framework to be ready towards the end of this year, and we hope to be able to report this regularly in our financial and annual reports going [ forward. ]

AI is something that every bank is doing. In fact, the whole country is. It's a matter of you can be faster, tomorrow, I will catch up, okay? It's a very scientific approach. But more important for me, for us, is the human factor. We are taking in a lot of young graduates or even our existing people is to train them to be smarter than the machine. Otherwise, they let the machine analyze for them. It's good to provide a second opinion. So if you have RM who has the EQ, who has the empathy, who is relationship conscious, that equipment everyone has, [indiscernible]. This is what we want them to be better, come with the machine. Banking is people business. If I don't interact with you every day, you see look at the machine and make the decision.

We'll take a question from online, sorry. Yantoultra from Reuters has a question.

See online, machine, right? Maybe you will take your question...

I mean I was just wondering with token costs increasing, are you at all considering Chinese LLMs as an option to use because data shows that they're cheaper, more cost efficient. Does UOB only work with Copilot? Does it have -- is it LLM agnostic?

No, I think, technically, the approach is more like having a harness that's open to different LLMs that can support the use cases and applications. But the infrastructure that we're building is looking at something which is neutral that allows us to adopt different LLMs from different providers.

Including Chinese.

Including Chinese. Now what we should also bear in mind is that the increased use in terms of energy consumption and cost of compute and availability of such resources is going to be increasingly punitive as everyone competes to get hands on these resources. So that's something to keep in mind in terms of the cost impact as well as the environmental impact. It's something, I think, as an organization, given our commitment towards sustainability goals, it's something we are very mindful of and making sure that we are doing this in a responsible manner.

I think we'll take one last question from Felicia.

Mr. Wee, in your presentation, you mentioned growth priorities. So we were just wondering whether you have more color in terms of your plans to invest in capabilities and expand your North Asia presence. And you also mentioned that you want to reposition your Hong Kong franchise, and you mentioned diversified and asset-light growth. Do you have more color on that? I mean when you say expanding, are you talking about like sectors or more branches or like what?

No. I think, generally, we have to improve our delivery to a certain extent because you talk about the whole ASEAN. We have to take advantage of digital. Our TMRW app is something that we are working on because today, digital do provide competitive advantage and because we standardize our technology platform that make it easier for us to develop and speed to market. So this is something that is important. Secondly, to attract the people, right? We want to attract people who are able to help us to build. I don't need the people to manage. I need people to help to build the builder, the entrepreneur, the business people because our asset -- our AUM is not as strong, not as big as the World Bank. How to increase, right? How to build? This is where -- it's not someone that manage. So that is important, right? It's not just taking in people. Taking in people, you can take a lot of people, but the quality of the people that we are looking. So it's people, it's the delivery, the product, as we said, we sold off our asset management. This is where we hope our partners can help us to improve our product capabilities, okay? And hopefully, the speed to market. No point to have a platform, but the product is not aligned to the customer. So these are the big picture that we are looking at. And all these will cut across the whole region.

If I could make one more comment, I think on AI, I just want to leave you with some stats as well because I think we tend to talk about AI and -- without numbers. We mentioned earlier on about 30,000 of our staff, including those in the region, have tools enabled for them already at their fingertips. The number of Copilot prompts we see across the system totals more than 400,000 prompts per month. That gives you a sense of the level of engagement that staff is using the tools. I gave you a specific example of how in our branches, people are using it to supplement responses to customers when they need to, that usage -- utilization is about 50% to 60% on average [ per month. ] While they are mostly able to handle the questions in cases when they need to supplement the figures that they are not sure of, the utilization we are seeing about 50% to 60%.

All right. Thank you. That's all the time we had today. Thank you, everyone, and do reach out if you have any further questions.

Good morning, everyone. Welcome to the first results media briefing of this financial year. Today, we have with us our Deputy Chairman and Group CEO, Mr. Wee Ee Cheong; and our Group CFO, Mr. Leong Yung-Chee.

As usual, Mr. Wee will begin by giving a broad overview of how our franchise has performed and the operating landscape that we are all in. Mr. Leong will then go into more details on the financials and business performance from this quarter. After both presentations, we'll be taking questions from the media. I would now like to invite our CEO to get us started. Mr. Wee, please.

Good morning. Thank you for joining us today. Happy to see all the usual faces. As all of you know, I don't have to say, we are operating in a period of heightened global uncertainty. Energy prices are volatile. supply chains remain under pressure and inflation risk. These are real challenges, and we are watching development closely. In time like this, customer looks at possibility. At UOB, we continue to work alongside our customers as they manage higher costs and volatility and as they seize opportunities across the region.

That is our priority to be right by our customers. So we enter this period of uncertainty from a position of strength. Our balance sheet remains strong. Our capital and liquidity position are robust, and our reserve buffers give us the capacity to support customers as they navigate an uncertain environment. As you know, our CET1 ratio first quarter is 15.3%. NPA coverage, 100% GP performance versus performing loans at 1%. And this is consistent with how we have operated over 9 years, how we will continue in uncertain times.

Now moving to our results. UOB delivered a resilient performance in the first quarter. Net profit was $1.4 billion, moderating 4% year-on-year and up 2% quarter-on-quarter, driven by our core franchise. Compared with the fourth quarter, net interest margin held up at 1.82%. Wealth and loan-related fees normalized from fourth quarter seasonal level. Trading and investment income rebounded. Expenses were well controlled. Asset quality was resilient with NPL ratio stable at 1.5% and total credit costs within expectations.

Our balance sheet remains strong with high CET1 ratio of 15.3% and robust liquidity ratio. This outcome reflects the quality of our earnings, underpinned by our diversified business model and our regional franchise. Now let me go through the business aspect of the balance. In retail banking, we saw steady growth in CASA, up 10% year-on-year on Wealth, up 6% year-on-year and card billings up 7%.

In wealth, we are making progress, supported by growth in AUM and higher conversion of customer assets into investment. In Wholesale Banking, momentum was positive with healthy loan growth. We continue to expand our RWA-like revenue stream through regional connectivity flow. with double-digit growth in CASA and trade loans. Our trade loans first quarter of this year up 19% year-on-year. CASA up 10% year-on-year. Global Markets delivered record high income in a more volatile environment. We have never been more confident.

Our foundations are in place across ASEAN, and we are now focused on harnessing its potential. As a long-term operator, what drives us is achieving steady, sustainable returns over the long haul. We are executing according to our plans and not chasing quick short-term results, especially given the volatile market we are in. Now let me further elaborate Today, we serve 8.5 million customers across our ASEAN footprint, and we continue to grow organically. This scale give us a stronger base to deepen relationships, build ecosystem partnerships and deliver tangible value to customers.

Over the past 3 years, our focus has been on integrating the Citi portfolio and bringing everything into a single unified platform. That work is largely completed. It positions us as one of the most connected banking franchises in ASEAN with strong capabilities across retail, SME and wholesale banking.

We are moving into the next phase now, unlocking the value of our enlarged customer base to reshape the group towards a more diversified fee-driven mix anchored on connectivity, trade and cash, lifestyle solutions like credit cards and wealth. In retail, we see significant opportunities, including in wealth, underpinned by a large and increasingly affluent customer base that is underpenetrated.

This gives us a long runway for sustainable organic growth. Our immediate focus is to grow AUM and improve investor AUM penetration. Execution over the next few quarters will be focused on this key initiative.

One Bank approach, tapping our strength in retail, SME and wholesale, strengthening advisory with more personalized solutions, continuing to invest in talent, including in private banking and advancing digital and cross-border wealth capabilities, particularly within ASEAN and with North Asia. Over time, our ambition is clear to double wealth income by 2030 through disciplined organic execution in platform, people and solution.

Beyond retail, our strong regional franchise allow us to play a meaningful role in supporting foreign direct investment and cross-border growth. One example is Johor-Singapore Special Economic Zone. Through our green lane arrangement with Invest Johor, we have helped facilitate more than SGD 5.8 billion in FDI into the loan. This reflects our role as a regional connector across ASEAN and our commitment to supporting long-term growth. Our integrated platforms for payment, trade and cash and deep sector expertise are powering trade and transaction banking growth.

We are deepening coverage in high-growth sectors such as technology, sustainable energy, EVs, consumer goods and infrastructure. We are also penetrating our customer supply chain ecosystems to support the regional growth. Across retail and wholesale, we are reshaping the group towards capital-light higher ROE growth, supported by a more disciplined approach to balance sheet management. We are confident of achieving sustainable growth with stability in the coming years.

Let me close with a few thoughts on the road. Macro environment is uncertain, and we stay vigilant. UOB has weathered many cycles before. We continue to work closely with our customers, partners and stakeholders to capture opportunities for long-term growth and manage risk. We are also investing in our people, building AI-ready skills and embedding AI across the bank to work smarter and more efficiently.

As you know, we recently moved our tech and innovation teams to the Punggol Digital District, as you can see from [indiscernible] time today in the heart of Singapore innovation ecosystem.

Now to guide you for this year, we expect low single-digit loan growth, full year NIM of 1.75% to 1.8%, high single-digit fee growth, low single-digit operating cost growth, total credit cost of 25 to 30 basis points. So good times and difficult ones, we will continue to be the steady end our customers can count on. Thank you. And now I will invite Yung-Chee to share more in terms of financial detail.

Thank you, Wee Ee Cheong, and good morning, everyone. Before I go through the financial results, let me start with a few key messages that you should take away.

Our first quarter performance reflected the resilience of our diversified franchise. It has been a steady performance that we delivered. I'll go through the financial details of each of those items in a short while. But I wanted to highlight that in terms of the execution of our strategic priorities, all of our businesses, whether it's retail, wholesale, end markets have continued to show and evidence steady growth.

In retail, both the CASA and wealth products as well as credit cards demonstrated steady growth, while in wholesale, we saw double-digit growth momentum in trade as well as CASA likewise for Global Markets.

The third message to leave with you is a stable risk profile with a limited Middle East exposure that has been stress tested. Our capital and provision buffers continue to remain resilient and will help us navigate the uncertainties in the market.

And lastly, in terms of momentum in the business, we continue to see healthy client engagement and pipeline activity even with the market volatilities that we are seeing.

In terms of the financial highlights, in the first quarter of 2026, we delivered an operating profit of $1.9 billion and a net profit of $1.4 billion. This was 2% up quarter-on-quarter and 4% down year-on-year. Net interest margin moderated 2 basis points to 1.82%. We have a page discussing this in more detail later, which I'll go through. The move in terms of the net interest margin is consistent with the prevailing rate environment, but it was also offset by proactive management of our funding cost.

In terms of net fee income, we maintained positive trajectory, rising 2% from last quarter. This was driven primarily by strong loan-related fees as well as steady wealth management activity.

Trading and investment income increased 88% quarter-on-quarter to $405 million. This follows a seasonal year-end lull in the fourth quarter of last year. This is alongside more favorable trading and liquidity management performance.

Asset quality remained stable at 1.5% NPL ratio at 1.5%, while our NPA coverage remained at a healthy 100% and including the collateral taken into account, that's 272%. Again, I have a page that goes into that in more detail. Our capital and funding positions remain strong. CET ratio at 15.3% with NSFR at 115%.

Next, I'll just draw your attention to 2 lines here in terms of operating profit. If you look at the middle of the page there, quarter-on-quarter, we grew 8% and at the net profit line, quarter-on-quarter, we grew 2%.

Next, I'll focus on the group retail performance. In terms of the overall performance, our retail franchise remained consistent and disciplined, focusing on priorities and delivery across the businesses.

