UOB Singapore has Diversified Financial Industries all Around the world: Investments Assignment, SIMGE, Singapore

Industry and external environment

1.1  Industry

UOB Singapore has diversified financial industries all around the world and it relies on personal banking service, trusts, commercial and business banking, investment banking, futures service, assets management, and some insurance products. It aims to enhance its dominant status in Singaporeandeven thewholeAsiamarket.

Besides, UOB becomes the leader in the credit card and private residential loan businesses in Singapore. It also plays an important role when lends loans to small and medium firms.

1.2  MayorCompetitors

As the competitive match in Singapore DBS.   DBC Bank also offers personal and private banking, traditional commercial banking services to small and medium enterprises its major businesses. Because DBS bank has a premium funding structure system inside, the higher the interest rate in the US and Singapore, the more benefits it will obtain from its earnings.

Another bank group is OCBC, which is the aggressive group in Top three members in Singapore. Stop rates more than 470 offices in 15countries.In addition to common banking products for individual and enterprise customers, and asset management is concluded in its main operating activities as well.

These years, while UOB Singapore concentrates more on the transactions inside the home country, where the marketing risk s are considered to be relatively lower, the rest two banks DBS and OCBC expand their cross-border transactions to other countries in Asia, such as China, Indonesia, and Thailand. However, the UOB Singapore announces its strategy that it aims to collect the profits from overseas countries, which will account for 40% of the whole profits. So the expansive trend of DBS and OCBCisthegreatchallengefor UOB.

1.3  CurrentStateoftheEconomy

The GDP in Singapore was worth 289.94 million dollars in 2012, and this amount kept increasing in the next four years (2012-2015), which rose up to 306.34 million dollars in 2014 and held on $292.74 million in 2015. So it is obvious that the economic state of Singapore is stable and increases rates slightly.

Meanwhile, the unemployment rate in Singapore can also reflect the background of the economy to some extent. This rate fluctuated between 1.9% and 2.3% in four years(2014-2017).It also means that society keeps balance when developing.

Refer to the policies of the central bank, the interest rate rocket more than 1% in 2015while it held on 0.2 to 0.4% for the rest years. Except for the additional increase of interest rate, we can conclude the tendency of rate is maintained on a standard level (0.2% to0.4%).

Consumer prices in Singapore rose 0.7 percent in 2017. The inflation rate remained at its highest level at 2.7% since August 2014. After that, it was mainly driven by an increase in the cost of food and transport while the cost of housing continued to fall. Inexperienced a series of negative growth threats from then on until2016.

The average amount of Bankruptcies in Singapore is about 216.28 Companies from2001until2017peryear,reachingthehighestnumberof507CompaniesinJanuaryof2004 and lowestof78 Companies in Februaryof2011.

In conclusion, the current state in Singapore is steady and positive. Every factor in the economy develops slightly and keeps on advantaged standard level.

2.  SWOTAnalysis

 SWOT Analysis is a simple and useful framework to analyze your organization’s strengths and weaknesses, and the opportunities and threats. It helps you focus on your strengths, find out your weakness, minimize threats, meet the opportunities, and minimize threats.

2.1 Strength

The strong presence in the country and around Asian

UOB has one of Asia’s leading financial institutions with a network of 500 officers. Therefore, UOBin Singapore became a strong presence around Asia.

•  The best wealth management as rated by theAsiaBanker.

UOB has won the regional awards, pointed out the Asian Bank for their best wealth management. Other than that, UOB in Singapore also won the best transaction bank, best cash management, and best trade finance bank in Singapore.

•   UOB has a well-diversified product portfolio.

UOB also provides a variety of financial services through its hundred of officers and branches all over the world. This diverse product portfolio will help to drive better performance in terms of customers and retention. The projected variables such as gross domestic product and the interest rate are applied to all portfolios.

•   UOB has a workforce of 10000+people and has a strong capital position.

UOB’s worker has trusted their employers and UOB’s worker is increasing as year past, year by year, their capital position becomes stronger.In2015, therearepeoplewithautismmakeup30 percentoftheworkforceattheUBO ScanHub.

• Research and development(R&D)focus and integrated supply chain.

UOB provides the workers with the opportunity to gain insights. It also enables the works to manage wisely and minimize the risk and cost, to achieve improvement.

2.2  Weakness 

• Global market and investment management(GMIM) division has low profitability.

GM provides a comprehensive range of treasury products and services including foreign exchange, fixed income as well as an array of structure products. The segment in 2013 is36.1%to$320million, attributed to lower income from trading and interest rate management activities. But in 2014, the segment increase in 15.6% to $452 million, attributed to higher gain on investment securities and the market-making activities. Then, the segment in 2015 is 32% to $349 million due to the lower income from market marking and banking book activities.

•  Thepossibilityofhigherloanrates.

The interest rate is to protect and enhance capital or the economy. The interest rate that providedbyUOBin Singapore was 2.75 for 2014, 5.04 for 2015 and3.35 for 2016.

2.3Opportunities 

• The growth retail saving 

Thisgivesacompellingimageofthelong-term prospects for the region’s relatively small and underdeveloped equity and bond market. In 2013, UOB registered a 5.5% growth in wealth management customer base on the continued to expand our business across Southeast Asia. The steady economic growth in Asia and increasing middle-class affluence continued to be key growth drivers for the Group Retail business, in 2015. UOB abiding commitment to encourage business investment the same and of diving long-term economic growth and community development.

