UOB Annual Report 2002 - United Overseas Bank

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2002 in Review by higher interest income earned from loans and advances and increased contributions from capital market activities. Commercial Credit Commercial credit, which embraces our SME business, is one of our traditional strengths. In 2002, we took advantage of the relatively quiet market to reinforce long-standing relationships and to expand selectively into targeted industrial sectors, including proactively identifying lending opportunities presented by the regionalisation plans and overseas investments of our customers. We continue to maintain our market leadership in financing to this customer segment because of our vast regional reach, broad range of products, improved services, and local knowledge. In 2002, the roll out of our new Business Internet Banking service saw the provision of a suite of online offerings for our commercial customers, including cash management, payment and trade transactions. Corporate Banking Corporate banking provides a full spectrum of banking products and services to middle-market and large local corporate groups, including non-bank financial institutions. Our portfolio is characterised by a diversified base of customers. This has allowed us to segmentise our customer relationships by industry groupings, both for greater client focus and long-term banking relations. Noteworthy deals and initiatives in 2002 included: • Participating as a lead-arranger and underwriter in a US$600 million five-year term loan facility for UMCi Pte Ltd to finance Phase One of its proposed US$3.6 billion wafer fabrication plant in Singapore. • Participating as a lead-arranger in a US$300 million fouryear term loan and three-year revolving credit facilities for Systems on Silicon Manufacturing Company Pte Ltd to finance the company's capital expenditure for the expansion of wafer capacity. • Participating as a lead-arranger in the issue and underwriting of a $400 million bond by Tuas Power Pte Ltd to finance the Stage Two construction of its power plant. • Putting into place a structured finance team to pursue opportunities in a variety of financial products and structures, such as credit default swaps and callable asset swaps, in the primary and secondary credit market. • Expanding our e-commerce solutions to include a greater range of cash management and business internet banking UMCi's 300-mm wafer fabrication plant in the Pasir Ris Wafer Fab Park is the world's most advanced semiconductor fab. Its construction was financed through a syndicated loan facility in which we were a lead-arranger and underwriter. UOB Asia, our investment banking arm, continues to support the development of the Singapore bond market with its participation in Singapore's second Islamic bond issue for Majlis Ugama Islam Singapura. Strategic partnerships with established global financial institutions, like Deutsche Bank, allow us to accelerate the growth of our Collateralised Debt Obligation business. 52
services so as to meet the increasingly sophisticated needs of our major corporate and financial clients. Capital Markets Our capital market and corporate finance activities are conducted through our investment banking arm, UOB Asia. The subsidiary had an active year in 2002 despite the challenging market conditions. In terms of the number of deals, it earned a joint second-place ranking in both the domestic Initial Public Offering (IPO) and domestic rights issue league tables with a 22% and 18% market share respectively. Some of the year's key transactions were as follows: • Appointed as the Co-ordinator of the public offer in Singapore for the MobileOne Ltd IPO, the largest IPO since 1999. • Appointed as Manager of the IPOs for seven companies across multiple business sectors, including those for Europtronic Group Ltd, aspnetcentre Ltd, Cortina Holdings Limited and Raffles LaSalle Limited. • Appointed as Manager for the rights issues for Hotel Negara Limited, Meiban Group Ltd and Vertex Venture Holdings Ltd. • Appointed as Financial Advisor in relation to Panpac Media.com Limited's acquisition of Auston Technology Group Pte Ltd. • Appointed as Independent Financial Advisor to the independent directors of CWT Distribution Limited in respect of the conditional cash offer by PSA Logistics Pte Ltd in the takeover of CWT Distribution Limited. • Arranged and managed a $451 million asset backed bond issue for Upperton Holdings Limited. • Jointly lead-managed Singapore's second Islamic bond issue for Majlis Ugama Islam Singapura, a statutory body. Global Treasury Global Treasury performed significantly better in 2002. Despite the global economic downturn and an increasingly difficult operating environment, we continued to build on our strengths and to capitalise on our competitive advantage in strategic markets. Net profit before tax rose by 30.1% to a record $347 million, reflecting a broad-based improvement in performance in our key lines of business and the effectiveness of cost-saving measures. We benefited substantially from the favourable global interest rate environment, high value-added securitisation activities like product structuring, and cross-marketing initiatives to customers. Our other achievements during 2002 included: • Successfully structuring two managed synthetic investment grade Collateralised Debt Obligations (CDOs) with a combined notional value of US$3.03 billion. This is in line with our strategy to develop CDOs as one of our core businesses, by entering into strategic partnerships with established global financial institutions. • Doubling the issuance of ARCHER asset backed commercial paper, and broadening its investor base. • Designing and customising an expanded range of products to serve the specific financing, investment and risk management needs of our regional clients. • Expanding our treasury franchise in the region. • Enhancing our e-trading capabilities to provide a wider range of web-based transactions for our customers. Going forward, growth for our global treasury operations will hinge on the realisation of two important strategic goals: • Increasing the contributions from our Overseas Treasury Centres while continuing to substantially boost our earnings from the domestic market. We will do this by supporting the commercial and funding requirements in these centres, and identifying and developing profitable market niches in these locations. • Achieving a more balanced income ratio for our trading and non-trading activities by honing our ability to structure products with regional and global potential and maximising value to the services that we offer our clients. UNITED OVERSEAS BANK 53
