United Overseas Bank Ltd

SGX:U11

Earnings Call Transcript 2017-Q4

[Ee Cheong Wee, executive]

Good to see everyone. Thanks for joining us. Time flies. Like, we just met not too long ago. Today, now we are announcing our full year result. Now before we take any questions, let me just give an overview.

Since we met in last July, sentiments have been picking up. Along with further signs of recovery in the global economy, markets have reached new high despite recent volatility. As a long-term player in the margin business, UOB has always been disciplined in balancing growth and stability. Whether in good times or bad, we continue to stay focused on the fundamentals in building our core franchise so we can support our customers through market cycles. And our efforts are paying off.

We wrap up 2017 with a record full year profit of $3.4 billion, up 9% from the previous year. Our core businesses performed strongly with net interest income and fee income at new high. Net interest income was boosted by broad-based loan growth of 5% during the year. We hope to achieve high single loan growth this year. Net interest margin was up 6 basis points to 1.77% during the year, and we continue to deploy our liquid assets more efficiently. With short-term rates expected to rise this year, our margins should benefit, though they may be partly offset by competitive pressures.

Noninterest income was lifted mainly by fee income, up 12% year-on-year, particularly from wealth, fund management and credit card fees. We expect the momentum to continue with high single-digit fee growth this year. Cost to income ratio was stable at 45.5%, as we stayed disciplined while investing in talent, infrastructure and technology to enhance capabilities.

As a long-term player, balance sheet strength has always been our priority. At the same time, we focused on balance sheet efficiency to ensure every dollar is put to good use. Our return on risk-weighted assets increased last year through various bank-wide initiatives. And we will continue to strike an optimal balance between risk and returns.

On asset qualities, it is broadly stable. Most of the issue in oil and gas segment are behind us. We accelerated recognition of the remaining vulnerable exposures in the oil and gas and shipping sectors last quarter. So as a result, NPL ratio rose to 1.8%, and we expect the ratio to be lower this year.

Nonetheless, total credit costs were lower at 28 basis point last year as we released some general allowance to offset the rise in specific allowance. We expect total credit costs in 2018 to be lower given the more benign outlook this year. Our remaining general allowance of $2 billion is more than sufficient to meet the latest accounting and regulatory standards, which came into effect in January this year.

On funding, our group loan deposit ratio, LDR, and liquidity coverage ratio, LCR, remained healthy as we continue to enhance our liabilities profile. CASA balances were up almost 10% during the year. While deposits are our main source of funds, we also check on debt capital markets to help optimize our funding costs. Our recent successful issuance of subordinated notes, senior bonds and covered bonds reflect the confidence investor have in us.

In October, we priced our USD 615 million additional Tier 1 Securities at the tightest pricing for such offers globally. We also further diversified our investor base with meaningful participation from European investors besides Asian investors. In terms of capital, we are in a strong position with fully loaded common equity Tier 1 ratio at 14.7%. This give us flexibility to seize growth opportunities.

Cover with greater clarity on Basel IV, regulatory and accounting requirements, we are able to reward shareholders with a special dividend of $0.20 in addition to a final dividend of $0.45. And this bring our total full year dividend to $1 or a payout of 49%, including special dividend. The scrip dividend will be applied to the final and special dividends.

Now moving onto business updates. In wholesale banking, despite challenges from the O&G sector, we achieved steady income during the year. We are taking initiative to reshape and diversify our earning mix to enhance risk-adjusted returns in the long run. Two key priorities are to boost fee income and to tap connectivity flow. As we deepen clients relationship across the region, we are making good progress.

Nonloan income. Proportion of income from nonlending business rose from 47% in 2015 to 52% in 2017, a result of our efforts to provide comprehensive solutions to clients. A key contributor to nonloan income is our Transaction Banking business, accounting for 36% of wholesale income last year. Income from cash management grew faster than trade as we continue to ramp-up our product and advisory capabilities.

In terms of tapping cross-border flows, we have an edge given our regional footprint and integrated network. Our FDI Advisory team offers clients seamless connectivity and ecosystem benefits across the region. Within ASEAN in particular, we see momentum in rising cross-border activities in the markets of Singapore, Malaysia and Thailand.

