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United Overseas Bank Ltd
Earnings Call Analysis
Q3-2024 Analysis
United Overseas Bank Ltd
UOB has reported a net profit of SGD 1.6 billion for the third quarter of 2024, reflecting year-on-year growth of 16%. The bank's core return on equity (ROE) was recorded at 14.3%. This remarkable performance was attributed to broad-based growth across all business segments and key ASEAN markets. The strong demand across sectors, particularly in trade finance and consumer banking, has supported the bank's expansion amid ongoing global uncertainties.
Loans grew by SGD 5 billion, or 2%, driven by solid retail mortgage and corporate trade loans growth. The net interest margin (NIM) remained stable at 2.05%, benefiting from proactive deposit cost management and a wider loan margin, which improved by 5 basis points to 2.56%. Overall, UOB's total income increased by 10% compared to the previous quarter, showcasing strong momentum across all revenue lines.
UOB achieved a record high fee income of SGD 630 million, buoyed by healthy demand in trading, wealth management, and card fees. The significant increase in fee income indicates strong customer engagement and retention strategies that are proving effective as the bank integrates its acquisitions, particularly the Citi portfolio.
The bank's trading and investment income soared to SGD 709 million, driven by exceptional customer flow treasury income and growth from trading activities. This reflects the bank's ability to capitalize on market conditions and shifts, thereby enhancing profitability.
Following the Citi acquisition, operational synergies have begun to materialize, with significant cost reductions associated with the integration process. One-off costs related to the integration have decreased by more than 50% quarter-on-quarter, indicating efficient management of the acquisition. The final phase of operational integration in Vietnam is expected to complete by the end of the year.
UOB maintained a stable asset quality with a non-performing loan (NPL) ratio unchanged at 1.5%. The bank's total credit costs have reached 34 basis points, reflecting the bank's cautious approach in provisioning against potential risks, particularly in the Thai retail segment following operational issues during the Citi integration.
Looking ahead, UOB projects high single-digit loan growth and double-digit increases in fee income, predominantly driven by cards and wealth-related services. The bank expects its cost-to-income ratio to remain between 41% to 42% while maintaining a total credit cost between 25 to 30 basis points. Importantly, UOB's strong capital position has opened avenues for potential capital management initiatives including share buybacks or increased dividends as they assess the optimal use of excess capital.
UOB's management expressed strong confidence in the ASEAN growth story, leveraging the region's economic stability and increasing foreign investments. The bank's commitment to expanding its regional footprint places it in a robust position to capitalize on emerging trends, particularly in the digital and green economy sectors.
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Good morning, everyone, and welcome to UOB's third quarter 2024 results media briefing. Today, we have with us our Deputy Chairman and CEO, Mr. Wee Ee Cheong; and our CFO, Mr. Lee Wai Fai. [Operator Instructions] I would now like to invite our CEO to get us started, Mr. Wee, please.
Okay. Thank you. Now good morning, thank you for joining us today. As all of you know, globally, there are renewed uncertainties, and we are watching development closely. As an ASEAN-focused player, we see the region being resilient. Supply chain shifts and new FDIs, this could accelerate. Regional economies are growing strongly, easing global interest rate allows central banks to further boost domestic economy. China recent stimulus should have a positive spillover effect across our markets.
I'm pleased to report that UOB has achieved a record-high quarter. Net profit was up [ 16% ] year-on-year, SGD 1.6 billion, driven by broad-based growth across all business segments and in our key markets in ASEAN. And I can feel I can see the momentum is quite strong, the whole ASEAN market.
You can see cut across, healthy demand across sectors and geographies boosted our loan book, driven by ASEAN role as a trade hub and related financing opportunities. Rise of the digital economy with companies upgrading their systems and growth of green economy with rising demand in sectors such as electric vehicles and renewable energy. Following the U.S. Fed rate cut in September, we see positive consumer sentiment in ASEAN markets. Our cards and wealth fees continued to grow double digit year-on-year for the first 9 months.
Synergies from our Citi acquisition have kicked in. Our customer base in the region continue to grow. Cross-sell synergies are bearing fruits notably in CASA penetration across all 4 markets, and we will focus on this.
On the balance sheet front, our asset quality is resilient with strong provisioning. Specific provisions were higher, mainly due to one-off factor during integration of the Thai Citi portfolio. Delinquencies of the Thailand unsecured book have peaked, and we are -- and are normalizing, the business intact and revenues are picking up. Our full year credit costs remained within our guidance of 25 to 30 basis points. We will continue to maintain healthy level of capital and funding.
