United Overseas Bank Limited (U11) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to UOB's Fourth Quarter 2024 Results Media Briefing. Today, we have with us our Deputy Chairman and CEO, Mr. Wee Ee Cheong, who will give a broad overview of how our franchise has performed and the operating landscape. We also have our Group CFO, Mr. Lee Wai Fai. Wai Fai will go into more details on the financials and business performance from the quarter and for the full year. After both presentations, we'll be taking questions from the media. I'd now like to invite our CEO to get us started. Mr. Wee, please.

Thank you. Thank you. Good morning, everyone. Good morning. Thank you for joining us today. With ongoing geopolitical tensions and tariff, the outlook for the year remains uncertain. We are closely monitoring developments. So far, ASEAN continues we receive. Megatrends such as supply chain diversifications, digitalization and the green economy are driving investments into the region. ASEAN is also moving towards closer corporation. With recent developments such as Johor Singapore special economic zone and integrated cross-border retail payment system and the share power grid, all this will help boost intra-ASEAN connectivity and growth and reinforce the region's position as a key player in the global economy. In 2024, we achieved a good set of results. Full year net profit grew 6% to a new high of SGD 6 billion versus 2023, SGD 5.7 billion. We are pleased that we are making good progress in reshaping our income drivers. In Wholesale Banking, our platforms and sector-specific solutions enable us to better finance cross-border businesses, leading to higher fee income and CASA growth, 4% just year-on-year on loans and trade-related fees, 16% year-on-year in CASA balance. Cross-border income and transaction banking now contribute a higher proportion of Wholesale banking. Also, customer-related trading and investment income saw robust growth of 20%. In Retail banking, our Citi acquisition has helped us scale our business in ASEAN. Gross credit fees grew 18% for the year. Our newly reorganized private bank, along with privileged banking are driving high net worth AUM. Our total AUM up 8% to SGD 190 billion and wealth management income, which grew strongly by 30%. We are making good progress in shaping our businesses towards drivers that are recurring in nature and less sensitive to rate cycles. This may take time, but we are happy with the results so far, and we will be laser focused on accelerating growth in these areas. On the cost front, we are stepping up efforts to enhance productivity. Our cost-to-income ratio for 2024 was 42.5%, reflecting our cost structure as a regional commercial bank. In 2025, Citi-related integration costs will roll off significantly. We expect CIR to be in the low 40s in the next few years. Asset quality is sound and our book continues to be resilient. The uptick in specific provision last quarter was in line with our expectations and prudent policies and catered for by management overlay set aside earlier. Total credit costs remained within our guidance of 25 to 30 basis points last year. While we stay vigilant, we are gaining traction in reshaping our loan portfolio to more trade-related exposures and diversifying our revenue base to more non-loan income. Given our business model and projections this year, we expect total credit costs again to remain 25 to 30 basis points. Funding base is also getting stronger with solid gain in transaction flows from both retail CASA and business cash management services. Capital positions are at a healthy level with excess CET1 even on the Basel IV fully loaded basis. The Board has recommended a final dividend of SGD 0.92 per ordinary share, bringing our full year dividend to SGD 1.8 per share, represents a payout ratio of around 50%. This year marks UOB 90th anniversary. For our shareholders, we are pleased to announce a SGD 3 billion package to return surplus capital over 3 years. This comprises a special dividend of SGD 0.50 per share payout over 2 tranches this year and a SGD 2 billion share buyback program to be executed over 3 years. Our disciplined approach of pursuing long-term growth with stability has served us well, and we are confident of enhancing shareholders' value in the years to come. Looking ahead, amid an uncertain world, we are confident that ASEAN economies are resilient and continue to expand. We are committed to our ASEAN strategy. Our long-term investments in the region are paying off with early results. The momentum is picking up, and we expect to see sustained revenue growth this year. Just for guidance, our this year guidance, we like to achieve high single-digit loan growth, double-digit fee increase led by cards, wealth, trade and loan-related fees, higher total income, cost-to-income ratio of around 42% and total credit costs at 25 to 30 basis points. I will now invite Wai Fai to share a little bit more detail. And I'd also like to take this opportunity in front of the Wai Fai has been a loyal staff of the bank for over 40 years. I think he will be stepping down and you'll be watching us on the site. And I would like to take this opportunity to thank him for his dedication and contributions to the bank. And he has been a CFO for the last 20 years and he is a valued member of our senior management team. I wish him all the best. Thank you very much, Wai Fai.