To drive -- to further drive connectivity and fee business, taking full advantage of our regional strengths, we are stepping up, focused on target industry sectors where we see strongest opportunities in trade and investment flow.

Through a deeper and more integrated understanding of clients, value chains and ecosystem, using data analytics, risk insights, bank controls, we are able to offer bundled solutions to address clients' needs holistically. This in turn helps strengthen our share of clients' wallet and to mitigate risk. For instance, we started with the financial institution segment. It has shown good progress with rising income and a high proportion of nonloan income. Our enhanced capabilities allow us to support an increasing number of FIs in their funding, trade financing, cash management and global markets needs across the region. In 2017, 57% of FI income were from outside Singapore. We extended this approach to other sectors, including industrials and consumer goods and are encouraged by the progress.

In retail banking, we saw good growth momentum. Loans and income were up 6% and 9%, respectively, in 2017. Singapore housing loans saw good growth, benefiting from the volume mood in the property market, amid growing optimism on the economy. We maintained our market share of new sales in Singapore despite intense competition. Our housing loans business in the region also did well, up 8% last year. Thailand in particular saw double-digit growth. Wealth management business remains strong with income and profit up 20% and 26%, respectively, in 2017. Our AUM hit another milestone, exceeding $100 billion as of end 2017.

Our organic growth strategy is bearing fruits. Income from high net worth segment was up 35%, more than double the growth of mass affluent segment in 2017. Our ground presence in the regional markets give us an edge in terms of client engagement and convenience. There is upside potential as we strengthen collaboration across our extensive network and client segments.

There is much talk about digital these days. In a world where the lines between off-line and online are blurring, we believe in integrating digital and traditional channels to give customers a truly omni-channel experience. We focus on our customers' cumulative experiences with our brand, products and services across all touch points. Whether in wholesale or retail banking, our initiatives are driven by our customer-centric philosophy.

While we innovate, our focus is not on chasing the latest technology trends but in providing customers relevant, convenient, safe and reliable solutions because banking is ultimately about trust and confidence.

Given the different stages of development, dynamics and demographics in each market in the region, we tailor our strategies accordingly. In our home base of Singapore where we are a major player, our aim is to innovate for greater productivity and better customer experience. We continue to cater to evolving customer needs. For instance, with the launch of Mighty ForEx last month, we now have a complete payment solutions for customers to go cashless in Singapore and overseas. Our award-winning UOB Mighty was developed with customer convenience in mind. It provides a complete suite of banking, payments, ForEx and lifestyle solutions all in one single integrated applications.

Last month, we also piloted a nontraditional banking concept in Tampines for millennial customers who are typically more digitally savvy. And just 2 days ago, our accelerator, the FinLab-launched program for SMEs, which aspire to grow and digitalize. The program is the first in Singapore to equip SME with tools and knowledge on self-innovations.

We also continue to expand our ecosystem partnerships under our BizSmart offerings to help SMEs automate their back-office processes. These are all parts of our ongoing efforts to help SMEs go digital to enhance productivity.

Outside Singapore, where our priority is to scale up our customer base, our unique regional network provide an opportunity to pursue further innovative digital solutions. We will share more with you in the coming months. Watch out for this space.

Looking ahead, we believe the outlook for the next couple of years will be positive with rebound in commodity prices, trade and investments. Amid lingering risk on the geopolitical and policy fronts, the global economy is expected to improve this year. Asia is poised to ride the tide of recovery.

Closer to home, short-term interest rate have been gradually increasing. Several Asian central banks are likely to join the Fed in normalizing their monetary policies. Such tightening move will generally benefit commercial banks like us, and UOB is well placed to capture growth opportunities across our franchise. Our robust balance sheet, integrated network and sharpened capabilities allow us to tap ongoing physical and digital connectivity opportunities.

We continue to invest in our core franchise, undertaking various initiatives to transform and reshape our businesses and operations in line with the fast-changing landscape. Through our disciplined and focused efforts, we are confident of creating long-term value for our stakeholders.