Although the challenging rate environment led to a moderation of profit at the profit before tax level to $537 million, it was a continued benefit from resilient contributions from our wealth management and cards business.

In terms of wealth, invested AUM and wealth income rose 9% and 6%, respectively. Card billings also grew a healthy 7% year-on-year. Likewise, for our retail CASA balances, it grew 10% year-on-year with the mix -- CASA mix to deposits improving to 58%. This reinforces the strength and stability of our group's deposit franchise.

Next, I'll cover wholesale banking. Likewise, consistent execution of our strategies have led to a consistent delivery of results. If you look at our transaction banking line, it continues to remain about half of the wholesale banking income, supported primarily by double-digit growth in CASA balances as well as trade loans.

I think you saw in CEO's presentation earlier, CASA balances grew 10%, while our trade loans grew 19%. From a customer treasury income for wholesale customers, it grew 11%. Investment Banking continued to show good momentum. Year-on-year, you see some moderation because first quarter of last year, we had mentioned that there was an extraordinary slew of items, one-off transactions during that quarter. Overall, loans grew 4% year-on-year, continued to be led by solid demand in the technology sector, in particular.

Next, in Global Markets. Client demand for hedging and investment solutions rebounded following the year-end seasonal slowdown, lifting our customer treasury income to $294 million.

Also from the noncustomer treasury income, a favorable cost of funds environment helped us to capture liquidity deployment and trading opportunities amid the heightened market volatility.

Next, I'll talk about net interest income and margins. Net interest income did moderate due to the shorter quarter by 1%. If this was adjusted, the net interest income would have increased by 1% Overall, our net interest income remained resilient at $2.3 billion, underpinned by disciplined funding cost management, balance sheet optimization as well as modest asset growth.

I'll discuss the NIM in more detail on this page. So if you recall, our fourth quarter NIM was at 1.84% and we walk through from left to right, despite the lower SORA environment in the quarter, our Sing dollar book delivered a 3 basis points uplift. The HIBOR, however, reduced NIM by 2 basis points, reflecting some of the rate dynamics in the Hong Kong dollar book. We did undertake proactive funding cost management, both across retail deposits in the form of our one account. We also did business for our wholesale banking deposits, and that together offset the asset pricing.

Just one more point on the NIMs. The exit NIM for the quarter was 1.83%. So we ended the quarter at 1.83%. Gross fee income grew by 1% to $857 million. This continues to be underpinned by momentum in wealth as well as loan-related fees. Card fees dipped in March, but we expect that to normalize in terms of spending for the rest of the year.

Next, expenses. Stable expenses strong management discipline in terms of managing our IT, non-IT and other expenses. Our overall expenses stood at $1.5 billion, but this is balanced with continued investment in three areas: strategic initiatives that we are deploying across the bank, technology to support franchise expansion and meet regulatory environment requirements and third, our people.

The next couple of pages, I'll discuss our asset quality in more detail. Nonperforming ratio stood at 1.5%, unchanged. If you look at our NPA formation, it's $341 million.

The following page discusses some of the credit costs. From 19 basis points total credit cost last quarter, this quarter's total credit cost is at 26 basis points, in line with our guidance, 25 to 30 basis points. The general allowance write-back in the quarter reflected certain migration accounts to NPL with a lower write-back versus last quarter, underscoring our continued conservative provisioning stance.

Next, in terms of our coverage ratios, we maintained our GP coverage ratio at 1%, NPA coverage at 100% and the unsecured NPA coverage improved to 272%, as I mentioned earlier on. Gross loans grew 4% year-on-year. This was driven by broad-based expansion across our businesses in wholesale, term funding, trade lending and also retail mortgages. The quality focused lending is amidst very strong market competition even amidst prevailing market conditions.

Let's talk about funding mix. Our liquidity and funding positions remain solid with LCR at 144% and NSFR at 115%, both comfortably above the minimum regulatory requirements. CASA deposit balances continue to remain strong, underpinning our stable funding profile.

In terms of capital, our CET ratio for the quarter, CET ratio of 15.3%, fully loaded 15.2%. With this strong capital base and resilient liquidity position, we are well positioned to support customers through this period of uncertainty.

Our return of excess capital to shareholders remain on track. Our $2 billion share buyback program as at March 2026, we have done $706 million, equivalent to roughly 35% of plan. It is on track.

In summary, let me just repeat some of the key messages for you. Our performance reflects the resilience of our franchise. We continue to execute consistently across key segments. Direct exposure to the Middle East remains limited. We do expect uncertainties to prevail, but our capital base is strong and provision buffers are adequate to help us manage through that.

Looking ahead, in terms of guidance, loan growth to be in the low single-digit range for this year, net interest margin to be within 1.75% to 1.8%. Continued execution in wealth, cards and trade will support fee income growth towards high single-digit levels, and we remain disciplined on costs, but we expect some low single-digit growth in terms of our operating costs as we continue to invest in technology and people as well as our strategic priorities.

With that, I conclude my presentation, and we will open up to questions and answers.

[Operator Instructions] We'll take the first question from Ruiwen Lim.

Congrats on the numbers. I have three questions. The first one, could you talk a little bit more? I think at the beginning, you mentioned UOB is looking to double wealth income by 2030. What kind of number we will see by then? I'm not sure which place you are looking at.

Second question, many analysts pointed out to NPA formation in Greater China, which expanded 15% on quarter. which sector is that if it's still CRE? And could you share whether it's Hong Kong or Mainland?

The third question is that whether UOB is looking to seek access to Mythos, the enterprise AI model. What are you doing about that?

I anticipated all this question, okay? But I think over the last 3 years, our focus has been on integrating the Citi consumer. Even though we took over Citibank for the last -- since 4 years ago. But the whole integration effort is very critical for me.

And everything is over now. As you listen from my speech, I think we will position us to be one of the most connected because we took over -- we have the most comprehensive REA footprint that takes a lot of time, effort to connect.

Now without all this infrastructure, it is going to be very difficult. And also, I don't want to take in the customer if I cannot deliver.

So I think all these are way ahead of what we anticipated. I think for this year, the next few quarters, we will start to see the wealth business because we are focusing on doubling our wealth. As you said, we will continue to double our wealth management RM, and the infrastructure is ready. And we're also focusing on One Bank approach because the wholesale and retail will all work together to generate and also we are strong in that foreign direct investment. These are all the foreign people coming in to operate in this region.

And as an organization, as a bank, the effort is collective effort that we have had to work on. So to answer you, yes, the next few quarters or the next 1, 2 years, we will start to see we are doubling income.

Income.

Income.

Yes. Any number that we can see -- we may see at the end of 23 ?

The number will be great. I cannot tell you the number, but I think definitely it's a big potential looking at our customer base that we have.

And this is the whole bank, not just private bank.

Not the whole bank. So the private bank will be -- again, it's a whole collective.

To supplement a few of that, China, if you're looking for a reference point, 2025 is when we communicated. So you said 2025 as reference point. That's all right, right, for doubling of wealth to 2030.

Now you had another question on the Greater China NPA formation. That is specific to real estate. But if you look from an NPL ratio, it is a heightened NPL ratio with lower NPA coverage, but unsecured coverage continues to remain high, right?

And I think you had a question on Anthropic and its announcement, I think, was on 7th of April regarding Mythos. I think this is something we are all taking very seriously. But although to date, the -- many of our vendors and key partners in the technology space are still assessing and reviewing actions to be taken.

In the meantime, from our own perspective, A lot of things are being done in terms of strengthening our surveillance, hardening our infrastructure, making sure we are working jointly with the agencies in Singapore and also in the industry peer group as well, everybody is keeping each other abreast in terms of developments on how to navigate as that evolves. It will not be the first and probably not be the last of such attacks -- not, sorry, such capabilities that could lead to attacks.

But will you have access to...

I think this is exactly what we're trying to paint. These are the current infrastructure. We want to bring in customer that they can say, You look at our tech line right by you, very important rather than I just take a short-term profit.

It's easy you look at even our deposit growth, it's quite muted. Why? Because market is uncertain. If I take the money in, where do I have to place out if the loan growth is not as good, unless I want to enlarge my balance sheet. Is it the right time to do this?

So I think P&L is one thing. Balance sheet is one thing. The world is still very uncertain, and even across uncertainty, you look at Thailand, the oil crisis, maybe Malaysia, Indonesia is good, but for us, it's a portfolio that we are looking.

Congratulations on the results. Two broad questions. First on wealth talent, you mentioned you'll be hiring. Is it mostly in the ASEAN market? Or can we expect some hiring in Singapore as well? And there's quite a bit of competition for the wealth talent among other banks. How are you going to navigate that?

Second broad question is on the house view on U.S. Fed and the rate expectations. Has that changed from 3 months ago? And what's your net interest income sensitivity today?

The wealth space is something that, yes, competition is there. Everyone is competing. But if you want to join an organization, you have to see the customer base. Because you as an individual, your connection is. You want to join an organization that can help to support you over and above your own connection.

Look at us, we have the ASEAN footprint. We also have the North Asia that we want to double down. So we have two engines that we are running plus -- and as I emphasize, it's a One Bank approach. My wholesale, I cannot share with you the statistics, but I have the statistic, the wholesale bank supporting a lot of our retailers. So what we're doing now is to make sure the infrastructure is ready, from the user-friendly standpoint also to protect the customer. That to me is important.

Then if we are ready, we are -- and in fact, we are ready. The next few quarters, you will start to see coming. I don't want to have a short term and then customers are not happy, then they leave to somebody else because strategically, I think Singapore, you're going to look at it in the medium to long term with the Middle East crisis, Singapore increasingly. And we are one of the local bank. So I don't see our wealth figure is so much different given our setup, given our ASEAN footprint. Bear that in mind.

On the interest rate question, maybe I can take that. Our house view on U.S. rates is that we expect there's still one more rate cut this year.

But the translation between U.S. rates to SORA, I think, has significantly decoupled compared to history. We are obviously a lot more sensitive to SORA as opposed to U.S. rates.

As far as SORA is concerned, we expect limited more downside on SORA. I think it has already moved significantly over the course of last year. If you look at NIMs from our last 2 quarters, in fact, it's been bouncing around and quite stabilized -- looking quite stabilized. So even if there is downside, it is fairly limited. So I point you again to our NIM guidance for the full year. We think it 1.75% to 1.8% should be comfortably within that range. Ruiwen?

Hi, Ruiwen from Reuters. Congrats on your results. I have a follow-up on the wealth angle. So in terms of flows, where are you seeing kind of the greatest opportunities from flows?

I would say ASEAN is one of them. South Asia, even though, we are not so strong in South Asia. But increasingly, we are also paying a lot of attention from Greater China. And the Middle East is not so obvious at this point in time. Mid to long term, it may swing some of the activity back to ASEAN, but it's yet to be seen.

But I think our immediate is the customer base that we have, right? Not so much, yes, new customer will come, okay? We will engage relationship manager, they will target new customer. But my existing customer base of 800 million. This is where the low-hanging fruit is. And this is why we are very, very confident the next few quarters, I cannot tell you the number, right? And we will definitely increase the AUM.

We also improve the investor because the investor AUM is the customer base that we have. If we are conservative. We want to protect our customer, you don't just ask them to take money because today, the environment is very uncertain. I rather they be safe. We can earn less fee, but I want them to be safe. But opportunity, this is where the potential is.

And another question on the war itself. I know you have limited exposure in the Middle East, but then the higher oil prices are hitting pretty hard the ASEAN economy. So where do you see kind of the impact from that, especially given your focus on that.