Thank you, Ee Cheong. Good morning, everyone. It's nice to see you again as usual. Okay. On the results itself, our full year profit rose 6% to a record SGD 6 billion with an ROE of 13.3%. Net profit for the quarter was SGD 1.5 billion, 5% lower than the previous quarter. Fees income grew 7% to SGD 2.4 billion, led by double-digit growth in wealth management fees alongside strong card fees and higher loan fees. Trading and investment income rose 15% to SGD 2 billion for the full year, driven by robust customer-related treasury income as well as good performance from trading and investment and liquidity management activities. For the fourth quarter, net interest margin moderated down to 2% from the effect of interest rate cuts. Wealth and loan-related fees were seasonally softer and trading and investment normalized to SGD 367 million after an exceptional third quarter. Asset quality stayed resilient with NPL ratio maintained at 1.5% with full year credit cost at 27 basis points within our guidance. We maintained our strong capital and funding position with CET1 at 15.5% and NSFR at 116%, respectively. With our record profit, the Board is proposing a second half dividend of SGD 0.92 per share, bringing the total full year dividend per share to SGD 1.80. We are also pleased to announce a SGD 3 billion package to return surplus capital over the next 3 years as part of our capital distribution strategy to reward our shareholders. I think the Board is recommending a capital distribution package comprising of special dividend and share buyback, as Ee Cheong mentioned earlier. We are committed to deliver this over the next 3 years. A special dividend will be of SGD 0.50 will be paid in 2 tranches in 2025. We only have -- we only pay dividend half yearly. So you'll get it in the 2 tranches this year. And we returned close to SGD 1 billion of our surplus capital. And this year also marks our UOB 90th anniversary. We have also introduced a SGD 2 billion share buyback program to be executed over the next 3 years. Together, the package targets to return SGD 3 billion of surplus capital, which will bring us closer to our optimal capital level. Now back to the financials. As mentioned, net profit for the year grew 6% to a record SGD 6 billion, boosted by strong fees income and trading and investment income. Net profit for the quarter was SGD 1.5 billion, 5% lower than previous quarter. You could note that the Citi integration costs have actually re-tapered off as we have completed our operational integration in the key markets of Malaysia, Thailand and Indonesia. I think what's left is Vietnam, which is a small part of our portfolio. We saw healthy growth across our business franchise. Group retail registered total income of SGD 5.5 billion for the year. The enlarged regional franchise is finally showing results with double-digit growth in low-cost CASA, card billings and wealth income, which helped to cushion the pressure on margin. We are also happy to note that the total wealth fees, including the so-called customer-related treasury income, actually, they have grown 30% year-on-year to cross the SGD 1.1 billion mark. Our group wholesale regional franchise is also doing well. Record investment banking fees, better customer flows, strong CASA and trade loans with a diversified loan book helped cushion the drop in margin from declining interest rate and keen competition. For the year, net interest income was stable at SGD 9.7 billion, supported by healthy loans growth, offsetting the margin compression. Quarter-on-quarter, net interest margin, though it declined to 2% from the effect of interest rate cuts, net interest income we held steady at SGD 2.5 billion from asset growth. For the full year, gross income grew 11%, led by double-digit growth in wealth management fees, along with stronger card fees and the enlarged regional franchise. Fees income eased from last quarter due to a seasonal slowdown in loans related and wealth activities. However, our credit card fees maintained its momentum, boosted by the year-end holiday spending. Trading and investment income rose 15% to SGD 2 billion for