Page 1 and 2:
ANNUAL REPORT 2002 United for Growt
Page 3 and 4: Our Mission To be a premier bank in
Page 5 and 6: Performance in Brief Profit For The
Page 7 and 8: Profit growth was derived mainly fr
Page 9 and 10: Financial Highlights Group Assets 2
Page 11 and 12: Group Return On Average Shareholder
Page 13 and 14: Corporate Information Honorary Life
Page 15 and 16: Left to right: Koh Beng Seng, Ngiam
Page 17 and 18: Left to right: Tan Kok Quan, Prof L
Page 19 and 20: Mr Francis Lee Chin Yong Managing D
Page 21 and 22: The Bank has a budget for directors
Page 23 and 24: independent and non-executive direc
Page 25 and 26: work of each of the banking subsidi
Page 27 and 28: Risk Management Credit and Country
Page 29 and 30: The composition of loans and advanc
Page 31 and 32: Group Non-Performing Loans (NPLs) a
Page 33 and 34: Group NPLs and Cumulative Provision
Page 35 and 36: Group Specific Provision by Region
Page 37 and 38: Collateral Types The majority of th
Page 39 and 40: Exposure to the Five Regional Count
Page 41 and 42: Cross-Border Exposure to the Five R
Page 43 and 44: Complementing the static analysis i
Page 45 and 46: Sources of Deposits The Group has a
Page 47 and 48: The VaR calculations are performed
Page 49 and 50: Group Daily VaR Distribution for 20
Page 51 and 52: As part of the Group's comprehensiv
Page 53: The celebratory light-up linking UO
Page 57 and 58: Our subsidiary, UOB Asset Managemen
Page 59 and 60: Grow our services In line with the
Page 61 and 62: exercise, achieved well ahead of th
Page 63 and 64: processes in place that will suppor
Page 65 and 66: Group Financial Review Review of Fi
Page 67 and 68: Group Profits The Group achieved a
Page 69 and 70: Analysis of Changes in Net Interest
Page 71 and 72: Cost Savings from Integration The G
Page 73 and 74: Overview of Balance Sheet Assets Mi
Page 75 and 76: Gross Customer Loans Analysed by Cu
Page 77 and 78: Capital Adequacy Ratios The Capital
Page 79 and 80: Directors’ Report for the financi
Page 81 and 82: In addition, the following subsidia
Page 83 and 84: Arrangements to Enable Directors to
Page 85 and 86: Ability to Meet Obligations No cont
Page 87 and 88: Share Options of the Bank (a) From
Page 89 and 90: (d) (e) (f) No options have been gr
Page 91 and 92: Statement by Directors for the fina
Page 93 and 94: Income Statements for the financial
Page 95 and 96: The Group The Bank Note 2002 2001 2
Page 97 and 98: The Group 2001 Non- Share of Share
Page 99 and 100: The Bank 2001 Non- Share Share Dist
Page 101 and 102: Notes to the Financial Statements f
Page 103 and 104: (e) Investments (i) Singapore Gover
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(k) Derivative Financial Instrument
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4 Interest Expense The Group The Ba
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(c) Equity Compensation Benefits Op
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11 Directors’ Fees and Other Remu
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14 Tax (a) The tax charge to the in
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2002 2001 Fair Value of Depreciable
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Deferred tax assets and liabilities
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18 Non-Distributable Reserves (a) T
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19 Revenue Reserves (a) The Group 2
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(c) The interim dividend paid in sp
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23 Debts Issued The Group The Bank
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(b) Included in other government tr
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(c) Total gross trade bills and adv
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29 Other Assets The Group The Bank
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32 Investments in Subsidiaries (a)
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33 Movements in the Provisions for
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34 Fixed Assets (a) The Group 2002
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(e) Certain freehold and leasehold
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39 Derivative Financial Instruments
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(c) Derivative financial instrument
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The Group - 2001 Individual Institu
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(b) Secondary Reporting Format - Ge
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Discussions on the main financial r
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The Group - 2002 Hong Singapore US
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Other foreign exchange exposures of
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The Group - 2002 Non- Over 7 Over O
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The Group - 2001 Non- Over 7 Over O
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The Group - 2002 Over 7 Over Over O
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The Group - 2001 Over 7 Over Over O
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Where quoted and observable market
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Percentage of Paid-Up Capital Held
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Investor Reference Financial Highli
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1998 1997 1996 1995 1994 1993 1992
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1998 1997 1996 1995 1994 1993 1992
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Statistics of Shareholdings as at 1
Page 179 and 180:
Changes in Share Capital The follow
Page 181 and 182:
Our International Network Banking S
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United Overseas Bank (Malaysia) Bhd
Page 185 and 186:
UOB Venture Management (Shanghai) C
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Notes to Resolutions 4, 6, 7, 8, 9,
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Notes: 1 Please insert the number o
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UOB Annual Report 2002 - United Overseas Bank

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