On that note, thank you for joining us today. Today is special in more ways than one. Wishing all of you a happy Valentine Day (sic) [ Valentine's Day ] and a happy Lunar Chinese New Year. Thank you very much.

[Wai Fai Lee, executive]

Okay. Good morning, everyone. I know it was a really long day and is going to be a long day for you. So I shall say, thanks for joining us on Valentine's Day. I'll briefly go through the detailed financials that was highlighted by Ee Cheong, and then we will open the floor for questions.

The group achieved a record net profit of $3.4 billion in 2017. This is up 9% year-on-year. 2017 saw very strong revenue momentum across both net interest income and fees income. We benefited from an upward interest rate environment and our wealth and fund management businesses continued to show very resilient growth.

We also took the opportunity as part of our ongoing portfolio assessment to accelerate the recognition of the remaining vulnerable exposures in oil and gas and shipping, okay? Bringing them into NPAs to this quarter. In addition, further haircuts were applied on the collateral valuations. If this exercise is completed, we believe that the group has addressed any lingering concerns on our credit risk to these sectors going forward. We closed the year at a comfortable level of general allowance on loans, in line with the new accounting center requirements and comfortably above regulatory requirements.

With our strong capital position at 14.7% fully loaded CET1, coupled with the strong performance, we are pleased to reward our shareholders with a higher final core dividend of $0.45 and an additional special of $0.20 per share.

I think, looking at the details for the year, total income showed strong momentum, rising 10% with new highs in both net interest income and fees income. Net interest income growth of 11% was on the back of margin, improving 6 basis point to 1.77%, and healthy loans growth of 5%. Given the outlook on the interest rate environment, we expect margins to continue to show moderate growth this year. Fees and commission registered a robust growth of 12%, driven by strong performance in our retail franchise. Our wealth management, fund management and credit card businesses have shown strong growth.

The revenue momentum allowed us to continue to invest in people and infrastructure, while maintaining expense to income ratio at 45.5%. I think with the acceleration, recognition of the NPAs in the fourth quarter, specialty allowance increased to $1.5 billion for the year with general allowance way above the new accounting standard and regulatory requirements allow us to write back $0.7 billion for the year. We closed the year, as I mentioned earlier, at a record profit of $3.4 billion.

For the quarter, net profit rose 16% year-on-year to $855 million. I think, total income was up 14% due to the continued momentum in net interest income and fees income, as I mentioned earlier. The strong growth in net interest income of 15% was on the back of a 12 basis point margin uplift to 1.81% and a loans growth of 5%. Total expenses were up due to higher performance-related staff costs. Again, with the -- as I said, the recognition of NPAs, as we mentioned, special allowances increased to $781 million, and we are able to release $641 million of excess general allowance, ensuring that we are satisfying both the accounting standards and way above regulatory requirements.

For the quarter as compared to last quarter, net earnings were marginally lower by 3%. This may lead you to higher performance-related staff cost and year-end seasonal expenses. But our top line showed very strong growth. Net interest income grew 4%, driven by higher asset volume and a margin improvement of 2% -- 2 basis point. Fees and commission rose 6% last year on higher loans related and credit card fees. And with the write back, total allowance were lower this quarter at $140 million from the write back.

Margins. Our overall margin increased steadily, okay? This is helped by our ongoing balance sheet management and rising interest rate environment. I think if you noticed, our loans margin were relatively stable for the last 4 quarters despite the competitive pricing. So with interest rate expected to rise further, we expect to see a lift in our margins. Like Ee Cheong said, the magnitude of the increase will be a function of competition and also the pace of the Fed rate hike increases.

Our strong growth in wealth management and fund management business is in line with the return of investor confidence this year, especially in the second half, as we said, our fees were very strong. Our strong credit card franchise continued to deliver, and I think we are fairly confident that we have positive 2018 outlook, our regional networks will continue to deliver.

We continue to invest and build capabilities and infrastructure to support our customer regional business needs. I think IT expenses grew 28% year-on-year as we continued to improve our infrastructure. Due to strong revenue momentum and continued cost discipline, our expense to income ratio declined to 45.5% for the year.