the year, driven by robust customer treasury income from increased retail bond sales and strong hedging activities as well as good performance from our trading and liquidity management. For the quarter, trading and investment income, like I mentioned earlier, normalized to SGD 367 million after an exceptional third quarter that benefited from market volatilities. Total operating expense excluding the one-off, increased 5% year-on-year to SGD 6.1 billion, mainly from people and IT-related investments. Our full year core cost-to-income ratio at 42.5% reflects our regional commercial banking activities. Staff cost is well controlled at a 4% growth for the year. For 2025, we are focused to improve our productivity and staff efficiency. In the medium term, we target to keep the cost-to-income ratio in the low 40% range. The overall asset quality of our loans portfolio stayed resilient with NPL ratio maintained at 1.5%. The increase in new NPA formation for this quarter was due to a few nonsystemic accounts. This were within our expectation. With the higher recoveries and write-off, total NPL ratio remained at 1.5% for the quarter. However, specific allowances rose to 52 basis points this quarter. This increase was mainly due to the same few corporate accounts in U.S. and Greater China. This were anticipated and hence, the release of some general allowances that we have earmarked previously. On a full year basis, total credit cost of 27 basis points were within our guidance. As the end of last year, group total allowances was SGD 4.8 billion, of which SGD 2.7 billion was for the non-impaired assets. Overall, NPA coverage remained adequate at 91% or 194% after taking collateral into account. The loans saw a healthy 5% growth from a year ago, driven by broad-based growth in wholesale, term loan, trade loans and the retail mortgage. While loans growth was largely contributed by Singapore, the ASEAN franchise also recorded good momentum with a 7% year-on-year growth. Customer deposits, we grew steadily at 1% quarter-on-quarter. More important is with the emphasis on CASA. Our CASA deposit continue to expand, leading to the improved CASA to total deposit ratio of 54.6%. Our liquidity and funding position remains sound with LCR at 143% and NSFR at 116%. These are well above the minimum regulatory requirement. While there had been some volatility in credit costs during the year, the full year credit cost of 27 basis points were within our expectation and earlier guidance. Our total capital remains strong and robust with CET1 closing at 15.5% even on a fully loaded basis at 15.4%, it is well above our target operating level. On the back of this capital strength, we are confident to continue to deliver consistent and sustainable returns to our shareholders. This includes our core dividend payout as well as surplus capital to be returned as part of our capital distribution strategy. With our record profit and strong earnings generation, our Board is recommending a second half dividend of SGD 0.92 per share. As Ee Cheong said, this translates for the full year to a 50% payout ratio. As mentioned earlier, the Board is also proposing a special dividend of SGD 0.50 per share to be paid in 2025 as part of the SGD 3 billion package. We are also committed to a SGD 2 billion share buyback program including both the core dividend of SGD 0.92 per half year and the special dividend of SGD 0.50, I think the total annualized dividend per share will be at SGD 2.34. I think with that, I conclude my presentation. But before I pass back to the moderator, please allow me to say a few more words. I think as Ee Cheong mentioned, I'll be stepping down as Group CFO after the AGM in April. I think I'd like to take this opportunity to thank Ee Cheong and the Board for giving me the honor to serve as Group CFO for the last 20 years. It has been a privilege and a great honor to be part of the team that transformed the group from a Singapore-based bank to a regional powerhouse. I'm very confident that with Yung Chee coming on with the leadership of Ee Cheong, we will bring UOB to new heights. Thank you. Back to you, Ben.