Now in short, we are confident of where we are today and how we can capture opportunities ahead. ASEAN is a bright spot amid global uncertainties. Our clients are expanding, investments are flowing and digital innovation driving demand for services.
As an ASEAN-focused bank, ASEAN growth story is our growth story. We are uniquely positioned to capitalize on the tailwinds of strong megatrends with our extensive regional network and capability. Our multiyear investment in standardizing regional IT platforms are now yielding benefits. Our FDI Advisory Unit set up in 2011 has supported more than 4,500 companies to expand into ASEAN. And we are the only bank who have signed MOU with government investment agencies across key ASEAN markets. We expect sustained revenue growth across our businesses, and we'll continue to invest in building capabilities in our key ASEAN markets.
So for guidance, we expect high single loan digit (sic) [ single-digit loan growth ]; double-digit fee increase led by cards, wealth, trade related fees; higher total income; cost-to-income ratio between 41% to 42%; and total credit cost at 25 to 30 basis points. Our strong capital position also allows us to consider capital management initiatives.
So thank you for your support. Now I will pass over to Wai Fai to elaborate on our financials and performance of our retail and wholesale business. Thank you.
Thank you, Cheong. And thanks for joining us so early, and I hope you enjoy the tour that could come for you. Okay, back to our results itself. Our third quarter core net profit grew 10% quarter-on-quarter and 11% year-on-year to a record SGD 1.6 billion, with core ROE at 14.3%.
Net interest margin was stable at 2.05% as loans margin widened on proactive deposit cost management. Loans grew 2% or SGD 5 billion from last quarter contributed by broad-based wholesale and mortgage growth. Fee income was at a new high of SGD 630 million, supported by healthy trade and wealth demand as well as picked up in card fees.
Trading and investment income was very strong at SGD 709 million, bolstered by all-time high customer flow treasury income coupled with exceptional performance from trading and liquidity activities.
Asset quality remains stable with NPL ratio unchanged at 1.5%. The higher specific allowance this quarter was mainly from Thailand operational merger issues, which we have addressed and will normalize in the next 2 quarters. Total credit cost on loans was at 34 basis points. Our capital and funding position stayed resilient with CET1 at 15.5% and NSFR at 116%.
A little bit more detail on the numbers. Like I said, core profit for the quarter rose 10% from last quarter and 11% from a year ago to SGD 1.6 billion. Total income grew 10% quarter-on-quarter, and we are very encouraged by the momentum, and this is happening across all revenue lines. The one-off costs relating to Citi integration has reduced significantly by more than 50% from last quarter with Vietnam as the last portfolio to be completed -- to complete operational day 1 sometime next year.
On the business front, Group Retail registered total income of SGD 4.1 billion for the 9 months of 2024. In constant currency terms, this was 1% higher than a year ago. Healthy growth in CASA, card billings and wealth management fees helped to cushion the pressure on margin, especially in the mortgage area.
Total income for Group Wholesale Banking is 5% to SGD 5.1 billion amid the competition for high-quality assets. The competitive pricing impact was offset by strong investment in banking activities along with steady growth in CASA and trade loans.
Our margins. Net interest margin was stable at 2.05% this quarter, while net interest income picked up from a longer day count, but also because of loans volume growth. Loans margin improved 5 basis points to 2.56% as we proactively managed and brought down our deposits' cost of funding. Interbank, securities margin declined, mainly due to the lower Interbank use.
On our fees, net fees income of SGD 630 million is a new quarterly record. Loans-related fees remained strong, backed by double-digit trade growth. Card fees passed the SGD 100 million level, along with the sustained wealth momentum led by strong banca and unit trust sales.
On our treasury and trading. Customer treasury income rose to a new high at SGD 270 million this quarter on increased hedging demands and higher business flows and market volatility. Other trading investment income surged above the SGD 400 million as we capture trading opportunities and recorded exceptional gains from interest rate volatility.
Core expenses for the 9 months was up 5% from a year ago as we continue to build regional capabilities while maintaining tight cost discipline. Staff costs for the quarter rose in tandem with income. There are mainly in bonus provision that we set aside while IT-related expenses picked up from strategic tech investments. On an enlarged income base, cost-to-income ratio improved to 41.5%.