I think we'd just like to take note that going forward, next year, we will be netting the directly attributable expenses against related fees, so with that, our expense to income ratio will be recalibrated to 43.7% in -- for 29 -- 2017.

While we have invested in standardizing our core banking platform several years ago, we are committed to serve our customers who are stepping up their regional expansion plans and expecting further growth in their personal wealth. Our investment technology have continued to grow with IT CapEx spend share totaling $1.2 billion over the last. And we are seeing encouraging results in our investments. So if you see, we have double-digit growth rates in income from Transaction Banking, treasury income, wealth management over the last few years.

Our group-wide online banking penetration has also inched from a year ago and more customers enjoy the ease and convenience of digital banking, as Ee Cheong highlighted earlier.

Special allowance. The special allowance on loans increased to $1.4 billion for the year, primarily from the NPLs in the oil and gas and shipping segment. I think we mentioned about the acceleration of the recognition and also the further haircut that we did. So you realize that our special provisions for the quarter actually shot up to 125 basis point.

I think with that, we have relative confidence that credit concerns surrounding these segments are now fully addressed. And 2018 credit costs will normalize to more benign levels and way below our long-run experience of 28 basis point.

As for the NPL formation, not unexpected, due to the one-off accelerated recognition, the group's total NPA stood at $4.4 billion at the end of the year. And this fourth quarter, we recognized $1.2 billion in new NPAs. And these are really due to a few large accounts in the oil and gas and shipping segments. The rest of our portfolio was actually very, very stable.

The new NPL formation, we expect it to ease to a more normalized level of $300 million to $400 million every quarter going forward.

It is important to note that while NPL ratios have increased to 1.8% as part of the cleanup, the special mentioned portfolio has steadily reduced throughout the year. So with that, we are very confident that special provisions will be a lot more manageable going forward in 2018.

As for the NPLs, I think the year-on-year increase, some of you are wondering where the oil and gas and shipping NPLs are showing. From an industry classification standpoint, they are classified mainly in the manufacturing and the transport industries.

Okay. As for exposures, hopefully this is the last quarter I need to address this. Okay. The concerns of the upstream. I think we have shown that we have brought it down and they are actually fully provided for a lot of it. So with that, we are fairly confident that we are in full control of this segment.

Okay. The next topic will be the reversal in GP and the new accounting standards. So like Ee Cheong said, we closed the year at $2 billion of general allowance, okay. So this is actually well above 2 things: Number 1, the accounting standards. And by now, most of you have been -- hopefully been briefed what does the ECL level 1 and 2 means, I think that's probably the technical part. And also the regulatory environment. So we are comfortable and we do have a little bit of reserves in there which we are confident can take out the volatility for this year, if any. If not then, we will have some positive surprises.

For NPL coverage, I think we remain adequate at 91%, while 195% after taking collateral into account. Liquidity, like Ee Cheong mentioned, our funding position remained very strong, very healthy loan to deposit ratio. And I think, the Singapore LCR of 140% and all currency LCR of 135% are well above the MAS requirement.

Loans itself, I think we did show very steady growth of 5% for the year and this is broad-based across most territory. The only one that showed a decline probably is Indonesia. Indonesia onshore growth is actually quite flattish, a lot of those deduction is mainly due to exchange differences.

Funding itself, year-on-year deposit grew 7% to $273 billion. I think mainly by that -- by the U.S. dollars deposits. Compared to last quarter, we grew 2%. For the market funding, I think Ee Cheong has elaborated quite a lot that we issued $4 billion in debt and professional capital to diversify our funding mix and some of it is to refinance steps that are ideal for redemption. So we are very, very comfortable with our liquidity position.

For the business segment itself, I think not unexpected, group retail showed very strong growth, okay, of 9%. And this is really supported by their double-digit growth in fees income from wealth management and their credit card business. Net interest income was highly -- was also higher, mainly because of the volume increase in loans and deposit growth. For last year, loans margin actually came down, but we are hopeful that it should stabilize. Or if not, show some uptick this year.