Yes. I think the first order impact, I think for the Middle East, I think our exposure is quite insignificant. Second order impact is that may affect the SME. But so far, we are going through stress analysis.

It's too early to tell at this point in time, okay, because everything is so fluid. The worst is if it's prolonged, then you may get a step kind of inflation and no growth.

This is where I keep emphasize balance sheet is important. You will be capital is strong. We want to make sure we're ready to serve the customer.

P&L, yes, it is important. All of you looking at P&L. I was. But at the end of the day, we have to have a balance. I have to be strong first then P&L. If I'm weak, I just continue to drive P&L. My capital is not [ soft ] then I'm chasing after too many.

At this point, market is uncertain. We want to make sure our staff is well trained to combat the AI. You can see the government is also paying a lot of attention of the people and all these things. We need to be responsible. We need to be socially responsible.

If I could add to that, your question around our wealth, where it comes from, more than roughly 58% of our wealth comes from overseas customers.

And your question around Middle East, I think our CEO mentioned, our first order, meaning companies with direct geographical exposure in the Middle East that's less than 2% of our loan exposures. The focus now is on second order, third order.

The second order is more looking at energy vulnerable industries. So sectors such as transportation, basic materials, utilities, agriculture, et cetera, we're looking and assessing how much of these industries and clients in these industries may be affected as a result.

Third order is a little bit harder because it's a lot of assumptions around how prolonged this will be. There is potential impact on overall Asia's economic growth environment, inflationary pressures and so on. So that actually requires much further stress scenarios.

Mr. Leong, I took your point on strong balance sheet and you are making sure that your staff is well taken care of. I mean I have seen some filing this morning about disposal of minor assets and there's an ongoing rationalization. Can I take it that you meant there won't be any job cuts at UOB?

Maybe I can clarify that. There was a filing today because we set up a company. It's actually part of our BAU activity because under our venture management business. we do occasionally set up a GP for managing funds for investors, right? So that was actually something that's being set up specifically for a digital fund that we are managing for a family office, the client.

With AI, as a responsible employer, we want to spend money to trade, make sure that they are able to navigate job.

Ultimately, I mean, it's up to our employees, give them the confidence, give them the secure environment. We also provide them the job on the job exposure. That is important. No point to train PPR. At the end of the day, you train them, you have to put them on the job to experiment. This is what we are trying to do.

AI for us is not artificial intelligence. It's actually augmented intelligence. The priority is to roll out tools that augment our SaaS capabilities, how they improve productivity, efficiency, customer service, risk management, et cetera. So a lot of the things we're doing is actually supporting our people.

As a number of statistic to you, about 30,000 of our staff today have copilot at their fingertips. So we are actively promoting the use of these tools and training and reskilling our staff.

Our process we have streamlined a lot of processes that cut across Singapore may be better, but cut across the whole region. So I also want our staff to be happy work-life balance, giving them the tool to make sure that they work hard for productivity. That is our job.

On Disney Cruise...

So you see the emphasis at Punggol Digital District, us moving 2,000 staff. They're all very focused in terms of our tech digital. We've also started an innovation academy dedicated to training our staff. You have seen that we've launched an innovation hub at NTU in the news articles in prior months. I think it's all part of the continuum of activities that we undertake. It's a journey, right? It's not just a onetime exercise. This is here to stay.

Three questions. One is sort of the -- what do you see in the opportunity around RWA wholesale banking, mainly wealth is CASA and also transaction banking stuff management.

It was liability management...

But you're doing that a lot of it anyway, but you intend to accelerate more of that.

Well, you can see our deposit growth is not that high. But we are...

You want to have more deposits. Okay. So the question on deposit CASA, so your peer and have to bring them they brought a lot of deposits and they are putting them in HQLA while loan growth has sort of moderated with them. So what's your view on that? Are you doing the same thing?

I think there are two parts to the question, and I shouldn't be commenting on.

Okay. So there are two parts to it. One is just bear in mind that our deposit growth overall is in line with system. But if you look at the components of what we are doing at CASA level, and maybe this is something you should ask others. Our CASA ratio at retail is 58%. CASA ratio at wholesale is 60%, those are fairly industry standard.

And the reason why the focus on CASA is lower cost of deposits, better stickiness in terms of customer franchise, better opportunities to cross-sell. So those are things that we have articulated as a strategic intent, and we're executing well to that intent.

As for HQLA, I think that relates more to, look, if you've got excess deposits and you're not deploying it to higher return users loans and so on, then do you deploy this to HQLA to maintain your NII versus managing NIM, right? Our perspective on that is you need to strike a fine balance between NIM as well as NII.

Of course, you want to make sure you continue to bring in NII, deploy excess deposits right, into HQLA as long as they are yield positive, right? But at the same time, you cannot lose sight of your NIM as well because that's the overall margin in terms of your books. And it's how your cost of funds and your yields, your funding mix, it all comes together.

So the other thing also that we had from the previous briefing was that they have derisked their SME and consumer franchise a bit in cases like what I said, India, which you don't have in Indonesia.

So how -- I mean, you don't separate out the Indonesian market on your first quarter, but could you give us an idea of how that has...

Portfolio is still very small for us. I think maybe...

3% of our loan exposure...

I would say, well, it's easy to talk about. End of the day, is the origination, you look at the customers, you look at employers, you look at the employment track record and things like that. We are still growing. You look at the consumer, you look at the mortgages.

This is Indonesia.

And in fact, this is a time, especially the SME, you have to stand by that. This is not a...

Okay. So who are your customers in Indonesia in terms of the consumer? Are they -- and the SMEs...

We do have more big corporates, I would say because we have limited distribution.

Retail is mid high affluent customer base. Likewise, for the wholesale banking, when you're out in countries outside of Singapore, large customers, I think it's guided by our strategic solutions group. We've identified seven specific industries, and we've guided by those.

Singapore, because it's home market, we are more broad-based. We provide services across the whole spectrum of customers. But outside of Singapore, it's more targeted because there's information asymmetry when you're operating in somebody else's backyard.

Just one final question on 231 million ECL, what's your plan? And have you sort of changed your NAV model at all? Or is it because of the Middle East the from the tariff to the Middle East, you would imagine there. And then the $341 million of NPA formation.

Sorry, what was the question on the NPA formation?

What sector or what geography is that?

I think if you step back and look at our BAU run rate, usually NPA formation should be normalized around $300 million to $400 million, so I think it's in that range. I mean you can't run the business with 0 NPA.

I think with respect to the MEV, I think we are starting to take some of the uncertainties around Middle East to account. But also bear in mind that the first 2 months of this year was pre-Middle East, right? Effectively, the pensions flat up February 28. And that continues to be the case, and we will continue to monitor and adjust accordingly. So you should probably expect MEV refresh to be adjusted in the following quarters.

The tariff thing has gone at the tariff concerns are they over? Or what -- I mean, how do you view this and how do you build it into your second and your first?

It has not gone away, but it has morphed into. That's not for us to comment, but I think the tariff numbers, I think, still factors into consideration when we talk to clients and clients need to take that into account when they make their CapEx and investment decisions. That has not gone away, but it's been, I guess, superseded by logistical issues, fuel costs, lack of access to materials and potential impact on demand. There are other implications now for them to take into account.

So in terms of your stress test, does it change? I mean, it has to change a lot within the last year, must have changed a few times.

At the end of the day, I think there is no right and wrong. At the end of the day, very difficult for us to predict what is going to happen. It's very unpredictable. We have to make sure that we take care of ourselves first. That is the first priority. If we can't even take care of ourselves, are we going to take care of our customer.

That is the [indiscernible]. We have to be strong. We take care of customer responsibly. That is important. Not every customer we will take care. Make sure that customer with a good track record has been with us for a long time. We will continue to support because they will have to go through. This is not something that is the business failure. This is external...

So just to be clear also with what Yung Chee mentioned about NPA, you said that within range in each quarter, 300, 400. That's also applicable to the Greater China formation, right? And you said that it's all well covered.

The whole book. Our GP coverage, I'll point back again in Q3 when we raised the provision coverage, it brought our GP coverage to 1%. And for the last 3 quarters, Q3, Q4 and now 1Q, you've seen that our GP coverage remains at 1%. In fact, we were getting questions this morning from other people, why don't you raise it more, Yes, given the Middle East.

And I think that blends with what Wee Ee Cheong was mentioning. The situation started end of February. We are monitoring. There's still a lot of uncertainties and the impact is still yet to be fully transmitted to our economies. So I don't think we are saying that there will not be any more. I'm saying that we need to be watchful and adjust accordingly if things deteriorate.

But specifically, I'm being painful here. I'm sorry about that. But Greater China, is there a concern because the spike of 15% on quarter, is it from real estate? And is it Hong Kong or Greater China? And do you see that coming down soon?

It's Greater China. It is real estate. I think that was raised earlier on. I also highlighted that even though our NPL ratio and NPA coverage had moderated slightly because of that, but our unsecured coverage for Greater China portfolio continues to be comfortable.

We have a question from online Sheila from The Street Times.

Okay. Any other questions from the floor?

I have two questions, again, on wealth and the other on manpower. So the first on wealth, wealth has become increasingly important for all the banks including UOB. UOB thinking of pursuing further M&A to grow its market share in wealth in the region? And are there opportunities in this area that you are looking at?

The second on manpower, you've talked about AI. UOB's workforce shrank in 2025 compared to a year ago. What is your outlook on headcount this year, considering what AI can do as you pointed out earlier as well?

Well, everybody is focusing on well, right? If there's opportunity, I believe the price will be very high. End of the day, it's got to make sense. It got to make sense. What makes sense to me at this point in time. I'm not ruling out inorganic growth. Organically, we can grow. This is our strong point.

Other people don't have the customer base. I have the customer base. That is a key differentiator. So the next quarter or so, we will start to see that happen. So the second question is?

Around headcount.

Headcount, I think we are managing it. We will continue to grow certain segment that we need to grow. In terms of wealth, we will continue to increase our headcount on wealth. Certain segment, we can deemphasize, but certain segment, we will overemphasize.

So on balance, I would say it's quite stable, quite despite the AI, despite that we see from the newspaper, you are the writer, you say all people return. I think that is the last result. It's a very negative way, right? You want to train people at the same time, you tell them after you train, you get returns.

It's partially stable. It's the natural progression of the headcount and workforce across the year. But we continue to invest in areas where there are growth opportunities and hire people.

And which areas that you see as less opportunities -- and in wealth is something that you will emphasize and add, but which areas that Mr. We will deemphasize?

Deemphasize?

Which area is less relevant to...

So certain jobs like our call center, we can make use of AI to automate certain processes. I can use robotic. I mean you can see all this. So we can depend less on human, so we make the service more predictable.

So let me emphasize again, right? It's about augmenting our staff. replacing. So all the AI initiatives that we are pursuing, again, it's about improving productivity, improving efficiency, improving our risk management, right? These sort of things helps our staff. So we have the improved productivity, if you have natural attrition, you don't have to replace at the same replacement rate. So we are managing this over time, not replacing staff with AI. I think the notion that accountability and trust can be replaced by an artificial bot. I think that's not the philosophy that we ascribe to.

I think I'll just read out the question from Sheila from The Street Times. Could you share UOB's acquisition strategy in the region, particularly in light of reports that we had explored acquiring HSBC sanitation assets. which was eventually bought by OCBC. How does this shape UOB's inorganic growth plans going forward?