Overall, our asset quality remains stable with NPL ratio unchanged at 1.5% from last quarter. The higher NPA for individuals was largely due to a little bit of fiction that we observed in the Thai retail operational day 1 in Thailand. I think we have since addressed the issues and moving forward, the NPA will be normalized. For the wholesale portfolio, new NPL formation declined. In fact, recoveries and write-offs more than offset this increase.
On the credit cost, net credit cost rose to 36 basis points this quarter with total credit cost at 34 basis points. The increase in specific allowance was mainly due to delinquencies in the Thai retail unsecured portfolio following the OD 1 issue that I mentioned. But this has since peaked and would normalized by the first quarter of 2025. The higher specific allowance also contributed by prudent collateral markdowns on the few selected corporate NPLs in the U.S. and Hong Kong as we step up recovery efforts on this account. Total credit cost for the 9 months was at 27 basis points, and we expect credit cost for the full year to remain within our guidance of 25 to 30.
As at September, the group total allowance was SGD 5 billion, of which SGD 3 billion was from non-impact assets. We continue to set aside general allowance for the growth in our credit portfolio. Our overall NPA coverage remains strong at 98% or 210% after taking collateral into account.
Loans grew SGD 5 billion or 2% came from last quarter, driven by broad-based wholesale trade loans alongside the higher retail mortgage. Year-on-year, we grew 5% at constant currency.
Customer deposits grew steadily by 3% quarter-on-quarter with continued expansion in wholesale and retail CASA. Our overall CASA mix increased to 53.6%. Our liquidity position remains sound, with LCR at 141% and NSFR at 116%, both well above the minimum regulatory requirements. Our CET1 strengthened to 15.5% following the implementation of Basel III reforms in July of this year. On a fully loaded basis, our CET1 will be at 15.2%.
With that, I conclude my presentation and pass it back then.
Thank you, Mr. Lee. [Operator Instructions] Let's start with those in the room first. Could we get the first question? Chanya?
Always the first one.
Congratulations on the good numbers and also the share price increase. Yes, it [ opened ] up 3%, I walked in -- yes, so congratulations. I would like to pick up on -- at the end of your presentation, you mentioned capital management. Could you share -- I mean, your competitor yesterday set a huge share buyback program. Is this something that you are considering?
I think this -- given the new Basel [ treatment ], you can see the capital is quite strong. So we can do a combination of things. Firstly, we can grow, ASEAN is growing. So that is that we can take full advantage of the strong capital to grow.
Secondly, we are -- as what you said, we are also actively hopefully, by end of this year, we can actually look at how we can take full advantage. Maybe capital management will come in. I will discuss closely with my CFO, see how we can take full advantage of that.
Meaning that you have -- you will consider buyback by fourth quarter?
Yes, yes definitely...
I think we're looking at all options now. Because if we can't utilize the capital for growth, we have to find some way to return it back to shareholders. So definitely, share buyback will be an option that we will look at.
Yes, higher dividend or whatever it is. So I think this is something that we are looking.
Would your investors prefer higher dividend or share buyback? I mean as...
What would you prefer?
Of course, dividends...
Maybe different investors have different view. Long-term investors, some of them prefer share buyback because some of them had capital gain tax or dividend outside of Singapore. So I think that there are various considerations because we have a wide range of shareholders, right? So we have to look at the interest of all [indiscernible] and also our retail, the retail investors probably like higher dividend, that's very obvious. So we have to balance both.
Major investors...
Yes. So this is something we are still -- okay? It's premature to discuss now. We are looking at it. I think we are in a good position to talk about.
Yes. But what is the size of your excess capital that can be employed to the full advantage?
So technically, we have always been comfortable, 13.5% to 14% CET1, okay? So technically between 15% and 14%. If -- our RWA, SGD 252 million, probably talk about the size too but between SGD 2 billion to SGD 2.5 billion of excess capital that we can actually look at. Like I say, we will utilize that to grow and partly also to [ win ]. If you look at RWA of SGD 250 million, it was SGD 2.5 billion.
I see. Just another thing that Wai Fai mentioned earlier about -- you said something about staff bonus because costs rise in line with provision for staff bonus, can we -- can colleagues here be optimistic about [ a bump in ] bonus?
We are quite clear that we have a staff program that must be in line with performance. So if you do well, I think, to be fair, shareholders expect higher dividend, staff also expect higher bonus. So I think we have been fair and something that we manage, and we will look at between the headcount growth, okay, and bonus because that's how we manage the staff to also push productivity.