For group wholesale, the operating profit was quite stable. So this shows the competitive environment in there. In fact, margins actually compressed because of price competition and the widening between the SOR and SIBOR. For global market itself, it showed a decline mainly due to some trading positions in the unfavorable foreign exchange movements. And some of the other segments that's not defined above, the biggest was really improved performance from our CTU and the fund management activities. So the business line itself, our core is actually doing very, very well.

For the region itself, the Singapore operating profit actually increased 10% year-on-year, again, mainly from higher interest income and fees. Our regional franchise grew 11% on a constant-currency basis. Again, Indonesia is showing lower mainly because of lower trading profit and some one-time gain last year from the sale of property and fire insurance claims and also mainly because of the exchange difference.

On capital itself, okay, we ended the year with a very strong CET1 of 14.7%. So remember, we started last year at 13.1%. So I think all the risk optimization programs that Ee Cheong mentioned has been taking effect. As a result, our RWA efficiency really already shot up. So with a very strong return on the risk-weighted asset or return on RWA, this allows us to utilize our capital resources more effectively and provide us the flexibility to adopt a more generous dividend strategy, while maintaining capacity for growth.

I think days so far has been a lot clearer. For us, we are actually quite neutral. Of course, there were some negative in the retail segment. This is more than offset by our corporates wholesales, some of the benefits. So we are actually quite neutral. So we are quite comfortable with our RWA position. So I think as for capital, I think from our strong capital position and financial performance, we are pleased to announce that we'll be increasing our core dividend to $0.80 with a special dividend of $0.20, okay. And excluding the interim dividend of the $0.05 that Ee Cheong mentioned, shareholders will be receiving a final dividend of $0.65. This comprises of $0.45 core and $0.20. And for the year, if you add up the chart, it will be at $1. So this equates to a 49% payout ratio, and I think at yesterday's closing price of $26.84, the dividend yield works out to be around 3.7%.

So I think, with that, I hand it back to Ee Cheong, and he will take any questions.

[Jean Khong, executive]

Five questions. Maybe we'll take one question first and then give the other media a chance to ask their questions as well.

[Unknown Analyst]

Your risk-weighted assets, Mr. Wee mentioned that this widened through various initiatives. What are they? Could you clarify it please, what are the initiatives?

[Wai Fai Lee, executive]

Okay. So I think part of it, remember, we shot up some of it is because of the collateral. So that's the true exercise that we review how we structure loans to make sure that we are efficient going forward. The other one was, I think if you really look at it, was the FX, structure FX that we had. Previously, we had a lot of regional exposure to the region in Malaysia, Thailand and these are investments that we did. We don't really cover that. And I think MAS has kindly agreed to give a concession to that, okay, because these are long term that we cannot cover. So I think -- and there are many various -- every single units has been looking at this. So the way they look at it is what you call the RWA density. If you look at the RWA over the total assets or total loans itself, this gives you a overall structure. We were at 61%, and we've brought it all the way down to 51%, and we'll continue to work at it. But I think the easy part has been done, and it's really hard work. So everybody look at collateral value, look at when they do customer review, et cetera. So every nitty-gritty that we are going in that resulted in that big savings that we have.

[Unknown Analyst]

But is that a cause of concern for the -- or it's -- what's the trend going forward?

[Wai Fai Lee, executive]

Okay. The trend going forward is you don't expect a 9% jump in RWA when loans grow 5%, okay. You should see some correlation of the growth.

[Jean Khong, executive]

Next question from [ Irwan ].

[Unknown Analyst]

[ Irwan ] from Sao Paolo. I'm just wondering from the shareholders perspective, we are seeing a 49% payout ratio. Are they -- I mean, I think the question for them is, is this going to be something around the level going forward?

[Ee Cheong Wee, executive]

I think -- yes, I think what we have today, if the business environment is good and then given our strong capital position. I think moving forward, I would like to see we are a little bit more open and progressive in terms of dividend payout, okay? We all along have been guiding the market of 40% to 60%, right. But I think -- yes, I think we will be quite confident to increasingly -- if the earning environment is good to increase our payout ratio.