Thank you, Mr. Lee. We will now take questions from the media. [Operator Instructions] So [ Tanya ], please.

Well, congratulations on the numbers and another good year. I have three questions. The first one, can I ask about NIM, net interest margin expectations for 2025? Second question, excess capital after the implementation of the SGD 3 billion capital return program. What will the dollars number be, meaning that how much money you have left after -- in excess capital -- the dry powder, sorry, sorry. And the third question, I mean, UOB is among the banks that have benefited from Singapore's wealth hub status for a long time. What do you think in terms of challenges, the challenges that the country has faced because there's also pressure from raising living costs. And how does that -- I mean, there are two sides of the point basically. And how are you handling as the bank the negative side that comes from Singapore's wealth hub status?

Do you want to address the technical aspect, the NIM as well as the capital?

Okay? Our NIM in the fourth quarter came down to 2%. I think this was the full impact of the Fed rate cut, okay? In the last quarter, the U.S. actually cut close to 1%. So that translates very sharply into the loans repricing, while our costs will take time to react. Our outlook is the Fed will not be as aggressive next year -- this year, sorry, this year. We -- at this time, we -- the in-house view is one. But like I say, every quarter, we could change. But at this time, in-house is one. I mean, for a good reason, right? If you look at the U.S. itself, strong economic data and also everybody is waiting for the latest Trump policy, which seem to be quite inflation-driven for rates to stay high. So with that, we hope and we are to maintain NIM at the current 2% level, okay, which means that we will have to work very hard on our strategy of getting two things, our cross-border in. As Ee Cheong mentioned, our operating model is no longer just loans. If you really look at where GWB is, we are focusing a lot, a lot on the others, which are really the fees and the loans-related fees, the hedging and more important that I always feel that with our platform going in, the GWB, which is the Wholesale, the CASA ratio is very strong. That to me is the best defense no matter where rates are. So we are hoping to stay at this level. That being said, I think it's hard work for -- which means that we will have to aggressively move towards managing our cost, okay? And hopefully, if the rate cuts like we forecast will be the second half, at least there was some -- hopefully, some more stability in the first half before the rate cut. So we're hoping at this level. The second question is excess capital. We actually wanted to -- we commit that we want to bring down the CET1 to 14%. So from a 15% to a 14%, we came out at the SGD 3 billion number, okay? So there are two parts, if you realize to our capital strategy. One is we call core dividend. Second part is excess funds, okay? For technical, core dividend will be a function of your earnings, okay? As our earnings grow, and we are quite confident that as a commercial bank, we will probably grow 8% to 10% every year. Your dividend -- your normal core dividend will grow, okay? And the question is, will CET1 go up above the 14%. There are two reasons why it can, which is really that your earnings are stronger, your return on RWA are stronger. And the second reason could be that you don't need capital for growth. At this point, we are still confident that ASEAN will grow. Hence the 8% RWA growth that I have been telling you, we are quite hopeful, and we're very hopeful that, that momentum will continue. So if you find that we have no needs for that, yes, then I'm sure as normal, we will review excess capital to see whether we want to take more of the denominator, okay because which is different from the core dividend that we have. So for the time being, I think that we are confident. We still have some work to do in the region, and we are confident that we need the RWA to actually push this vision of the regional growth. The regional franchise is actually happening. I mean a few like Ee Cheong mentioned, Johor now we are very hopeful. So we think that, that will sustain it. If not, then two things that we look at, if your return RWA continues to be at current level and the CET1 continues to be high, then I'm sure that we will consider whether they need the exercise. But meanwhile, let us consume the SGD 3 billion first.

Yes, yes. But the amount of excess capital post the SGD 3 billion, how much is...

It's about slightly more than 14%.

So like Ee Cheong said, we are slightly above 14%. The question really would be that when you say excess capital, okay? So it's where we pitch your excess capital to. I mean, from the 14% slightly to 14%, maybe a few hundred million at this point, but that number could grow as the base grow.

I see.

Okay, which is why I'm saying that look at the strength of our earnings coming in, okay? And if that grows, then I'm sure there will be a conversation to see whether you want to reduce the fully loaded CET1. So I think what is quite obvious that when we execute our capital management program, you will see the CET1 fully loaded dropping, okay? That is probably your first indication.

Yes.