So I think it's a balance that we look at, but we appreciate the hard work done by staff, especially with all the OD1 that we are seeing outside -- all over. We appreciate that. But like I said, it's something that we will have to consider.
Today, 2/3 of our staff is actually outside of Singapore. You look at Malaysia, you look at Thailand, you look at Vietnam [indiscernible] so we are focusing on the region. As long as the region is doing well. I think no reason to shop change.
Our shares keep going up -- your share price keep going up...
Any other questions? [ John? ]
Since you're considering what to do with the excess capital. I wonder with the completion of the acquisition of Citibank and soon the Vietnam integration will be completed, would you consider another acquisition within your core asset markets? I believe there is an Indonesian bank for sale now.
Yes...
Which bank for sale?
Indonesian.
It is something we're always on the lookout, always on that. Ultimately, it has to be the right fit. The last thing we want is to make any acquisition that derail our organic growth, okay? Because the growth is quite robust. You may can the tailwind is very strong. Any acquisition that we make, right, I think, is going to take a lot of management time, okay, to manage the integration of the system, the people, the culture and all these things.
So I think we are mindful. We are also -- not because of that, we miss out an opportunity. I have a team of people actually actively looking at it, right, to see opportunity. You look at the Citibank, it's the same thing, right, after so many years of not doing anything. And I believe the acquisition of Citibank actually boosted the overall branding of the bank as well as the customer base that we acquired. Thank you...
Yes. So I just want to ask a couple of questions. One on -- well, mainly on interest rates and one on capital. what is your NIM sensitivity likely to be based on higher inflation in the U.S. and fewer interest rate cuts. I mean maybe we just end up at 4.5% in the Fed funds rate. So how would your portfolio book...
We have published that we are now less sensitive to -- we know interest rate were cut, right? This is how fast and [indiscernible] so we always say that every 25 basis point will affect around 1.6% to margins will affect us probably in the region of [ SGD 70 million, SGD 80 million ]. So you think about it if it's 100 basis point cut, it's a [ SGD 300 million, SGD 400 million ] profit expected which is significantly less than what [indiscernible] mainly because we actually was now a little bit more sensitive, we move into CASA that is driven, and we have also repositioned our portfolio in view of this CASA.
I think now their market is saying that it might not be as deep. I think it's something that we will watch. Technically, if not as deep, it will be beneficial to margin, if technically. But we have to watch, it's still early days in the U.S. And a lot of times, I do agree that some of the actions that has been proposed is inflationary and inflation might not come down as fast as they can. So actually, we watch that. The 10 years have reacted, but market has always moved ahead on [indiscernible] and for all you know, next month, you'll come back. So we can't use market...
Very difficult to...
But we are watching them.
By end of the day, stability is very important, especially for ASEAN. If you look at the interest rate coming down, you can see the loan growth is picking up. So it's a combination of...
Yes. And the other part is, so for your CET1, you said that the transition 15.5% and your fully loaded is only -- is 15.2%. How come your -- the difference between your transitional and your fully loaded is a lot less than your peers. How does it work?
So this is the question, right? So basically, what Basel does is today everybody have their own models. So I give you the benefit of the models. Because of the difference standard, okay? What Basel wanted to standardize is that you don't have big variation, okay? You don't have one bank having better capital treatment than another or they rank that the RWA is less.
So what the Basel does is it actually set a floor, okay, which means that floor is based on standardized -- standardized means that based on prescriptive parameters. So they don't care about a model says. They say that, okay, for this, this is the parameter, this is the range. So Basel after that in the transition -- so meanwhile, if you are very aggressive, you can have the benefit because your RWA will be low, but it comes to the final, it will be floored at 70%. So if you are below that you have to move your RWA up, okay?
And that's where a lot of the countries are -- second point is actually quite unique compared to Europe, okay? In Europe itself, it's actually the reverse because a lot of them, the RWAs and -- same thing has been a little bit aggressive. So this -- Basel was to do to standardize risk treatment by all institutions. So those that are very aggressive, has benefited a lot with aggressive model will be normalized upwards.
So we are probably a little bit more conservative in the models. And we also have been positioning the models on this new Basel. It's not new. It's something that is anticipated. So it's things like benefiting SMEs and all, something that we're working on. So as a result, we are less affected.
The floor is nearer, the Basel...
Yes, yes, yes. So we are more conservative.