I think CEO mentioned that briefly. We are always on the lookout for opportunities, whether previously or going forward. Now whether the opportunities make sense, it has to check quite a few boxes, whether it meets our strategy, does it meet certain capabilities that we want? Are they filling certain business gaps that we don't have or geographical gaps? And also ultimately, is the price to pay correct?

It's not just a dollar price. And don't forget there's also integration cost. And going forward, you think the cost synergies and revenue synergies are going to make sense for you. So the calculation isn't just about the transaction price, but the cost of the entire project itself has to make sense.

If you look at our acquisition of Citi bank, the integration is not as straightforward as set up the benefit is we have the 8 million customer base. So this is really under.

So we are now trying to monetize, okay? But the initial part of it is actually quite stressing because we have to use Citibank technology platform while we are building our platform. It cost us to make use of Citibank platform.

But it's all over. That is a strategic move that we think is important for us to scale, especially the consumer business. Don't underestimate the 8.5 million. And now, in fact, our customer base is bigger than Singapore and it's growing and see that, okay?

And people are our business partner, they want to deal with us because of our customer base. You look at Disney, you look at Taylor Swift, why are they coming to us? Because of our regional footprint, people from Thailand, people from Vietnam, that is the power of don't underestimate that.

So for me to generate wealth in the digital way, in a cost-effective way is easier than including. This is what we are doing infrastructure, our TMRW. I can share with you my CIO fund. The growth is 300%, but these are a small number. It's not I'm dealing with the sovereign wealth funds suddenly put in $5 billion, $10 billion, no. But this is sustainable. People can trust us every month, $100, $200, but accumulate this is where you want.

So you mean that there's been a 300% growth in money coming in from your TMRW app.

From our TMRW app, yes, we have what they call a CIO funds. 2 billion [indiscernible].

2 billion.

[indiscernible] will take that. You can take it offline. I can give you a straight number. But these are all...

The curated fund wealth management ideas for our clientele that they can access directly from TMRW. I think the statistics, we will take it offline and provide it to you.

I think that's all the time we have...

Following your integration because your costs were a bit high these last 2 years, that was because of the integration over and above the...

Cost high because my revenue has gone up, right? Because when my revenue go up by able to get the customer base is already there.

The CIR cost-to-income ratio.

There are a few things. The cost relating to Citi, both the acquisition as well as the integration cost...

Platform tech are all done?

As for cost looking forward, I think it's a balance that you need to strike because we can always manage CIR by turning off the taps in terms of investments forward. And I think we are keeping a very balanced approach in terms of continued investment in people, in technology stack and forward-looking investments as well what we need to build.

So I think cost-to-income ratio is something we will watch, obviously, very carefully, and it swings with time as well as income numbers as well. So I think we've guided our cost growth this year is likely to be in the low single digits. We need to continue to make investments in our people and platforms.

All right. Thank you. That's all the time we have today. Thank you very much. If you have any further questions, do reach out to the team, and we'll see you again.

Good morning, everyone. Welcome to our full year 2025 results media briefing. Today, we have with us our Deputy Chairman and Group CEO, Mr. Wee Cheong; and our Group CFO, Mr. Leong Yung-Chee.

As usual, Mr. Wee will begin first by giving a broad overview of how our franchise has performed, the operating landscape we are operating in, and then Mr. Leong will then go into more details on the financials and business performances. After both presentations, we'll be taking questions from the media.

So I would now like to invite our CEO to get us going. Mr. Wee, please.

Good morning. Happy year of the horse. Thank you for joining us today. Well, as we enter 2026, the global environment continued to remain very fluid, geopolitical tensions, ongoing shift in supply chains and evolving trade and tariff. However, operating conditions in our core markets have remained broadly supportive. Across ASEAN, momentum towards deeper regional integration is building up. We look at trade, capital flows and cross-border investments continue to expand, reinforcing the region role as a key growth engine. This create opportunities for well-positioned regional bank like UOB to support clients across ASEAN.

Now against this backdrop, we delivered a resilient full year operating profit of $7.7 billion in 2025, 4% down. Our diversified business model remains a core strength. Net interest margins moderated as rates declined but strong fee momentum across wholesale and retail businesses helped to offset the impact, lifting our full year fee income to a record high.

On a quarter-on-quarter basis, trends were positive. Net interest income increased 4%, margin rose to 1.84% as we lowered funding costs. Net fee income was up 2%, while expenses remained flat. On the asset quality front, following our portfolio review in the third quarter, we proactively strengthened our provision buffer. Credit trends improved in the fourth quarter and are moving in the right direction with NPL ratio low at 1.5% and total credit cost at 19 basis points.

Our balance sheet remained strong with higher CET1 ratio at 15.1% and robust liquidity ratio. The Board has recommended a final dividend of $0.71 per ordinary share, bringing our full year dividend to $1.56 per share. This represents a payout ratio of around 50%. In determining the final dividend, we excluded the preemptive provisions of $615 million recognized in the third quarter last year. In addition to our regular dividends, we also returned excess capital to shareholders through a special dividend of $0.50 per share, paid over 2 tranches during 2025.

We remain committed to our capital return plan announced last year ongoing till 2027. Our diversified income stream helped ensure earnings stay resilient even in uncertain conditions. And we see promising momentum in our ASEAN strategy. We see increasing contribution from our ASEAN-4 markets across both wholesale and retail business. In fact, just for your information, if you add the ASEAN-4 total income is up 5% year-on-year versus the group total income down 3%. So the ASEAN is actually positively trending up.

Now let me talk a little bit about the wholesale banking. It also delivered a solid growth in trade, transaction-related activities and deposit growth. For trade, I think 2024, we generated $36 billion, 2025, $45 billion, actually a growth of 23% year-on-year. Global markets also benefited from active client hedging amid market volatility. Customer-related treasury income hit a record high. Retail banking delivered healthy growth across card billings, up 6% year-on-year. CASA up 12% and high net worth AUM up 6% as we deepen customer relationship across the region.

Our wealth business, our wealth franchise continued to scale with net new money inflow lifting AUM to $201 billion. And the invested AUM mix continued its steady increase. Our digital wealth momentum, this is dealing with the mass affluent market actually remained very, very strong with sales more than double year-on-year. That is actually applied through our TMRW apps. Just to tell you the volume, I think for 2024, we generated $1.57 billion. For last year, we generated $3.84 billion, up by 144%. That is through our digital platform.

Now looking ahead, we expect the region growth to continue to be powered by structural trends, including digitalization, infrastructure investments and deepening regional innovation. We are confident that our enlarged regional scale, stronger platform and capabilities, we are well placed to grow in tandem with the region. At UOB, our strategy is clear and consistent. We are deepening our strength in connectivity, enhancing our expertise and digital capabilities to support the flow of trade, capital and investment across ASEAN and Greater China and with the rest of the world. We are also unlocking synergies such as through our One Bank program across wholesale and retail customer base, strengthening our digital wealth platform to enhance our services.

With our strong balance sheet, network and franchise, we are well placed to support our customers through cycles and capture emerging opportunities. Our guidance for this year is low single-digit loan growth. Full year NIM of 1.75% to 1.8%, high single-digit fee growth, low single-digit operating cost growth, total credit cost of 25 to 30 basis points.

Thank you for continuing to support us. And now I invite my CFO, Yung-Chee, to share more.

Thank you, Ee Cheong. Good morning, everybody. Let me take you through the financials update. So for the full year 2025, our net profit came in at $4.7 billion on the back of operating profit of $7.7 billion. The fee income for us was at a record high. What you see there is the net fee income number. On a gross basis, that number actually came up to $3.5 billion. On net interest margin, I think this is something that comes up quite often in terms of media and analyst questions. Our full year NIM was 1.89% on the back of continued pressure on benchmark rates. But actually, what's interesting is if you look at on the right side, the fourth quarter NIM for us was at 1.84%. If you recall, our third quarter NIM was at 1.82%. I can discuss more on the NIM in a subsequent slide.

On trading and investment income, we have all-time highs for customer treasury income but the overall trading and investment income for the full year came in slightly below $1.6 billion compared to the year before because last year was exceptionally well.

Next please. If I go through some of the numbers on this page, maybe specifically for fourth quarter, if you look at the operating profit line, we generated $1.8 billion of operating profit, slightly below quarter-on-quarter. But if you look at the net profit line, it's $1.4 billion. Our expenses remained stable at roughly $1.5 billion. And total credit cost for the quarter was 19 basis points.

Next, I'll go through some of the segmental breakdown in terms of the financials. If you look at our group retail operations, profit before tax was at $2 billion. This income was largely supported by double-digit growth in wealth amidst some of the pressures from lower rates as well as market competition. Our credit cards business continued to achieve new highs. On the bottom right, you see that the gross card billings grew by 6%. On the left side, the corresponding cards income, this is net, it's at 1%. But on a gross basis, that figure is actually 8%. So both wealth as well as cards business is demonstrating strong growth. The credit card business for last quarter or for the year effectively was because of our loyalty rewards alignment in Thailand. But that was a onetime cost. So going forward, we expect that to more closely mirror our gross rate.

Asset quality for the retail business remains sound. Maybe I'll move to wholesale banking next. On the Wholesale Bank, profit before tax declined amidst lower rates and keen competition. Our transaction bank continues to power about 50% of wholesale bank's income, driven by largely very encouraging trajectory in our CASA business and our trade business. As CEO mentioned earlier on, our trade loans actually grew by 20-over percent in the year. If you look at the bottom of the total gross loans, I think you will see the trade numbers growing from 35% to 45%. That's more than a 25% growth year-on-year.

Elsewhere for the wholesale banking business, if you look at our deposit growth as well, at the bottom, you see the deposit growth at 7% but our CASA portion of the deposits grew double digits, leading to overall CASA ratio for the wholesale banking business now at [ 6. ] So retail's CASA is 57%, wholesale at 60%. Overall, the bank's CASA ratio is now at about 58.5%.

Next on global markets. Year-on-year, our global markets business grew 23%. This is again an all-time high for us for our global markets business. It's largely led by customer treasury activities from hedging as well as wealth demand. The noncustomer portion of the business was positioned to capitalize on liquidity and trading conditions. So there is some normalization in the fourth quarter but year-on-year, you saw a 23% growth in this line of business.

Next, I'll go through some of the specific financial categories. Let's talk about net interest income first. Overall, net interest income inched down by about 3% on the back of largely interest rate movements but it's also negated by the fact that our average interest-bearing assets grew. So at the bottom, you will see $477 billion to $495 million. That's demonstration of the loan assets that we grew over the year but it was not enough to mitigate the pressures from benchmark rates.

Net interest margin, however, for the year, even though it's at 1.89%, if you look at the quarter-by-quarter trends, third quarter net interest margin, we reported at 1.82%. Fourth quarter, we reported at 1.84%. The red bar is actually showing the pressures and effects of the asset repricing, both because of rates but also keen competition. The green bar is the actions that we've actively taken to mitigate some of the funding costs. And we've also done some changes in mix in order to balance the requirements of having the right NII versus NIM outcomes.

On this page, what's interesting to note as well, a natural question would be, although that's a reported fourth quarter, where is exit NIM today? As of the end of January, our exit NIM is at 1.82%. So you will see that NIMs are sort of bouncing around that level already, giving us some confidence in terms of where NIM and SORA rates are looking like for 2026.

Next page. We mentioned earlier on that our fee income is at a record high. This page shows that year-on-year, our fee income grew 10%, and it's consistently across all categories, whether it's in terms of our loan, our wealth, credit cards as well as others.

Next. Expenses. We have continued to maintain very disciplined on our cost while prioritizing some of the technology and regulatory investments. Year-on-year, our overall cost actually fell 2%. But when you look at it from a cost-to-income ratio, it picks up because income actually fell.