[Jean Khong, executive]

Okay, can I get the next question, please. Li Hsia? Yes.

[Li Hsia Wong, analyst]

Mr. Wee, can we just be very clear, so your final dividend has now been increased to $0.45. And...

[Wai Fai Lee, executive]

Right. Final, yes.

[Li Hsia Wong, analyst]

The final, yes. And the trend I think for big multinationals and banks is to have same interim and same final. So does it mean in 2018, your -- the interim will also go to $0.45?

[Wai Fai Lee, executive]

No, I think we guided -- as I said, the core is $0.80. So $0.25 to $0.40.

[Li Hsia Wong, analyst]

So for 2018, it's going to...

[Wai Fai Lee, executive]

So if the core remains the same, we will be $0.40 interim. If the core remains the same, because it's $0.80, so it's $0.40, $0.40.

[Li Hsia Wong, analyst]

So for 2018, you're guiding...

[Wai Fai Lee, executive]

No. We are guiding the core to be at $0.80. So which means that you expect, like you say, equal payment, which is $0.40, $0.40, okay? Provided, we don't change the core outlook.

[Li Hsia Wong, analyst]

Where is $0.40...

[Wai Fai Lee, executive]

No, no, because it's total $0.80.

[Li Hsia Wong, analyst]

So you are guiding 2018 to be $0.80?

[Wai Fai Lee, executive]

Yes, that's what we are guiding.

[Li Hsia Wong, analyst]

$0.10 more then?

[Ee Cheong Wee, executive]

Yes.

[Wai Fai Lee, executive]

Yes.

[Ee Cheong Wee, executive]

Yes. And this year plus final -- the special dividend of $0.40.

[Li Hsia Wong, analyst]

Yes. But for FY '17, it's $1.

[Wai Fai Lee, executive]

Yes, yes.

[Jean Khong, executive]

Okay, next question, please.

[Unknown Analyst]

If no one. You have spent quite a decent amount, I just wanted to check $1.2 billion in the past 4 years with technology investment, is that correct?

[Wai Fai Lee, executive]

Yes, because that is basically on technology. And I think, today, banking is all about people and technology. So I think spending $300 million to $400 million a year is quite expected. And we are just accelerating some of them to try and catch the trend. But if not, we'll continue to see those trends going forward.

[Unknown Analyst]

Sure. No, it's quite a good thing, but I -- just my question is, do you see more going forward? And could you say how much you plan to spend over the next 2 years?

[Ee Cheong Wee, executive]

Well, I think generally we will pace the market, okay. I mean, how much we can afford our earning, you cannot overspend, right. And because technology is still something very new. I think, the last thing you want is to spend on signal the up technology and then the consumer are not able to accept it. So I think we have to pace it, okay. And things are changing very fast. Yes, go ahead.

[Unknown Analyst]

I'd like a small question, 284 people added in the fourth quarter. What are they for?

[Ee Cheong Wee, executive]

284 people.

[Unknown Analyst]

284 headcount.

[Ee Cheong Wee, executive]

Well, we just opened our Vietnam -- 284 people is...

[Unknown Analyst]

Yes. Oh, that's for Vietnam?

[Wai Fai Lee, executive]

No, no, no.

[Ee Cheong Wee, executive]

Not only for Vietnam. I think out of the 20 -- 26...

[Wai Fai Lee, executive]

Actually a lot of those are sales.

[Ee Cheong Wee, executive]

Sales. These are sales people. And in Vietnam, also opened our branch. We have a digital branch in Vietnam. So I think these are the people that we need to hire.

[Jean Khong, executive]

Okay, so we'll take one -- okay, I think [ Golar ] had a question as well. We'll let [ Golar ] go first.

[Unknown Analyst]

Yes. So what are your plans for Vietnam? How much are you expecting to invest in Vietnam? And also you mentioned that your loan growth -- you're expecting high single digits for loan growth, so maybe online if I can take with. So what will you expect for your risk-weighted assets, because it dropped from September 2017 to $1.99.

