Asia’s best bank for SMEs 2021: UOB
When Covid began to close in on southeast Asia in 2020, UOB didn’t wait. In February 2020, before any government support and before much of the west had even acknowledged there was a virus to worry about, UOB announced S$3 billion of relief assistance to SME clients.
It was the first sign of a process it would demonstrate time and again: see trouble coming, get ahead of it, help clients through and then benefit from a strong loan book as a consequence of getting clients back on their feet. All told, UOB approved more than S$7 billion of collateral-free financing for SMEs in Singapore, including over 5,000 loans worth a total of over S$2 billion for small enterprises. Regionally, it offered S$27 billion of relief assistance to more than 20,000 SMEs.
It was able to do this for two reasons. One is a longstanding strength in serving smaller clients in the region, led by Eric Tham and Lawrence Loh, who take one size segment of the market apiece and work closely together. They know their client base, they understand its needs and stresses, and they understand risk.
The second is the transformational embrace of digital technologies at UOB over the past few years, which paid off during the Covid crisis by improving operational efficiencies, getting around the problems of people being unable to meet and adding another layer of data analysis to risk management. Over 10,000 small businesses have set up through the UOB BizSmart platform, which has been enhanced through the year in several ways from invoicing to collection.
UOB Infinity is a new digital business service for cash management and trade; and a new SME Leadership Academy has been launched with Google.
Through all of this, the business performed well in the circumstances in 2020, with current account savings account volume increasing 19% and loans 3%, with net credit losses remaining at a remarkably low 0.6%.
On top of that, the SME businesses of the three main Singaporean banks have also stood out for their regional nature. UOB doesn’t publish precise data, but its SME book is thought to be roughly 50/50 Singapore and region in top-line terms. It stands out for getting deep into the heartland of the countries it operates in: you’ll find UOB people not just in Bangkok but Chiang Mai and Phuket, Medan and Surabaya.
Some of these markets were particularly vibrant in the review period, most notably Vietnam, which provided 52% income growth and Indonesia 16%, compared with 6% at home in Singapore.
UOB is also reaping the benefits of the Foreign Direct Investment advisory unit it set up a decade ago, principally in order to help Chinese capital engage with southeast Asia, a service it offers for free in the hope of ancillary business following. That has proved especially helpful as US-China trade tensions and Covid have disrupted supply chains and it is well positioned to take advantage of the RCEP regional trade bloc.
This is a useful time to be on very good terms with both China and the US.