Next. On performing assets. Our NPL ratio remained broadly stable. It dipped slightly to 1.5%. If you look at the bottom of the chart, you will see that our NPA formation has come off from the $800 million in third quarter. It is now just shy of $600 million. The trend is for NPAs to continue downwards for us. We did have some spike in the third quarter but it's now getting better.

Next page on the provisions. So again, our third quarter provisions caused a spike in terms of the specific credit cost as well as total credit costs. But for the fourth quarter, this trend has normalized. Specific credit cost is now at 26 and our total credit cost at 19. And if you recall, our guidance previously on total credit cost was a normalized range of 25 to 30.

Next, on provision coverage. With the exceptional provision top-up that we did in the third quarter, we brought our coverage up to 1%, and it remains at 1%. What's also interesting is NPA coverage at the bottom from 100% to 97%, but our unsecured NPA coverage actually went up to 254% once you include the collaterals into consideration.

Just to give you a snapshot on where the key hotspots are. We highlighted earlier on that the key hotspots for us in terms of credit costs are in Greater China and in U.S. We indicate here the size of the loans in those markets as well as the credit costs associated with it. So on the left-hand side, you would see that for Greater China, the credit cost from 2024 to 2025 went from 40 basis points to 72 basis points, whereas in the U.S. from 173 to 110 is still elevated. But directionally, we have taken active steps to restructure to recover some of the impaired assets in that country.

On the right side, it shows you what we have actively done to increase the provision coverage. So for Greater China from 1%, we raised it to 2.1% and in the U.S. from 0.8% to 4.7%. What this goes to show you and to assure our investors is that the provisions that we put aside for these 2 hotspots are more than adequate for us to navigate any potential issues coming from these hotspots.

The following page talks about the customer loans going up 4% year-on-year. It's stable quarter-on-quarter. I think I can probably move a bit quicker through this page. Funding. From our liquidity and funding positions for our continued CASA growth, it continues to remain strong with our LCR at 147% and NSFR at 116%. These are all comfortably above minimum requirements. Our CASA deposits, as I mentioned earlier on, on an aggregate basis is now at 58.4%.

Next on capital. Capital position remains robust with CET at a healthy 15.1%. Even on a fully diluted basis with Basel IV requirements is 14.9%. This allows us the ability to continue to deliver steady and sustainable returns for our shareholders.

On the last page I have is on dividends. As mentioned earlier on by CEO, our core payout ratio continues to be 50% as we committed. And this includes the adjustment that we did, when we did the provision for Q3, we said we would adjust it so that shareholders will not be worse off. Overall, the payout ratio at 50% means a total dividend for us at $1.56. The final dividend component of that is $0.71. I would also mention in terms of the capital return plan that was committed to shareholders in February of last year, $3 billion. Of the $3 billion, we have already done more than 50% executed, $1 billion of which was in the form of special dividends and another $2 billion in the form of share buybacks, of which we have completed 1/3 of the plan. So in total, more than 50% of that capital return plan has been done, and we are well on track to execute on the rest of it across the next 2 years.

That brings me to the end of the presentation. Maybe we open up for questions.

Thank you, CFO. We will now take questions. [Operator Instructions] [indiscernible]

[indiscernible] with Bloomberg. I have 3 questions today. My first is for Mr. CEO. Why did you revise down fee income growth for 2026 to high single digit from a year earlier, a range of double digit and high digit.

So what is your question?

The fee income growth, we had revised down to high single digits. And I think the backdrop of it was our loan growth for the year for 2026, we expect it to be low mid-single digits. But in terms of fee income, there are multiple components. There's the loan component, there's credit cards, there's wealth, both credit cards and wealth and customer treasury, investment banking, all those are all still demonstrating very strong growth. The primary reason for that adjustment was more because of more conservative loan growth outlook.

And where do you see UOB's 2026 growth trajectory from here? And what are some of the biggest risks you're anticipating?

Well, I think the market is very uncertain, right? Because this is something that is a little bit beyond our control. But the ASEAN we are talking about, I feel quite confident. As you can see, the ASEAN-4 actually [indiscernible]. So we continue to focus on connectivity, continue to focus on less capital-intensive activities. Trade. You still need to trade, cash management. So these are all the initiatives we want to make sure that we are able to weather rather than just purely based on loan growth. It is very uncertain. Nobody is sure.

And lastly, how you will be using AI to boost productivity?

I think he's on top of this. I think definitely, we train our 20,000 people. We tied up with the industry expert at Accenture, see how we can spearhead AI initiative. I think it's a tool. I think it's important. It's an important tool. I want to train my people to make sure that they are taking full advantage of the tool to increase productivity.

Have there been or do you anticipate any changes to headcount due to automation in the workforce?

I think certain job, maybe you can't avoid it, right? I think our challenge is we do have HR initiative program to make sure that we are able to convert some of these. I think important is this environment, we -- the last thing we want is to get [ free of cost ] to our staff to give them the opportunity to learn as much as possible. If they learn, I think that will be -- to me, I think that is most important, learn as much as possible, take full advantage of AI. And we have a dedicated unit to look at AI to see how we can transform that. And then if we hit a certain optimum scale, then we know how to reallocate our people, make better use. So at the end of the day, the ownership is the first thing.

If I could add to that, of our 30,000-over staff, most of them have all been given AI tools at their fingertips already today. And the only countries that have not been rolled out to is because of regulatory considerations. So any country that allows us, we have already rolled those tools out to our staff. And about 20,000 of our staff have already gotten some of the basic training in terms of AI. We have set up an innovation academy to roll out training programs for our staff. Now we see these tools as enablers to enhance productivity, to help us gain insights into customer behavior, to improve service quality for customers, et cetera. It's not a tool for cutting headcount. So the focus continues to be enhancing client outcomes. It's about enhancing our banking relationships with customers. It's also helping our staff with advice-driven solutions so that we can enhance their productivity.

Any other questions? Maybe Asian Banker, Russell.

Russell from the Asian Banker. Firstly, congratulations, Ee Cheong and Yung-Chee on the resilient set of results, I mean your strategy on fee -- driving fee income from the retail side and the wealth side has really paid off.

My question is on the trade loans. So recently, during last year's ASEAN conference, there's been talk about the global supply chains and how businesses are moving from cost and efficiency to more resilience and responsiveness. Trade loans has been a huge part of your growth. How has that allocation shifted between trade on the intra-ASEAN side and Asia and Greater China? How has that shift changed over the past year? And how has your bigger scale in the region contributed to [ your FOB ] having a greater advantage in this space?

Well, actually, the trade loan constitute about 13% of our total loan. It's not that big. So we are actually working on that because it's more capital friendly, right? And also short term, right? Even the volatility, this is why we are emphasizing on that. The growth is actually double digit. But in terms of percentage of our total loan is about 13%.

That's right. So to give you a deeper sense on that, our overall loan portfolio grew 5% but the trade loans component of it, that 13% grew at 26%. So the speed at which trade loans are growing, again, this reflects our connectivity, the whole ASEAN trading economy, that growth remains very resilient. So despite what you hear about the geopolitical tariff situations and so on, I think there's active realignment of supply chains and the trade loans actually demonstrate that. Why we concentrate on trade loans, even though the margins are slimmer is that trade actually encourages a lot of other activities that are cross-selling in nature. For example, if you do trade, they tend to be cross-border. Cross-border requires FX. If you are doing the FX, then you could pretty much package together interest rate hedging, cash management.

So the broader wallet associated with trade isn't because of trade alone, but it actually has implications on how we shape the business. So trade continues to be a very active, very important focus for us driving our ASEAN footprint.

And then another question, if I could add. On the SME banking side of things, I think you're anticipating single-digit loan growth for this coming year. How is that impacting how you conduct banking with SME clients? Are you pivoting more towards fee income for that? I understand that the UOB has quite a whole entire ecosystem for SME clients.

I think generally, I would say we are very much market driven, right? SME customer because of the market uncertainty, they themselves also take a wait-and-see attitude. It's not like I want to give them loan to waste. They are also cautious, right? And we also share our experience, our advice, what should they do? And if you look at even today with the latest tariff, right, from Singapore 10% to 15%, that is overnight thing. So they also have to wait and see but it's something that they cannot plan. So this is where you will be, we are right by our customers. We have to help them to how to restructure, how to prolong the tenure, how to help them to grow. This is where our franchise value is, right, rather than just focus on ourselves.

We take a question from [ Wei Han ] from BT.

Wei Han from BT [indiscernible]. May question is on the tariffs that you mentioned. And also I think in January, we sort of saw the Venezuela crisis fairly short lived but how does all this sort of impact your ASEAN outlook for 2026 and the opportunities you sort of see there?

I think definitely, I don't have a final number yet because it just a but [indiscernible]. But the whole intra-regional trade is also irregardless of U.S. look at China trade with ASEAN, I think the number seems to be quite encouraging within ASEAN. So we have no choice. We have to support each other. I still think that is quite robust. You can see from the trade volume. Last year, we started this and this year. And then, in fact, the tariff be even higher. Today, we try to equalize. And the fact is if we equalize everybody, then there's no competitive advantage or disadvantage to understand because now U.S. Supreme Court say everybody is 15% of tariff. There is no advantage to you or disadvantage.

If I dial back a little bit in history as well. We sat here in April last year reporting on first quarter results, 2 weeks after Liberation Day, and we were like, oh, no, all this tariff being announced, what's going to happen? And if you look what happened in the subsequent quarters was, yes, there was some dampening effect in terms of loan growth because customers in general, corporates took a step back. We had to reassess and realign our supply chains and where do we position our capital and where do we place our factories and so on. So loan growth did dampen. But by and large, the activities continue. Trade continue. The supply chain shifted, which is why you see year-on-year, our trade loans, our growth in those activities continue to be double digit.

So fast forward to now, you see realignment in tariffs again. I think there will be some time required for the system to absorb, comprehend and react to it but we are confident those activities will continue. As in the company's business activities, we'll find a way to navigate through that and continue. The important thing is for us to stay focused on helping our customers navigate that.

So the credit cost, can we look at Slide 14 again? Because over there, you've broken down your Greater China and your U.S., okay, hotspots. So of the Greater China hotspots, what is Hong Kong CRE? Is it all -- is it -- and what portion you don't have to give us a rough double digit -- low double-digit teens, that sort of thing for Hong Kong versus China itself? And is it all CRE for both those buckets? And also for the U.S. bucket, were they -- were you lending directly -- were they mortgages? Or were they like loans to funds because you had a financial institution group customers.

Okay. A couple of questions. Maybe I'll deal with the U.S. one. It's a little bit easier. The hotspots have been commercial real estate, right? We do lend.

All those billion, whatever billion was the...

Not all of that is commercial real estate. That's our loan book.

The $45 billion and $17 billion is the loan book.

That's the loan book of our business there, right? That's not the problem loans. If that was problem loans, we will be. No, no, that's the size of our loan book there. But in terms of the problem that we've been facing, specifically in the asset class of commercial real estate. And that's only a small fraction of that.

A small fraction as in 1%, 2%.

Yes. 1% approximately. So it's specifically commercial real estate. And your other part of the question was, are these to clients, are these to funds? It's a good mix. Some of it are to our clients whom we support network clients from Asia who have decided to operate in the U.S. There are some who are our global financial institution sponsor clients as well. So there's a good mix of that. Coming back to Hong Kong, I think the similar question. You mentioned about mortgages and so on. We actually do not have a mortgages -- significant mortgage book from Hong Kong. The problem assets, again, are commercial real estate related. We don't give the breakdown on how much of that is Hong Kong versus China.

