by HARIZAH KAMEL / pic by TMR FILE

UNITED Overseas Bank (M) Bhd (UOB Malaysia) remains focused on its strategic priorities of capitalising on regional growth drivers and strengthening its technology infrastructure to drive innovation and performance.

UOB Malaysia CEO Wong Kim Choong said the bank will continue to invest in its people’s professional development and enhance its capabilities to make banking simpler, smarter and safer.

“We will continue to place our customers at the heart of everything we do and will leverage our expertise and regional network to offer relevant and distinctive solutions through conventional and Islamic banking.

“We will remain prudent and disciplined as we forge a sustainable  future with our stakeholders,” he noted in a statement yesterday.

UOB Malaysia’s total operating income increased by 3.7% year-on-year (YoY) to RM3.21 billion in 2020.

Net profit, however, declined by 16.8% YoY to RM1.02 billion due to pre-emptive provisioning on its assets, given the uncertainties arising from the economic impact of the Covid-19 pandemic.

“UOB Malaysia’s 2020 financial performance saw the effects of the severe economic impact brought about by the travel restrictions and physical distancing requirements to curb the spread of the pandemic.

“Nevertheless, we maintained our strong balance sheet and effective resource management, with our sound asset quality underscoring our robust corporate governance, risk management and business practices,” Wong said.

UOB remains steadfast in supporting affected customers in overcoming financial challenges, he added.

Besides Covid-19 relief measures, which include loan moratoria for business and individual customers, he said the bank actively assisted customers in managing their financial wellbeing.

“Beyond the moratorium period that ended Sept 30, 2020, we extended targeted repayment relief assistance until June 30, 2021, to help customers emerge stronger from the crisis,” Wong added.

UOB Malaysia’s higher operating income was attributed to the 5.7% growth in net interest income to RM2.2 billion, driven by proactive balance sheet management.

However, the effects of the Overnight Policy Rate reductions to a historic low of 1.75% between Jan 22 and July 7, 2020, have partially offset the increase in net interest income.

While trading and investment income for the year grew, lower fee income and net foreign-exchange gains led to a 3.5% drop in non-interest income to RM938.8 million.

An increase in allowances from the pre-emptive provisioning has partially offset its operating income growth, thus impacting UOB’s profitability.

These allowances were for expected credit losses for both impaired and non-impaired assets.

The allowances were RM356.1 million more than the previous year, largely for expected losses categorised as Stage 1 (within the next 12 months) and Stage 2 (indefinitely) on its loans, advances and financing portfolio.

The bank maintained its sound asset quality with the net non-performing loan ratio sustained at 1.4%.

UOB remained prudent in managing its discretionary expenses. Its total operating expenses increased by 1.1% to RM1.28 billion as the bank continued to invest in its technology infrastructure to support business growth.