[Wai Fai Lee, executive]

Right. As I said, for risk-weighted asset growth, it should roughly be proportion, so if you want to do that I think you can model it around the middle of 5 plus 10 or 5/2. You can do it 7% to 8% always.

[Unknown Analyst]

So you have excess capital, so is that -- I mean, you've got a lot of capital, 14.7% is the highest amongst the 3 and there was a huge payout of dividends by DBS, which is not reflected and not repeated by the other banks. So what are you going to do with that capital?

[Ee Cheong Wee, executive]

I think it's a good problem to have. I think it's a good problem to have, you asked about Vietnam, I think this is a country that is growing. We'd like to see growing faster. What we have done is I think we actually set up, I would say, almost total digital concept, right, to penetrate into the Vietnamese market because we think, as a foreign bank, and now we are competing with most of the state-owned enterprises in Vietnam, and they have all those physical branches. And Vietnamese, they have the youngest population base. They are digitally quite savvy. So we thought this is one of the good way for us to penetrate a market, especially the younger generation. So we are working towards that direction. And of course, the wholesale piece, I think there are quite a number of good, strong Vietnamese company. Many regional, multinational company to take advantage of the growing population base, the young population and also the cost of operation in Vietnam today, I think, is a lot more competitive compared to China. So as a regional bank -- in fact, since you brought up this, I think we started this, I said it many time, we started this FDI unit, foreign direct investment, since 2011. It's basically to capture our regional footprints. And so far, I can tell you, it's -- the result has been very, very encouraging. We -- from 2011 till now, we are able to attract 1,600 companies with deposit flow of $90 billion. Now these are company come to Singapore from China, from Korea, from Japan, from different part of the world. They are talking to us because -- party because of our Southeast Asia footprints. They want to talk to one bank able to provide them the regional solution. So the attraction is getting quite good, quite encouraging, and especially today, with the One Belt One Road, I think people are talking more about it. I believe the momentum is slightly to gather more and more.

[Jean Khong, executive]

Okay. Sorry, we will take one final question from [ Kevin ].

[Unknown Analyst]

Yes. Okay, I'm [ Kevin ] from [ NKA Market Service ]. I've got 2 questions, one follow-up on China. In the area of technology, where you see the big -- which business lines in your opinion are under -- that face a greatest threat from fintech players? And also, in terms of cost savings or efficiency, what are the areas where you're most likely to see the kind of gains from application of technology? And also just wealth management, you've -- I think you've stressed the organic growth. Is there any reason why you seem to, how do you say, be uninterested in M&A unlike, say, your local competitors?

[Ee Cheong Wee, executive]

At UOB, we have a big pool of customer base, so I don't need to invest. I mean, when we say buying things, what are you buying? You are buying people. I have all my people, I have all my branches, I have 52 wealth center in the region. I think it will be sad for me not to take advantage of that. Why do you have to buy, why do you have to pay a premium? Buying a bank, different culture, different system, it will set you back for the -- yes, you -- what you can see is AUM increase, but the day-to-day operation is a lot of work. For UOB, we have gone through our -- the growth of UOB, we have 6, 7 acquisitions, more than any other banks in this region. The amount of pain that we had to go through. Please join me and then you understand, right. You look at Thailand, okay, you have Thai colleagues here from Bloomberg, we started Thailand about 16 years ago. We took 2 small banks in Thailand, and so far it's getting traction. How many years it took us to change a system, the culture, I don't speak the Thai language, to understand that is not easy. Just by...

[Jean Khong, executive]

I can teach you any time.

[Wai Fai Lee, executive]

Yes. So I think this is something, I mean, we must be practical, right? Of course, we're always on the lookout. We have good assets, good company, good banks with the right culture. Today, we are buying culture, we are buying people. What you're buying? You're buying infrastructure. Technology can do that. You don't need physical branches.

[Jean Khong, executive]

Okay. I think we have to wrap up today's session. If you have any further questions, then please follow-up with me directly. And I will now invite Mr. Wee and Mr. Lee to take the lead.

[Ee Cheong Wee, executive]

Thank you.