Okay. So in the -- so what is your outlook for -- I mean, I know you said it's normalized but what is the outlook for the asset quality this year?

I think given some of the macro conditions, I think there is still some potential challenges to be navigated, right? But that said, I think we have preemptively already anticipated many of these. So what we see in our pipeline, what we see are the potential hotspots, we have, in the last quarter, put aside that $615 million of provisions because we were anticipating some of these. So what I would say is that our buffers that we have put aside today allow us to navigate these potential hotspots for us and stay within our guidance of credit cost between 25 to 30 basis points.

Okay. So can I ask one more question. You had a small write-back in 4Q of [ 69 million. ] What was that? I mean, was that a recovery? Or was that...

Let me check on that.

In the fourth quarter. And also, DBS...

Yes, there was a write-back.

Also on the other part, your peer has been very open about how much it has in management overlay. And I think at one point, you also -- one peer but you have also talked about your overlays in the past, which were -- I mean we don't have to give the exact number, $1.358 billion but it used to be above $1 billion towards the $1.4 billion area. So could you just give us an idea of whether it is around there below or above just.

I think we'll stick with not giving that information as we have not given it before. But again, I'll emphasize that the GP buffer that we put aside is 1%. And if you look between Q3 and Q4, even though we raised it to 1% at Q3, it's 1% at Q4.

Okay. So does that have to calculate?

Yes, it's 1% at Q4, and it's enough to support our guidance. Yes. That's actually something very important to note. The unsecured number, which when you look at credit cost, there are quite a number of metrics to look at, and it looks at different things. The unsecured number is after taking collateral into account, what is the portion that is unsecured? How much coverage do you have against unsecured? So at 25%, we are actually very well covered in terms of the exposures to unsecured.

Any other questions? [ Rei ] from Reuters.

I am [ Rei ] from Reuters. Just a question. You mentioned about ASEAN growth. There's also been some headwinds facing the Indonesian market in recent times. How do you see that impacting the business and the outlook for the market?

I think we have to focus on long term. Every day, you talk about short term, very difficult to manage an organization like this. But short term, I can tell you, Indonesia, our loan exposure is 3% of the total loans, 8% in Thailand. Thailand also going through all the volatility. End of the day, I think we have to take a look at the whole ASEAN, Indonesia being the biggest country in ASEAN, 300 million population. There is enough opportunity for us. Obviously, it's a selective customer choice. And I still think there are opportunity there, okay? And the fact is today, if you look at most of the foreign banks, they already exceeded the market. Most of them all they slowed down. That actually gives us a lot of opportunity being closer to the ground, being able to navigate a lot more nimble and faster.

But having said that, our focus is still basically on trade, right, so that we are a little bit more flexible. But unless the customer is good, yes, we're prepared to give a term. So the overall, if you can see the growth despite all these tariffs, ASEAN-4 is actually growing quite well, right? We still can continue to grow because we have a very small market share. If you look at Indonesia, 300 million, 3% I can grow to 5%, right? Thailand, yes, going through the up and down, but I think I believe things are stabilized. You can see the portfolio quality seems to be sustainable.

And Vietnam, is still exhibiting high single digits in terms of GDP growth. And so I think we look at the region as a whole, there are continuing opportunities for us to..

And it's a portfolio, right? It's not like you be only confined to a hope.

I think just to address Chanya's earlier question on Thailand, not to forget Thailand. I think the stability there actually encourages FDI as well. So it's definitely a country that we are very optimistic about as well. We -- our operations last year, we had onetime credit costs as well as loyalty rewards. Those were behind us. We actually believe that the Thailand operations this year will contribute more significantly for us.

You say Thailand will attract more FDI.

The political stability, I think encourages more FDI. And it will solidify its position as one of the key nodes in the supply chain in this region.

ASEAN is still generally quite attractive. You look at the family officers coming in. We're talking about trillion. And I think these are the kind of liquidity there. And ASEAN, I think, is a little bit more flexible. Yes, there are some political risk. But in terms of structuring, in terms of union, in terms of -- I mean, and cons. You tell me, which region is better? You tell me, U.S., Europe, where? So we are in this region. So we are -- and it's proven. And we are just dealing with ASEAN, which is within our reach, it's easy for us to.

If I can add one question, the net new money has been quite positive. Do you see that much growing in 2026?

No, I think it will continue to grow. It will continue to. And this is something that the bank is making a big effort to see how we can not only just supporting loans, right, how to -- because we do have a very strong private banking, our investment advisory unit within the private bank has actually done very well. As I -- just now in my speech, the digital platform. These are people, like every one of you, the average size [indiscernible]. People put money, they're able to generate good return, 144% in terms of growth. And this is just the beginning.

In terms of number of customers, it's still quite limited. But in terms of volume. So this is where I see the power of distribution and also the trust that the customer have with us, not only just Singapore, the whole region.

The wealth income grew 14% year-on-year. So that's an area we think continues to be a highlight and bright spot that we want to focus on coming to 2026 as well.

Ask about coal financing. Do you still -- do you finance current customers of yours who decided to buy a coal plant?

We have stopped financing new coal plants or new projects involving coal since a few years ago, I don't remember, which year.

Including nickel. But let's just focus on coal for the time.

So we have stopped financing new coal projects or new clients doing coal projects since a few years ago. We can come back to you on which year..

2 years ago but we will confirm the year.

However, that said, if existing customers with existing facilities with coal, our priority is to help them transition out of it. So while not doing anything new or more, the existing facilities that we have to clients, we are actively -- every time we refinance we actually put in encouragement, incentives for them to transition.

I think you asked about nickel.

No, no, no. I think nickel plant is powered by coal.

So how far down the -- what is it? What are those things?

The problem is a value chain.

The value chain you say nickel plants are powered by coal. So do you finance the nickel plant?

It is difficult to answer that precisely. So let me give you an example, right? So if we finance coal mining equipment companies, they are not doing coal-fired power plants but they're doing equipment. But equipment can be used to mine other types of products as well. So do you not finance that? So I think you have to be quite deliberate here. We are very focused on addressing climate considerations, coal-fired power plants, right, CFPP. So those are areas that we have very specifically deliberately articulated what we will do, what we will not do. But it's a slippery slope to then start broadening that definition out to many others because you need coal-fired power plants to do power generation for power companies and to use start financing power companies. So it's hard.

So our commitment was made in 2022, about 4 years ago.

With what's happened in the U.S., are you still committed to your -- that road map to whatever net zero or...

Yes. Yes. We are still already withdrawn. We are still -- I think it's the right thing to do. We are facing it. We are doing it in a more practical way. The environment is for the future. It's not because of the regulation we are doing.

Any other questions?

I mean just to touch back on the AI. Can you give us some insight as to which parts of the bank are furthest into AI adoption? Is it wholesale? Is it bank retail banking?

We are going -- I can give you some examples but it cuts across the bank in multiple areas. I think what's important for us is now to focus on foundation and knowledge layers that we built, and we can then use that to quickly replicate across other parts of the bank. But some key areas of use cases, for example, are in customer servicing, contact centers and branches. Maybe one practical example is every time you have trouble, you call a contact center and sometimes you get a run around, right? This person can help you and frustration among customers grow. But part of the problem is because the attrition rate with customer service contact center operators are fairly high, they get yarded by customers all the time. It's not a pleasant job. Attrition rate is high. They are not well trained. They don't have enough knowledge and they don't address questions.

And with AI tools, can you just imagine that if we are able to curate faster, better responses, whenever a query comes in, what is the appropriate knowledge and response to deal with that. That helps us address the questions, hopefully at one touch rather than multiple touches. So accelerating that knowledge-based accumulation of testing, making sure the models are correct and we are responding correctly, that's important. Part of the challenge for us is unlike U.S. where it's a homogeneous market, everybody speaks the language in the same tone and the same accent. When we use these tools to help accelerate for our staff, the listening tools sometimes misread what is said because of the different accents and expressions. So the accuracy continues to be refined, and we need to make sure that, that's done in a speedy manner to address.

So sort of customer servicing is just one aspect of it. AML, KYC preventing frauds and scams, anticipating, looking at the data analytics to look at where there are new modus operandi. How do we circumvent that? That's very useful cases of our AI team is focusing on as well. So just a couple of examples to share.

We have deployed it across all our branches. Okay. So when they answer very complex thing like state accounts all assisted by the AI. So it's always with the right set of terms and conditions. So it's all deployed.

So you still have a human interface. But the human interface is helped by AI.

Yes. Yes. One example is people will call up to us what's your latest promotion rate for a certain product, right? And the promotion rates do change because we do have promotions at different times of the year. So it's important to make sure that the operators who are interfacing with customers have the most up-to-date and most accurate information at every interaction.

Have you -- those positions that are being -- I know like the AI is helping on function. Have you stopped hiring for new roles in those departments?

Not at the moment. I think given the economic climate, I think we have been very disciplined overall with our headcount but it's not targeted specifically at job archetypes. So you did see -- there's income pressure definitely in the macro sort of state. You have seen our slides on cost discipline. So that cost discipline actually extends across the bank. It's not about specific roles.

The human cost, you can actually see is coming down. Partly, we want to make sure we are able to contain we're able to train all these people rather than keep increasing. And end of the day, you have a situation where, as you say, AI, are you going to retrain people, keep it within ourselves, we train them so that the damage will less.

Maybe we'll take one last question.

Kevin from [indiscernible]. Just 2 quick questions. I think one is on what's your interest rate outlook in terms of interest rate cuts from the Federal Reserve in the coming year? And the second one is whether or not there's any comments on the potential sale on UOB Asset Management was reported by Bloomberg a couple of months back.

House view is interest rate likely to cut maybe [indiscernible] but if you look at Singapore interest rate, it's already overdone. So how much would that -- I think it's quite stabilized at this point. Asset management, I think is on top of this. Yes, I think market is aware that we are -- we are looking at it. This is not something that we want to see who are the strategic buyer because end of the day, UOB, we want to have a platform to distribute what is the best product for our customers. On the stand-alone, scale is one thing but we want to make sure we offer the best product for our customer. That's our choice.

Right. That's all. Thank you very much, everyone, and have a good day. Good rest of the week.

Thank you.

Thank you.

Welcome to our third quarter 2025 results media briefing. Today, we have with us our Deputy Chairman and Group CEO, Mr. Wee Cheong; and our Group CFO, Mr. Leong Yung-Chee. As usual, Mr. Wee will begin by giving a broad overview of how our franchise has done and the operating landscape we are operating in. And Mr. Leong will then go into more details on the financials and business performance. After both presentations, we'll be taking questions from the media.

So I'd like to invite our CEO to get us going. Mr. Wee, please.

Good morning. Thank you again for joining us today. As all of you know, geopolitical developments are impacting business outlook but we always see encouraging signs. ASEAN continues to attract investments. Amid evolving tariff changes, we continue to see healthy intra-regional trade flows. While a softening rate environment is putting pressure on asset yields, we see healthy loan growth and fee income. Now for the first -- for the third quarter, we have reported a strong operating profit of $1.9 billion. And we are happy with our performance for the first 9 months with healthy growth in loans, deposits, including CASA, wealth AUM and fees.