•  UOB investment in fast-growing economies to increase market share and profitability.

To meet the UOB growing needs of Asian investors and corporates seeking to diversify their investments to grow their wealth and to optimize their working capital. UOB Bullion and futures (UOBBF) expanded its derivatives the services beyond Asian currency-denominated products into US-dollar and Euro-denominated derivatives to offered on global bourses. The growing needs of customers, UOB expanded the UOB team of transaction banking specialists in cash management, tradefinance, and liabilities management.

•        The constant increase in income level.

The constant increase in income level will lead to an increase in profits for this entity. This factor will lead to a decrease in cost. In 2013, the more Commercial Banking clients across the region taking up the universal life and key-man term insurance to safeguard business continuity and manage risk, our income from the products doubled.

Threats

• The changes in tax rates in various countries and the tax policies are common to create the threat for UOB on a global platform. The implementation of policies such as GST and tax slabs are some of the factors that affect the balance sheets and cash flows of the bank. The tax changes on profit for the financial years from the theoretical amount computed using the Singapore corporate tax rate due to the following factors. The tax rate is 17% from 2013 until2017.

• The low-interest-rate environment could continue to affect core earnings.

The core earnings of UOB are likely to affect due to low rates and various competition in the market.

3.PESTAnalysis

3.1        political factors

The political risk in Singapore is quite low. The main reason is that thePeople’sAction Party, which is the most dominant party in Singapore, plays the critical and central leader of the country for a few years. This party constructs a scientific and qualified strategy to lead the country. Since its independence, they cherished relative political stability. Today, political stability has translated to country peace developed economy level, more competitive potential, and a better standard of living.Moreover,ithasimprovedtheinternationalstatusforSingaporesubstantially.

However, there are reports about the restriction of free speech for opposition parties in Singapore. The right of free speech for the parties is limited by the People’s ActionParty. The defamation laws require opposition parties to be careful that political comments do not lead to costly defamation suits or imprisonment. Furthermore, the critics from other democratic countries or groups always focus on the unfair limitations towards Singapore. The debates that whether Singapore needs to transfer the current party policy into a two-party system have never stopped.

Besides, the strict laws in Singapore are well-known in the world. And the argument sabs out the implementation of this aware never achieving the agreement sofar.

3.2        EconomyFactors

The economy of Singapore is mainly depending on its role primarily and entrepot neighboring countries. The main reason of it its strategic geographic location and the entrance to the straits of Malacca. So,itplaysthesignificantroleinthewholeSoutheastAsia.Althoughthereisnoenoughmineralsresourcesuchasoilandgasesin Singapore to develop its industry, it concentrates a major economic function by transshipping and processing of goods nearby lands. It can be understanding that theneighboringcountrieshelpSingaporetodevelopandsavealotofcosts.NowSingapore has become the most competitive country with highly educated people and a steady financial structure.

However,therearesomeconstraintsonSingapore’s economy,they are outlined

below:

Labor shortages,rising labor costsandDeclinesinproductivity

3.3        SocialcultureFactors

Socially, Singapore’s behavior resembles an Eastern country. It not only follows western culture and values but also builds the western strategy and economic policies such as the president and family values. It is directed by the Ministry of Community Development, which is often assisted by various voluntary organizations.

LiteracyrateintheSingaporeisvery high.Primary schooling is compulsory in Singapore. What’s more, residents need to use English and Chinese languages at the same time. They are two official languages there because the most of people areChinesedescents.ThiscircumstancereallyassistsSingaporeantoobtainmoreadvantageson the international stage and foreign communication.

Finally, the internet coverage rate is more than 70% in Singapore. The 10Mbps of broadband internet service is nearly available in-country. The widespread IT business world has attracted multinational company resources. As the report said, there are more than half of the top 500 enterprises have set up their Asian regional operations there. Currently, the Singaporean government is determined to achieve the dream of electronic government working.

3.4        LegalFactors

Previously, the Singapore government consisted that the rapid increase of electronic commerce needed a specific critical regulation and legislation in certain conditions. One of the regulations named the E-Commerce program was introduced in 1996 to develop e-commerce services. Furthermore, Singapore has other basic legal and infrastructures to provide steady and peaceful e-commerce, which have been in place since 1998.

The disciplines and details of the laws are below:

ElectronicTransactionsAct,IntellectualPropertyRights,AmendmentstotheEvidenceAct,ContentRegulation,TaxIssuesandImportandExportProcedures.

3.5  TechniqueFactors

In 1979, the growing need for technology tools and electronic information spreading the world. The Singapore government abolished its previous policy and adopted a policy of modern technologically sophisticated industries.

The government in the 1980s especially target investment promotion were computers, electronic medical instruments, automotive components, and pharmaceuticals and soon.

To concentrate on education quality and human resources level and to accelerate export competitiveness capacities, the Singapore government started The Strategic Economic Plan (SEP) in 1991. The new policy plan enhances the investment in the media, publishing, arts, entertainment, and fashion fields.

In conclusion, it is apparent that Singapore is a great and successful country in many fields. It makes full use of the geographic, political, and cultural conditions to maintain positive development. The most important is Singapore represents a remarkable achievement for Asia and even the world.