Financial Management of United Overseas Bank Ltd

Financial Management 1
FINANCIAL MANAGEMENT
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Financial Management 2
Table of Contents
SECTION A...............................................................................................................................3
Introduction................................................................................................................................3
Financial Analysis......................................................................................................................3
Horizontal and Vertical Analysis of UOB Financial Statements...........................................3
Economic Analysis of the Banking Industry.........................................................................4
Financial Ratios......................................................................................................................4
Profitability........................................................................................................................4
Dividend Ratios..................................................................................................................6
Stability and Liquidity Ratios............................................................................................7
Efficiency...........................................................................................................................8
Compare UOB with Industry Average.......................................................................................9
UOB current market share price analysis.............................................................................10
UOB Customer Service........................................................................................................11
Section B: UOB Corporate Governance Compliance..............................................................12
News That Has Impact On Bank’s Financial Performance.................................................12
Impact on Brand and Reputation..........................................................................................12
Corporate Governance.........................................................................................................13
Conclusion................................................................................................................................13
REFERENCES.........................................................................................................................15
APPENDICES..........................................................................................................................17
Appendix 1: Horizontal analysis of UOB balance sheet......................................................17
Appendix 2: Vertical analysis of UOB balance sheet..........................................................18
Appendix 3: Horizontal analysis of UOB income statement...............................................19
Appendix 4: Vertical analysis of UOB income statement...................................................20

Financial Management 3
Financial Management of United Overseas Bank Ltd
SECTION A
Introduction
United Overseas Bank Ltd is usually Singapore multinational banking firm. The company
operates across Singapore with several branches located in Southeast Asian nations.
Established in the year 1935, the bank is third largest financial institution in the South-East
Asia by total assets. It provides wide range of services including corporate and commercial
banking services, private banking, corporate financial, performance financial services,
venture capital, insurance and investment services. Generally, UOB has over 68 branches
across Singapore and over 500 offices across 19 nations and regions within North American,
the Western Europe and Asia Pacific. Currently, UOB is one of the top banks in the world as
the company has grown rapidly since its establishment as a result of several strategic
acquisitions. The bank offers several financial services across the globe through its three
chief segments; that is, global markets, global wholesale banking as well as global retail.
Through its subsidiaries, UOB offer insurance services, venture capital management as well
as asset management.
Financial Analysis
As a financial analyst or an investor, one should dig into an organization’s financial
statements. One can look at the financial statements in isolations; nonetheless, it is crucial to
company organization’s financial results to selected firms within the industry, companies
outside the sector as well as against other period in determining whether the firm might be a
good investment. There are different forms of analysis which could be performed; these are;
vertical, horizontal or ratio analysis.
Horizontal and Vertical Analysis of UOB Financial Statements

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Based on Appendix 1 below, it is evident that UOB total assets increased year by year,
though the amount differed over the years. Similarly, its total liabilities for the bank increased
year by year. Further, it is evident that its total liabilities represented at least 90% of the total
assets over the past five years (Appendix 2). Moreover, based on Appendix 3 below, it is
clear that the total revenue increased every year except in the year 2016 where a slight
decrease was recorded. Despite the decrease in 2016, UOB has gained significant increase in
its total revenue. On the other hand, its net profit is said to have decreased in the year 2015
and 2016, nonetheless, it gained momentum in 2017.
Economic Analysis of the Banking Industry
Singapore is presently the most renowned financial hub across the globe with its banking
sector account for over 10% of city state’s GDP (Bestar 2019). This industry employs just a
small portion of Singapore personnel which makes it among the highest value-added sector
across the country. Generally, Singapore is considered as one of the powerful banking centre
that caters for both domestic finances as well as monetary activities for the entire Asia-Pacific
(3E Accounting 2019). Being heartened by nation’s stable economic and political climate,
law enforcement against money crimes and frauds, effective taxation and legislation, the
country banking sectors is one of the most competitive sectors across the globe. Furthermore,
it is the Asian third-largest financial institution that provides several services from the
consumer credits to insurance and investment operations (One Visa 2019).
Financial Ratios
Profitability
Net profit ratio
2014 2015 2016 2017 2018
Industr
y
Net Margin % 46.53 42.88 41.53 41.29 45.75 39.2%

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The net margin for UOB was 46.53% in 2014 which later decreased over the years to 42.88
in 2015 to 41.53% in 2016 and later to 41.29% in 2017. Nonetheless, the ratio increased to
45.75% in 2018. The trend in net margin is attributable to decreasing net income between
2014 and 2017 and increasing net income reported in 2018.
Return on assets
2014 2015 2016 2017 2018
Industr
y
Return on Assets % 1.07 1 0.92 0.94 1.04 1
Return on Equity % 11.59 10.58 9.56 9.43 10.47 12.04
It is evident that UOB ROA decreased from 1.07 in 2014 to 0.94 in 2017 but later increased
to 1.04 in 2018. The trend is a good sign that despite the decrease, the company management
has gained its effectiveness in utilizing the bank assets to generate income.
Operating ratio
2014 2015 2016 2017 2018
Industr
y
Return on Assets %
57.81
%
55.31
%
54.15
%
54.50
%
56.08
%
48.45%
Operating ratio for UOB in 2014 was 57.81% that decreased over the years to 54.50% in
2017. Nonetheless, the ratio gained momentum in 2018 increasing to 56.08%. The operation
ratio for the bank was relatively higher than industry average meaning that it was doing well
within the industry.

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Return on Equity / Return on Investment
2014 2015 2016 2017 2018
Industr
y
Return on Equity % 11.59 10.58 9.56 9.43 10.47 12.04
As per the above values, it is evident that UOB ROE decreased from 11.59% in 2014 to 9.43
in 2017 but later increased to 10.47% last year. The trend in ROE was as a result of decrease
in net income between 2014 and 2017 and increase in net income reported in 2018. Its ROE
was lower as compared to industry average for the last five years.
Dividend Ratios
Dividend Yield ratio
2014 2015 2016 2017 2018
Industr
y
Dividend yield 3.26% 3.34% 3.43% 3.78% 4.88% 3.95%
Its dividend yield increased over the last five years. This is a clear sign that the company has
been experiencing increased dividends which were distributed to its shareholders. Besides,
the company dividend yield is relatively higher than the industry average.
Dividend Payout ratio
2014 2015 2016 2017 2018
Industr
y
Dividend Pay-out Ratio % 34.4 44.5 37.2 37.4 41.1 30.21
As per the analysis, UOB dividend pay-out was 34.4 in 2014 which later increased to 44.5 in
2015. Nonetheless, the ratio decreased to 37.2 in 2016. This was attributable to decrease in
dividend paid in proportional to increase in the net income for the bank. The ratio later
increased to 37.4 in 2017 and to 41.1 in 2018. This shows that the company is in a stable