Now from this position of strength, we have proactively set aside additional preemptive general allowances. This substantially strengthens our provision coverage ratios, reinforcing resilience and flexibility to navigate headwinds and sustain long-term growth. And after building our coverage ratios, we retain a healthy capital position. By prioritizing balance sheet strength, we stand ready to act, support customers and see strategic growth opportunities across the region. Now for our shareholders, we remain committed to our $2 billion share buyback with almost 1/4 of the program completed as of September 2025. There is no change to our policy of 50% dividend payout and our 2025 final dividend will not -- let me emphasize, will not be impacted by this preemptive general allowance.

Our core franchise performance remains sound with strong fundamentals and positive momentum quarter-on-quarter. If we look at the loan growth was robust, 2% quarter-on-quarter, 5% year-on-year, and they are very broad-based. CASA, this is something that we have been always emphasizing for both retail and wholesale banking registered healthy growth for the first 9 months, up 19% year-on-year. Our wealth management AUM grew strongly during the quarter, quarter-on-quarter AUM up $8 billion or 4% net new money. And the invested AUM portions continue its upward trend. In terms of P&L, net interest income down 3% quarter-on-quarter. It was impacted by margin compression in a declining rate environment but this was partially offset by healthy loan growth.

Gross fee income saw robust broad-based growth across loan-related cards and wealth management businesses, up 8% quarter-on-quarter, 10% year-on-year. Customer-related trade and investment income grew strongly. We maintained cost discipline, keep expenses flat while investing in growth initiatives. On the asset quality front, NPA formation and specific allowances were higher this quarter due to a few accounts in the U.S. and Greater China commercial real estate sector. We conducted a thorough review of our portfolio.

As a proactive move to further strengthen our balance sheet, we took the opportunity to ramp up our provision buffers to cushion against any further headwinds. By setting aside general allowance of $0.6 billion and raising our GP to performing ratio to 1%, which is higher than the 0.9% objective that we articulated previously. With this, our total NPA coverage improved to 100% or 240%, including collaterals. Now following this exercise, we expect our total credit cost to normalize with asset quality risk contained barring any unexpected global volatility.

Our balance sheet remains strong with CET1 ratio of 14.6% and robust liquidity ratios. And we are very confident of delivering sustainable value for the long term. Looking ahead, while no market is spared from external shocks, we believe ASEAN offers strong structural growth opportunities, and we are well positioned to capture them. We are staying focused on growing our franchise and supporting businesses through our connectivity strategy. We are deepening relationships with our expanded retail base through wealth and lifestyle offerings, investing in innovations to uplift productivity. We are confident of executing our strategy and achieving sustainable growth as we invest for the future. We are in a strong position moving into next year with the following guidance: low single-digit loan growth, full year NIM of 1.75% to 1.8%; high single to double-digit fee growth driven by growth engines in wealth, cards and trade, low single-digit operating cost growth, total credit cost of 25 to 30 basis points.

Now I will hand over to Yung-Chee to share more. Thank you.

Thank you, CEO. Good morning, everyone. I'll take you through the financials. I will have 17 slides to walk through. What I'll do is I'll spend a little bit more time on the summary slide and the highlights, and then I'll move a little bit faster through the rest of the slides. On the first slide, we walk you through the highlights. And as CEO mentioned earlier to you, the macro picture today still has certain pockets of economic uncertainties. The benchmark rates have come lower. Asset yields continue to come under pressure. But despite that, our businesses have continued to deliver on the strategies that they have articulated, whether be it in the balance sheet, assets and deposits, loans and deposits rather, if you look at the number of customers, our fee income, our trading income, our wealth AUM, our card fees, everything in those parameters have exhibited positive growth.

From that position of strength, our operating profit has proved resilient at generating $1.9 billion. At the same time, our liquidity, capital and funding ratios have continued to stay strong and resilient. We have taken the opportunity in this backdrop to take the preemptive provision and bring our performing loans coverage to 1%. Overall, the NPL ratio remains flat at 1.6% I've mentioned that the coverage ratio has increased to 100% and including collateral, that's 240%. As CEO mentioned, the final dividend payout will not be impacted by this preemptive general allowance that we have decided to set aside.

Now let me walk you through the third quarter's performance. On this page, specifically, I've mentioned the $1.9 billion, if you focus on the fourth column, operating profit of $1.9 billion is a drop of 3% quarter-on-quarter. It coincidentally is also a 3% comparison year-on-year, and this is primarily driven because of the net interest margin, the interest rate environment. Our core fee drivers have continued to register resilient growth. Noninterest income has also risen 5%, backed by record high customer flows and treasury income.

Expenses have remained stable. Allowance, I've mentioned earlier on. We will discuss more in terms of these allowances in a slide later on. I'll now bring you to the segmental performances, just focusing on the retail business. Retail businesses profit before tax overall was stable at $1.5 billion. It exhibited strong growth in our CASA and wealth businesses and income pressures were mitigated with strength in terms of our balance sheet growth in deposits and loans. If you notice, we mentioned earlier on that if you look at the CASA line, we've actually grown 19% year-on-year. In terms of our AUM growth, we have also taken it 8% up year-on-year with the invested portion from 37% of AUM a year ago, now it's 41%.

Net new money flows at $5 billion for the quarter and our card billings grew 8% year-on-year. Asset quality remains strong with credit costs significantly lower than last year in this portfolio. Operational, which we talked about in Thailand last year has eased. I'll next move to the wholesale banking portfolio. Likewise, it has demonstrated broad-based growth in terms of loans and deposits growing 6% and 4%, respectively. And in the loans portfolio, our trade loans, in particular, grew 22%. Again, this cements the strategy that our wholesale banking team was focusing on. And if you look at the CASA as a proportion of our deposit business, deposits grew 4%. The CASA portion is now at 57%.

Investment banking has maintained strong momentum with our fees reaching record levels. On a year-to-year basis, that has grown 29%. This diversified strategy has seen our income contribution from non-real estate sectors stay at 69% with cross-border components of this contribution at 27%. Our regional footprint continues to deliver as we diversify our income streams. The allowances has increased. This is primarily due to collateral markdowns for some nonsystemic borrowers and preemptive provisions we have decided to proactively set aside.

I'll next talk about our Global Markets business. It has grown 22% year-on-year. And for this particular quarter is our second highest performance on record. This was driven primarily from continued client demand for hedging and investment solutions. The noncustomer part of the income has also benefited because of a favorable cost of funds environment where our teams have managed to capture market opportunities across equities, foreign exchange and rates, contributing to the overall performance.

Next, I'll talk briefly about net interest income and margins. In my summary slide, I did mention that the net interest income moderated 3% quarter-on-quarter. This was mitigated by asset growth. If you look at the bottom box, we grew assets from $479 billion to $494 billion on a quarterly basis. But on a 9-month basis, it was $473 billion to $491 billion. The net interest margin did compress during this quarter by about 9 basis points compared to last quarter. So if you recall, we had 1.91% in terms of our Q2 NIM. For Q3, it is 1.82% but what is important to note is the exit NIMs. So when we exited 2Q, it was 1.84%. Our exit for this quarter is 1.82%. So in terms of the steepness of the decline in NIMs resulting from rates movement, you would have seen that this has significantly slowed in terms of decline. We do expect further pressures because there are further expected rate cuts, one more, we believe for this year and 2 more next year but the downward trajectory, I think, has slowed significantly.

In this quarter, the 25 basis points drop in asset repricing primarily came from Sing dollar, which accounted for about 60 basis points. And from HIBOR, there was a positive 14%, but there is some delays in repricing the HIBOR rebound, which we expect to show up in the fourth quarter. We have proactively managed our funding costs and that has mitigated the drop in NIM. So that accounted for that green box of 16 basis points. I'll speak briefly around fee income mix. This slide shows gross fee income.

So if you look at gross fee income across all spectrums, overall, it grew 10% but each of the components showed almost double digit single -- high single digits or low double-digit growth over this period of time. These fee drivers demonstrate the resilient growth led by activities such as wealth, particularly in unit trust and structured products on the back of improved market sentiment and consumer optimism. Card fees also sustained its growth momentum. However, on card fees on a net basis, we took a harmonization of our rewards scheme in Thailand post the Citi integration. This was taken in 3Q effective 1st of October, which means that this normalization would be normalized into 4Q and 2026.

A little bit more background on that. Gula, I noticed that you were raising eyebrows on that. So when we had the rewards program when we integrated the Citi franchise, the rewards redemption ratios were at different levels. Citi's ratios were a little greater than ours. We brought that in line, although that still puts us competitive -- still competitively ahead of market in Thailand. So that rationalization was effective 1st of October.

The next page on expenses. Period-to-period, our expenses have actually come off. But on the cost-to-income ratio, it has ticked up from 44.3% to 45.2%, simply because income numbers have come down, not because expenses have gone up. We continue to keep very tight cost management while continuing to invest in talent, technology and innovation to drive our franchise expansion, meet regulatory requirements and provide services for our customers. The next page on nonperforming assets.

NPL ratio is unchanged at 1.6%. There was some new NPA formation this quarter I mentioned earlier to nonsystemic accounts in selected markets. With the higher write-offs and recoveries, we have maintained proactive in reviewing and monitoring our credit portfolio for asset quality risk. Next page. The $0.6 billion that CEO mentioned earlier on, more specifically, it's $615 million. This is a preemptive general provision. We did so because in the midst of reviewing our portfolio with the macroeconomic uncertainties and some sector-specific headwinds that we see, we wanted to build a stronger buffer for potential valuation adjustments going forward. We do so today because our capital, liquidity and funding ratios are in a position of strength. By doing this, we have brought our general provisions coverage from 0.8% to 1%. We brought our NPA coverage from 88% to 100% and from the unsecured NPA coverage numbers from 209% to 240%.

The next page speaks briefly to the credit costs. The 32 basis points total credit cost from second quarter bumps up to 134 basis points because of the preemptive allowances that we have put in place. We do expect with this buffer, our credit cost levels will normalize from the fourth quarter and into 2026. Next page, provisions coverage. I mentioned this briefly earlier on. The key numbers would be the general allowance on loans, 1% the NPA coverage, 100% unsecured NPA coverage, 240%. Next page on the loan momentum in our balance sheet. It grew 5% year-on-year, 2% quarter-on-quarter. This was quite broad-based across geographies as well as industries. I mentioned earlier on, in particular, within our loans, our trade loans continued to show the fastest growth, exhibiting 22% growth.

Next page. A little information on our funding situation. So if you look at our LCR, our NSFR ratios, if you look at our CASA-to-deposit ratios, these continue to demonstrate that our funding positions, liquidity positions remain healthy and comfortably above minimum regulatory requirements. Last but not least, some information on our capital position. At 14.6%, fully loaded at 14.5%, our capital position remains strong. Questions around our share buyback, I think we've addressed earlier on, the $2 billion share buyback, we remain fully committed. As of September, we've executed 24% of that, and this is way ahead of the trajectory if you drew simply a straight line from now to 2027. Our payout ratio of 50% remains a commitment we make to shareholders. And I will emphasize again that the dividend payout for 2025 will not be impacted by our decision to set aside this preemptive general allowance.

With that, I conclude my presentation and we can take questions.

Thank you, CFO. We'll now take questions from media. Any questions?

Questions will be on the allowances, right? Specifically around general allowances. General allowances you mentioned there were sector-specific. Can you mention what some of these sectors are and for the specific provisions, can you go a bit deeper into, I guess, the Greater China and United States, commercial real estate clients that you mentioned earlier.

