Can you tell us about UOB’s 30-year journey of development in Vietnam? What has impressed you most from these 30 years?

UOB’s relationship with Vietnam began 30 years ago, in 1993, when we set up a representative office with just three staff. In 1995, UOB was the first Singaporean bank to establish a branch in Ho Chi Minh City. Since then, we have been steadfast in our commitment to supporting Vietnam’s economic growth as we connect our clients to investment opportunities in the country.

Looking back over the last 30 years, UOB Vietnam has achieved many important milestones. We successfully transformed from a branch to a wholly foreign-owned subsidiary bank while maintaining steady growth, even through the pandemic. We have supported more than 250 companies to invest in Vietnam, which is projected to bring in more than S$5.9 billion ($4.39 billion) of investment and created more than 30,000 jobs in Vietnam, since we signed an MoU with the Foreign Investment Agency (FIA) in April 2015.

We have been continuing our sustainable commitment to do right by our customers, including the UOB Global Heartbeat Run/Walk and the first-ever UOB Painting of the Year flagship competition in Vietnam, which we recently launched in Hanoi.

2023 is a very important year for us, as we have achieved another important milestone in welcoming more than 500 Citi colleagues as part of our acquisition of Citigroup’s consumer banking business in four countries - Indonesia, Malaysia, Thailand, and Vietnam. This expanded network of ecosystem partners and a full suite of products and services and capabilities ensure that we can serve the needs of our enlarged customer base.

With the addition of new colleagues, we now have a bigger and stronger team with a wealth of knowledge to drive our ambition to be a truly regional bank and help our customers achieve their financial aspirations.

What is your assessment of Vietnam’s investment environment? What are the challenges and opportunities for UOB when investing in this young market?

Vietnam has always been a very important country for us. Over the past few years, it has benefited from the trend to shift supply chain amid US and China trade tensions and the Covid-19 pandemic, thanks to its stable political foundations, favorable demographics, strong growth prospects, and conducive business environment. In 2022, total registered FDI capital reached nearly $28 billion and disbursed capital hit a record $22.4 billion, up about 13.5 per cent over 2021 and the highest performance in five years (2017 – 2022).

Now, amid global uncertainties caused by prolonged geopolitical tensions, there will be challenges in attracting FDI not only for Vietnam but also for any other country. These prolonged geopolitical tensions have resulted in companies and lawmakers looking into strategies to make supply chains more resilient by moving production, either to the home country or to a trusted country. This will actually lead to increasing trend of geopolitical fragmentation that will cause intensified competition to attract FDI around the world.

In addition, the Global Minimum Tax (GMT), which will be applied in 141 countries and territories from 2024, will pose a significant challenge for emerging markets in Southeast Asia, where tax incentives have been one of the most attractive points for foreign investors. However, over the last few years, Vietnam has been consistently considered an attractive destination by foreign investors thanks to stable political foundations, strong growth prospects and conductive business environment.

In addition, a strong and affordable workforce and a very attractive domestic market of nearly 100 million people with a rapidly-growing middle class, creating a market with high purchasing power, are attractive points for foreign investors.

Vietnam is also one of Asia’s most dynamic destinations for business and investment, with the image of a country having a clear direction and striving to realize its strong commitments made at the UN Climate Change Conference (COP26) on attracting high-quality investment towards a carbon-neutral economy and green growth. Accordingly, Vietnam still has the opportunity to attract more FDI flows by enhancing infrastructure and improving administrative procedures, the quality of labor forces, and the regulatory requirements to effectively counter the GMT.

As the first Singaporean bank to serve a large number of FDI customers, what has been your experience in supporting customers in investment and business expansion in Vietnam?

Across the region we have set up dedicated FDI advisory centers to support regional investment flows and trade activities. UOB currently has ten dedicated FDI centers across Asia, including in Vietnam. We set up our tenth FDI center in Japan last week. We are confident that we can actually encourage more investment from Japan to Vietnam, because the former is now the third-largest investor in the latter. In Vietnam, UOB was the first Singaporean bank to set up an FDI advisory department, ten years ago to support growing trade and FDI flows into the country.