So you're at 15.2%, which is -- would be higher than the transition than the fully -- lower but higher than your peers.
We are all -- roughly around, yes. The transition that's reported around 15.6%, it's no longer the difference in [ 17%, 18% ] okay, versus the 15% so the transition we have...
I want to know, based on where you think rates are going like how would fixed deposit rates and mortgage rates change for you?
So we have to go according to the market, if the interest rate drop, our market will drop. But it is -- I think it's holding -- what is the housing loan right now. 2.6%, right?
Some foreign banks have gone at 2.4% with that. No. But you see -- maybe just to be fair. The interest rate drop, we want to lock in asset pricing [indiscernible] so mortgage technically, people lock in 3 -- 2 to 3 years. So hopefully, you lose money now, you make money later. That's how the intention would be.
But if the forecast of the interest rate drop is not as aggressive, we will have to -- in the market, we have to rethink and recalibrate that. Because if the market is aggressive, then technically, we don't mind losing money, but hopefully making them later. So this is how the market calibrate.
The second part is really asset opportunities growth. So I think mortgage, especially in Singapore is a very good bright spot. It's [ one the best. ] It's not only competitive, but it's actually a very good risk. We...
Yes, yes, very low risk and...
Yes, so there are a lot of potential in that space, okay? Because on the risk adjusted on a return basis, it's still very attractive. But like I said, it's something that we have to be competitive with the market. It's just like the rest of the mortgage. So I think that's...
Thing is the overall economy because it's attractive, job employment is there, it's fine. We have an unemployment situation that you look at China...
So in terms of your securities book, because the treasuries and all that -- yields have all gone up, are you -- what do you plan to do? Do you plan to -- so extended or long, short, I don't know, now you can go long.
Yes, you're right. I mean maybe you can catch any, you [ trust it. ] But I always tell people that it's very frightening that the volatility of the 10 years, when we are here just after the last talk, the 10 years is also at probably 3.5%, 3.6%. After we leave the room 1 month later, it's 4.2%. So they are trading more than [ Jambons ]. So that is the sensitivity we must be aware of.
But it's right that 4.5% is attractive that we have actually started to extend some of our books, especially in the liquid asset portfolio that we [ hope ] to carry. So we are selectively doing that. The other part was really the interest differential between the treasury and 10 years [indiscernible] that's -- most of our books are in liquid asset, it's government securities in Singapore. So that's the other one that we're actually looking at. But yes, in -- we are looking to extend. We prefer to -- but we prefer to use liquid then to do other synthetics. Also, we didn't do as much in synthetics. Most of it is natural extension of my liquid assets portfolio.
And then, of course, the -- I'm sorry I have to point out because -- and then what was the problem, the issue with the Thai book that Citi...
[indiscernible] the Thai reporter.
So I think we just want to be very transparent. She probably knows about it. But you see in the Citi portfolio, #1, it was a very big portfolio in Citi that we took over. So we knew that things cannot be perfect, but we took the opportunity to normalize a few things, okay? A few things that we changed in there, like some of it, we changed billing cycle.
Some of it, we have -- the Citi pay on certain time, now our cutoff is certain time. So sometimes -- then the other part was required multiple cards. So some people have 2, 3 cards, right, then when you make a payment, you specify which card you have to pay and then our system use operation. So there are some of these changes that actually -- as a result, these difficulties -- because of this unfamiliarity yet, some of them default because you're not -- I think just we open, the other part was really Thailand itself also increased the regulatory minimum payment due.
From 5% to 8%.
From 5% to 8%. So just the various combinations that we have. As a result, we have actually shifted a lot of people to stabilize, okay? So within 2 months, we actually stabilized that portfolio. But we also deviated some resources to look at customer service rather than to chase payment. So as a result, we agree that some of this backlog started to build up. But the good news is, like I said, within 2 months, we set -- we actually address the customer issue, then we look at recovery, okay? And we have fully recovered right now. We have fully recovered...
I think the worst is over. What you see is there...
So I think people now are paying on time as -- now I have to address this historical portfolio, which we have also got offered relief programs, okay? We can give them a period of time to pay. So this definitely in our mind, we are very clear. It was a blip that we had. It was quite stressful to the Thai operation.
In fact, we send people to actually stabilize because our primary responsibility is to stabilize so that customer [indiscernible]. And that has actually taken out -- all those talks about social media, they are ready -- so I think that's a good part of it. So I think it's behind us. Now we can look at synergies because all these volumes that we have then we can actually grow and it's actually a very -- a big card portfolio that we -- and the credit cards are pretty strong. So I think that's where we are.