The NPA formation and SP charges arose specifically from U.S. and Greater China CRE. Now this actually of the total loan portfolio is a relatively small proportion but we still see continued headwinds in these two markets. However, in the additional allowances also factors in something I mentioned to Gula before we started the call, which is by recognizing some of these recoveries that we are doing, actually, it's accelerated some of the markdowns in the collaterals. Now these flows can be chunky and it's very hard to predict in terms of the trajectory. But by building this GP position, it allows us more room to cope with any sort of asset quality gyrations. And also, we see a Us -- as I mentioned, these are all secured by setting up a preemptive provision that will give us time to recover.

And also from the customer standpoint, we also work along with the customer. As a commercial bank, I think our primary job is to make sure that we are in a position to protect the interest of the customer. That is important. Otherwise, it's very easy just to get rid of that So the general provision will give us the strength. And also, you look at the coverage is secured on an unsecured basis is 240%. So we have time, while the earnings continue to be strong and robust. And we are not using that to penalize our shareholders, too, right? So all this, the shareholders will still get the preemptive general allowance, the dividend. In Hong Kong, we do see selective interest coming back, although it's not broad-based. So residential, for example, I think is fairly stable but commercial real estate continues to be soft. So if you look at the IPO market in Hong Kong, it's growing 3x, right, $25 billion. So there's still plenty of liquidity in the system. The question now is at what point. So forget about the view, we just set aside first.

I think Bloomberg has a question.

You said that you expect credit costs to normalize after this. Does that mean you think the worst is over? Or could there be more provisions ahead based on your view shape?

If I know everything, I will not be a banker. I'll just go to a casino. But end of the day, I think if I have to take a calculated view, for the 2 markets we are operating in I would say -- I wouldn't say the worst -- well, the worst is a U-shape kind of thing, right? So we are dealing with cash flow, we are dealing with assets. So there's many factors to talk about when you talk about recovery. But what is more important is we manage our balance sheet. That is right, so we can overcome if assuming we misjudge the situation. We are strong enough to take the headwind that is important. This is why we are talking about preemptive.

Maybe if I could add to that, if you look at the Hong Kong context, the loan-to-value of our portfolio is 44%.

44%?

Yes, 44%. With this buffer, actually, we are bringing our credit costs back in line with our guidance of 25 to 30, not just for this year, but also for 2026. So Q4 and 2026 credit cost will be within the 25 to 30 basis points. Now big caveat here is the global market as much as we can see in 2026, this is what we expect with the normal caveats of barring any big market unforeseen volatility, I think that remains.

Also a follow-up question on the profit. Do you expect this to be something one-off or something that investors can expect in the future? Like is there going to be another provision for this lot of sum.

It's one-off.

Sorry, just to change a little bit. You said the HIBOR rebound hasn't been -- wasn't affected in the -- it didn't impact 3Q. Meaning that it should be better because...

The rebound actually happened around mid-August, right? So some of those effects may have come through but we don't think all of that repricing has actually been reflected into our 3Q numbers. Yes, there is a lag effect in terms of the repricing of the portfolio. It should support the NIM into 4Q '25.

Back to Bloomberg.

Just looking at the unique positioning here that UOB has because DBS and other Singapore banks haven't made similar provisions necessarily. What are you seeing in commercial real estate today that they're...

I think the risk appetite as well as geographical focus of the three Singapore banks are different. I cannot comment on the areas of business. I think in the areas that we focus on, I think we have seen some upticks in the CRE portfolio within our books. But these are assets that we have already identified and flagged earlier on and these are not new exposures. So we have not actually put on new exposures in real estate in these markets. We have continued to grow our balance sheet in these markets but not in these sectors. So I'll come back to the point again, which I mentioned to Gula earlier, which is some of this is because of recoveries that we are executing right now. When you do the recoveries, you end up parking collaterals down. So this is the reason why you see an uptick.

Okay. So the recoveries are with the CRE portfolio. So those have to be marked down because -- and those recoveries were they in Hong Kong and the U.S. as well?

It's a mix.

It's a mix of Hong Kong and U.S.

Yes.

So the troublesome area is Hong Kong and the U.S.

I would say Greater China.

Can I just ask a question about excess liquidity, whether you will deploy in HQLA, if you do, what currencies would they be Singapore, SGS Singapore government securities? Or would it be [indiscernible] U.S. treasuries or somewhere else?

I think over the last couple of quarters with the pressures from NIM, I think we have seen that the logical thing to deploy some of the excess liquidity is actually to make sure you focus on a bit more of your NII as to -- as opposed to keep defending where the NIM would be. Those excess capital would naturally be deployed to NSFR-friendly instruments.

Which are...

A combination of currency.

Is it -- you don't reveal the currency?

We don't reveal the call on that. I think it's not simply just bucketing into 1 or 2 types of currencies. I think we've got to look at the profile of our asset liability mix, and we've got to be quite nimble in shifting between those buckets.

So including the region because you are in the region -- including it will be the...

Yes.

Sorry, I just wanted to clarify the $615 million general allowance, is this the largest single provision you buffer that you set aside in 1 quarter?

We did have one, I think, on the COVID period, but I think there was a smaller amount, if I recall.

The buffer is largely for U.S. and Greater China.

I think primarily, we have -- again, a general allowance is actually set aside for us to have that flexibility to deal with market volatility and challenges. So I think while there are pockets in other markets, the primary areas or focus actually would be in those two markets.

So there's this interest rate cycle in the U.S. to which Hong Kong is related even though HIBOR has rebounded and the cost -- the risk-free rate affects all these assets. So as the interest rate comes down and these assets rebound, would there be -- would you look at writing back? Or this is one instance, how you would look at them at the moment.

Some of this could be write-off, yes. This is why we say it's a preemptive. This is not a total loss, right, preemptive.

And this was for the third quarter. So this was based on before the latest interest rate cut. You use the valuations before the interest rate.

Yes.

It was about 1.5 weeks ago. last -- you're talking about U.S. rate cut.

U.S. rate cut but we are down to the...

U.S. rate cut -- there was one cut about 1.5 weeks ago and there's another one we expect for 4Q and 2 more that we expect for 2026.

So again, this is preemptive, right? If you anticipate the rate is cutting. So hopefully, in fact, most of our investors, they are buying equity now. They are more prone to buying equity because interest rate, everything is down, the bond is down. So hopefully, all this will translate to the way we see that.

Question on expenses. I think 9-month expenses are lower impact on cost management. Can you explain about what this type of cost management means? Are you going to cut back on certain spending or marketing or things like that? And then I guess also on your outlook for hiring in the year, right? Are you expecting to maintain the same level of headcount just because of the margin compression as you mentioned earlier?

So the expenses did come off. It's a combination of various things that we are doing. I think you're right, we did relook at all the various expense buckets within the bank to see other excesses that we can further trim down. And some of it is also sales-related expenses. So the fact that income comes down, sales comes down, you actually can trim some of the sales-related expenses. Aside from that, I think your other question was in terms of headcount and so on. Our headcount posture remains stable. But what we have done is to actually focus on reinvesting some of the savings -- cost savings into productivity tools. So some of the investments have been in newer areas like Gen AI productivity tools that we are rolling out so that we can augment the productivity of our staff without actually tuning headcount from that perspective.

There is also a couple of things you need to keep in mind. Technology obsolescence and compliance costs continue to weigh heavily on us. So these are areas that we cannot compromise. Technology obsolescence presents risk, not just to us but our service to customers. Compliance, especially in the scheme of things now with heightened scams, frauds and so on, AML, KYC matters. I think these are areas that we absolutely cannot compromise. So what we have saved, we've actually reinvested and although we marginally managed to brought the cost down, it still feels a little elevated in terms of a cost-to-income ratio perspective.

Just one question. So in terms of overlays, you say you have about 1.5 billion and this would add a little bit -- this would add something to it. Now one of your peers that has a lot of overlay has actually said that they could consider releasing some if the earnings become very volatile. But you're adding to it now. So I'm just trying to -- in my own mind.

I think it's difficult to be buoyant about what we face in the year ahead. I think if you look at where we are in terms of trade policies, political tensions and so on, the situation continues to have pockets where we can't see that clearly. Putting these in place allows us that flexibility to navigate but it doesn't mean that we will use it. And if we don't use it, it could be reversed. But putting that in place gives us confidence and also be in a posture where if our customers require us to support them in their growth areas, we are in a position to do so.

If anyone from the media online have question [Operator Instructions] but we can continue with those in the room.

So in terms of the region, how is there -- are there any credit costs anywhere in the region that you see coming up? Or is the region -- okay because they all interest rates, right, even in Indonesia?

I would say quite stable, quite stable, I would say. Ireland, a bit of a headwind but I think generally it's okay in the overall scheme of things. And if you can see the growth without the currency [indiscernible].

The constant currency...

It's still growing.

And our exposures to the consumer markets in the region is more focused on our higher customer segments, whereas in Singapore, it's broader based.

So the consumer, the retail bank and the consumer banking, is that more stable versus because of the issues on the wholesale side that more stable than the corporate side. Is the retail banking more stable than the corporate banking at the volatile?

Retail will be more a reflection of the overall economy, right, because we cut across general population. The wholesale will be a little bit more chunky in nature, right? So I would say, yes, in terms of diversification, retail will definitely the segment that you are in is important. It's where employment situation, economy become very important. If you look at the Citibank portfolio when we acquired, they are generally unsecured but they're very focused on the segment that they want to focus, right?

To give you a barometer, we are the largest card issuer for Visa and Mastercard in the region. 8.5 million customers we have, if you look at the gross card billings, it grew 8% year-on-year. So in terms of customer spending and confidence in that franchise, I think it shows, right? Now there are obviously a spread. It's roughly half in Singapore, half roughly, half in Singapore, half in the region. But it gives you a good sense that this diversified customer base across the region provides a level of stability for our retail franchise. Wholesale is a lot more susceptible, I think, to asset pricing pressures. That particularly in this environment, everyone is chasing higher quality companies, right? So there is intense competition in that space for sure.

We have a question from Timothy from Straits Times who's online. Because his connection is bad, I'll just read out the question. Do the additional provisions cover SMEs or large corporations?

Across our portfolio.

Any other questions?

Provision is very positive and it's quite [indiscernible] .

Because you are buying insurance, right? We, as an organization, I think, taking a long-term view, you don't just focus on P&L. It's very easy to focus on P&L, right? Today, if you forget about the preemptive provision, then the number looks everything okay. But we are taking a view. We are here to make sure that our balance sheet mix continue to be strong, right? And so that we are in a position. It's no different than during the COVID, we set aside $3 billion to help our customer. That will give the market a confidence, okay? And then we give ourselves time to react to recover.

If you had not set aside the 615 million, what would your net profit figure have been.

That will be around 1 billion. Minor adjustments for tax and other things, but around that.

But that would have still been down quite a bit year-on-year.

That's right.

Just one more. Can you -- I mean, any chance you can give us any specific names or characterize the borrowers? Are these developers, office building owners?

No, I don't think we are in a position to tell you exactly who -- then the next day, I will receive a call.

I mean it is commercial real estate, it's commercial?

Yes, basically secured commercial real estate is quite -- which you said, our rate is quite low. So we don't want to be in a position to force certain thing, right? We want to in a position of strength, right, so that together with our customer. This is where we call franchise value, right? Otherwise, when you have a crisis situation, the tendency is everyone to overreact. Do you want to do that? You have a property, I overreact, I sell, no, right? We want to set aside. We want to be calm. We want to be measured. That to me is important. So you have to look at it from the overall standpoint rather than just focus on all. I want to have a P&L. I want to protect my profit. I will sell everything just to make it right. It's more than that.

Okay. If there's no other questions, thank you, everyone. As usual, if you have any further questions later, do reach out to the communications team. Thank you, and have a good day.

Thank you, everyone for your time.