In 2015, we have signed an MoU with the FIA with the aim of increasing FDI and trade between Vietnam and Southeast Asia and focus on areas being encouraged by the Vietnamese Government and the FIA, which will boost the industry sector and create more jobs.

Working closely with the FIA, we aim to serve as a one-stop service for companies looking at entering into or expanding in Vietnam by offering market insights and holding webinars, where our ecosystem partners, government agencies, consulting firms, and multinational companies share their expertise and best practices on investing in the country, market entry support, and holistic banking solutions.

Today, UOB has the most extensive ASEAN network among regional banks, particularly with our FDI service centers, which enable us to provide seamless support for customers to grow regionally, and we will leverage this deep regional connectivity to continue to facilitate FDI flows into Vietnam and support Vietnamese companies expanding into the region.

UOB Vietnam is already set to facilitate a pipeline of S$1.5 billion ($1.11 billion) of potential investment from companies in sectors including manufacturing, technology, and consumer goods over the next three years.

Could you tell us more about the acquisition of Citigroup’s consumer banking segment in Vietnam? Is this part of UOB’s strategy to expand its retail operations in the ASEAN region, outside of its home market in Singapore?

The acquisition is part of UOB’s strategy to scale up its ASEAN retail business outside of its home market in Singapore. We believe strongly in Southeast Asia’s long-term potential and we have been very disciplined, selective, and patient in seeking the right opportunities to grow. The acquisition was actually funded by internal capital, our own capital buffers that we have set up over the years, patiently waiting for the right opportunities.

Twenty years ago, foreign banks dominated the competitive landscape. Now, a regional bank like UOB is in the sweet spot, and not many players have our kind of footprint. Actually, we are ahead of other regional players, having earlier bought and integrated five banks in Singapore and five banks in the region over the past 40 years.

When Citigroup’s consumer banking businesses in four markets were offered for sale, we knew that was a great opportunity that came at the right time, as ASEAN has restarted its engine of growth post-pandemic. The acquisitions are expected to double UOB’s existing retail customer base in the four markets and add 5,000 people to our team strength, accelerating our growth by five years ahead.

So far, performance has surpassed our expectations. Business is resilient. We have diversified earnings across products and countries while creating significant cross-sell opportunities. The acquisition has also built stronger resilience in the business model with both geographical and revenue mix diversification.

With Citigroup’s portfolio more geared towards cards business and unsecured lending, net credit card fees for the Bank almost doubled year-on-year in the first quarter of 2023, with Citigroup’s portfolio contributing a quarter of this, and total income from the Bank’s unsecured business is expected to almost double by end 2023.

Separately, loans and deposits also grew almost 10 per cent and 15 per cent in the first quarter of 2023 compared to a year before. Financials and integration costs are on track. With the completion of the acquisition in Indonesia by end 2023, these four markets are expected to provide a S$1 billion ($740 million) boost to the bank’s revenue on a full-year basis. People wise, the teams are integrating well. In Vietnam, the acquisition will triple retail customer base, double retail lending and deposit balance of UOB Vietnam, providing the bank a full suite of unsecured products, including credit card and unsecured personal loan, to complement its existing mortgage and auto loans.

Digital banking has been a focal point for many banks, especially after Covid-19. How has UOB invested in digital banking to date and what are the plans for the future?

UOB is well positioned, as we have been investing up to S$500 million ($373 million) in digital innovation initiatives across ASEAN, including in Vietnam. This initiative will drive innovation and speed to market, to enhance the digital experience and serve our customers.

For example, we will focus on pushing the boundaries of innovation by creating a hyper-personalized banking experience, which means using AI to understand customer habits and preferences and then recommending relevant products and services that are unique to each customer. This is our aim, to make banking simple, engaging, and transparent for UOB customers.

We will also leverage our strong digital capabilities, such as our data analytics-powered credit underwriting engine, to access and respond quickly to the financial needs of small and medium-sized enterprises (SMEs).

The recent strategic expansion of UOB Finlab, an innovation accelerators powered by the bank in June 2023 aims to enhance our regional connectivity and foster UOB Finlab’s network of more than 21,000 SMEs across ASEAN, granting them access to digitalization and sustainability programs, and matching solution provider, mentorship, and valuable resources. This is to help the business become more resilient, grow their business and improve productivity.