Yes, we have -- yes, we had a little bit of hiccup, but we have addressed it. And I think we just have to face it, okay, but it's behind us. And the good thing is we still can absorb it, my credit cost and all, I still can absorb it. It's not that it has gone such enormous amount. But yes, when you look at quarter-on-quarter, there's a blip in there, and we would have to fully address it and take it. But I think the good news is it's behind us. Customer service is back to normal. When we look at the cross-sell that we go into, the amount that customers are actually now opening up, like I say, even some of the CASA accounts and all.
But Citi never really concentrate on deposits. Today, I think Thailand penetration is -- now has reached like 30%, 40%, okay? And we continue to push that up. Also from 0 cross-sell now we have -- so some of this, we are back to it. The spending per [ CASA ] has also increased. I think -- so we are quite confident that it's behind us.
And like I said, we also measure customer feedback, customer -- and we actually measure social media very closely. Also, the good news is a lot of those noises -- so unfortunately it was something that no acquisition -- that's why it was so difficult. But it's something that we learn, okay, we learned. But the good thing is our, what we call the recovery programs was fully effective.
So we saw all the indicators past due, customer complaints, number of calls has been picked up. They're all back to normal now.
Would you guys revise any NIM guidance now that President Trump is in the office now?
I think it's still too early to tell. So far -- I mean, yes, we see the sentiment is more inflationary. But I think also depending on who are the people that [ are really ] seeking it, right? So on the face of it, yes, the interest rate may continue to stay higher longer. And it will base on the strict policies, the creation, but I don't want to make that assumption.
And then with ASEAN, do you think that people -- the investors will still start -- will continue to invest in ASEAN...
I think so. Yes, I think the flow is coming. You look at even [indiscernible] on top of it, we have 7 branches there. You can see the inquiries are very strong. Some of the Chinese companies, they already committed to invest $1 billion or $0.5 billion, some of these customers that we refer. So there are opportunities, but it cannot translate to dollars and cent at this point, but a lot of inquiries.
So what do you plan for [indiscernible] do you think -- are you going to open more branches? You're going have...
Yes, we can. We can. We are looking at opportunity. We are looking at opportunity. We see how we can relocate some of the branches because with the acquisition of Citibank, we have added 9 branches -- 10 in Malaysia, yes...
[indiscernible] 7 branches...
Yes, so this is something our people will look at it to see how we can capture it, how we can take advantage of the trade zone.
And then what about -- I think the [indiscernible] is trying to revive Forest City and trying to encourage the banks to open branches. Have you looked at it? I mean, have you been there?
We are exploring, we are exploring. It's still a bit too early. They have not formalized yet. I think definitely, there are more upside than downside, let me put it this way, there are more upside.
Any other questions? Do we have questions from those online? Any other questions on those in the room?
So tomorrow, okay, let's ask about tomorrow. Have you -- you didn't -- I mean in the first half, you always said that you get new customers for tomorrow. What's the update on customers and...
You have the latest, I think...
No. So our organic acquisition is obviously on track. I think we added, like I said, [ 101 million ] so now we have probably -- the last time we guided, it was [ 8 ] so now [ 8.3 ]. So they are [indiscernible] okay? They are a very important acquisition tools and especially outside Singapore.
So Malaysia was something that -- and we saw that number coming into Malaysia. Thailand, we had it a bit earlier and with the Citi, I think it's increasing, but I think the exponential rate is happening and really -- and partly Indonesia because these are the ones where our branch network is not as strong.
So it's happening. And the other thing that now that we have been focusing on was to put capabilities into digital. I think that's what we want to do, and you'll see more of it coming up because if you have to look at cross-sell, you have to do all this, the digital capabilities have to be improved. So that's where we are focused on both digital and the other part is really compliance related.
We do have a lot issues if we are not careful for the mass market. So customer onboarding and all was something that now we pay a lot of attention to, scans and all, okay? How do we enable people. When you are too easy, people get worried and where we add friction. So that's the balance now that we have to look at between security and...
But the top -- the 4 markets we are operating in, I think we do engage third parties, right? So the NPS score is actually top 3. So I think the acceptance seems to be quite good.
So top 3 in the markets you are...
Yes.
Could you also share colors on the wealth flows and your wealth management?
I think the flow is quite robust. I think this time around, I think the flow will be more ASEAN. Not so much on North Asia. So ASEAN because it's growing well. So the flow is coming from ASEAN that, in a way, is in line with our market, okay?
And is it like -- the increase in AUM during the quarter, was it primarily net new money? Or was it because of trading gains?
No, net new money.
New money.
So a lot of it, like Ee Cheong said, is from the consumer space. So it's not in the private banking space. But the consumer space is -- our asset franchise is very strong, okay? So I think we are -- and that's also gives testament to the cross-sell that we're all trying to do in the region.
So we are quite hopeful. Like Ee Cheong said, the momentum that's coming out of ASEAN and people are now competing. And once the confidence is back, we hope. Of course, people always say that the amount and the penetration rate is different from North Asia mainly because of the risk. So the wealth that we are selling are really bancassurance, unit trust, simple products that we want to look at interest rate protection, et cetera.
We have some in the private banking space, but not as big when you look at equity account and all. So I think we are quite happy that now the growth is in the consumer space. I think where -- Jacquelyn and [ Susan ] now that's in there and pushing into the region, those are now getting effect, which is really after OD1, the distraction, right?
To be specific, right? The growth AUM is about up 9%, okay? The net new money is about SGD 4 billion.
SGD 4 billion. Is this SGD 4 billion from the previous quarter or...
This quarter.
Quarter-on-quarter. No, no. So 2 things, right? On one side, the consumer space, there is stability and there is company -- at one time, they will move towards, equity but now more people go towards fixed income. So the fixed income space is where it's very active, right? So if you don't do -- if FD is too long -- too low sorry, you look for alternative.
And that's where we think that we are able to offer solutions and all. And also the risk, bancassurance is still a very core product that we are doing very well in.
And that's -- and you're happy with just doing banking, no insurance -- not interest in life insurance.
Life insurance. We went through that. It's just a different management. It's very captive that's it. We probably want to focus on banking.
And no problems in North Asia on the credit front. I think one of your peers mentioned that there was a big...
To say that North Asia has gone out the woods is just not true, okay? But we have been monitoring it very closely. I think we recognize our NPLs are hit. So we had some of those people asking us how come -- and we're asking ourselves as well, how come we recognize North Asia, how come it's not popping up, but based on our own -- and we are now looking at activities to try to accelerate the settlement.
Because if you look at North Asia, at least, there are more transactions now, okay, in recent months, there are more transaction. Previously, a lot of speculations, but more transactions. So we have more transactions and one of the reasons why we increased our collateral value, like I say, is because we actually wanted to just take the [ haircut and get up. ]
So hopefully, we want to clean the books out, but it's something that is well managed. We don't have new accounts that's coming in, that we're not aware of. So I think that -- so it's something that we are managing, and we think that we're at the tail end, we're definitely at the tail end.
Some of the credit cost is due to valuation. So it's okay. I think it's good to be conservative, right?
Any observations on the new Thai Prime Minister?
Say again?
Any observations on the Thai -- the new Thai Prime Minister -- the asset quality outlook can be...
We are the only Singapore bank. We are highly committed, okay? I believe -- I'm confident, let me put it this way. No reason not to be confident. And the flow for ASEAN, Thailand is still one of the biggest countries. You can see the Chinese, the EV cars and the things and the tourism is coming in, right?
No reason [Audio Gap] right? As long as they do the right thing and they are businesspeople, they do the right thing. And we have been in Thailand for over 20 years. In fact, the third week of this month, we are celebrating our 25 years -- I'll be there, it will be a major celebration. And we have 3 buildings in Thailand. And you see my headquarter in [indiscernible] and that gives a lot of commitment.
I think it's important if you want to be in a market, you have to be committed. So that translates to customer confidence. And a country like Vietnam too. We are the first Singapore bank to be locally incorporated. We are also in the process of acquiring a piece of land to build our head office in Vietnam.
In Hanoi or Ho Chi Minh City?
Ho Chi, yes. So this is all ongoing because end of the day, these are all my major ASEAN subsidiaries, we are locally incorporated. We want to make customers feel that we are committed, and we are willing to put fixed assets, build our own headquarter.
Is this still your 90th year -- is there going to be like -- are you looking at a special dividend to reward the Singaporean shareholders?
You don't -- I think it's a -- yes, I hope so.
If there are no other questions, thank you all for joining us this morning. Thank you.
Thank you.
Thank you.