And after at which point, if we finish the SGD 3 billion, we expect it to be slightly above 14%. Okay? And if the earning capacity is a lot stronger, then technically, you'll be higher because you're adding to the place, which I'm sure management then will be in a position to recalibrate that. The good news is, like I said, hopefully, we got the asset quality out of the way. That's why despite the volatility in earnings, we said GP. But my CET1 is confident. That's why we are confident to continue to do this capital strategy that we talked about, okay? And that's probably something that we want to make sure that the earnings capacity is more important to us and growing our franchise in the region, growing the retail and the wholesale. I think that to us is important. That's just coming in. If you look at ASEAN is actually showing like Ee Cheong mentioned in earlier slides.

When you mentioned managed productivity, does it translate into any job cuts or any cuts in spending on staff in any way?

I think productivity, to me, is more streamlining the process, right? And how to improve the top line that is important. Cutting costs, it's a very negative part. Yes, I think we will do it but I think today is the process that we have. Today, with AI, we should able to make full use of it and to supplement our productivity to streamline the whole top process. I think this is something we are working towards that.

But the cost cutting on impact staff numbers, right?

Yes. But the cost cutting, we also have [indiscernible] so we are trying to upskill our people. We are trying to channel the people that into a high-growth area, try to train them. Hopefully, certain part of the business can help to grow. So it's a roundabout way of doing it rather than just cutting costs.

I see.

Just now you talk about Singapore as a wealth center, right? I think it's a good thing. The tailwind is strong. The fact is Singapore is no different than any organization to grow the top line is the most difficult part, right? And this is where I think you look at yesterday, the budget, I think it's very prudent, inclusive future already. And measure frankly as a Singaporean, I think we are very encouraged. The government is taking care of us individually, families as well as corporates. Yes, the cost pressure is with more family offices coming to Singapore. I think our job is to try to create the stickiness, how to make them committed to Singapore, how to enlarge the pie because you know Singapore is facing aging population. We need to welcome them to enlarge the pie to make us more competitive as a country. The new initiative in Singapore, again, that is one of the areas that can expand further, right? You look at [ JB ], it's 4.5x the size of Singapore. If we are able to do well, that will be the benefit of both Singapore and Malaysia. In fact, today, we are actually UOB organizing with SBF, we are sending 100 dedications, right, to [ JB ]. And we signed MOU with Singapore Chinese Chamber of Commerce as well as Malaysia Chinese Chamber of Commerce. The whole idea is, given the cost structure of Singapore, how we can expand outside of Singapore, give us more space. And we both country, I'm sure they are all quite like-minded. If they can do well, I think that will benefit both countries.

We get the next question.

Your question on what do you think the Trump tariffs or upcoming policy is going to affect your business, especially in the region that it's going to come down towards the China Plus One countries and not just China at this point?

I think we are still watching. I think it will affect everybody, not just UOB. It will cut across ASEAN and the whole region. I'm hopeful, I'm hopeful. And end of the day, I'm sure every country is sensible enough. Let's try to deal with it in sense. Hopefully, it's a win [ situation go forward ]. So end of the day, you can see what we are focusing on trade. Data is important. People still need to buy things, to sell things. Focus on trade, focus on something fundamentally benefited globally. And the last 10 years, we have been spending a lot of our platform that generate that. You can start to see the volume...

Yes. Could I just ask a couple of questions. First one, of course, is that the 52 basis points special SP was -- I thought it was quite alarming. But if you could just give us some color on what that was? And also with Wai Fai stepping down and everything, what's your philosophy on your securities book? I mean because he -- I don't know who manages it, but what do you want to lengthen duration with the 30 years rising or whatever you want to do with that something that okay. And then you said you used some of your management overlays for the SP. So if you could -- what's the figure like? And what's the ideal figure? If you could on that. And the last question is, can AI help with looking at your -- at the credits that you have, if you...

So let me answer the first technical question. It's just a security book first, where we lengthen, which is really how we manage. I think we have started lengthening. The question really would be where the long term would be. So you really look at the U.S. today, it's [indiscernible] is tempting and we have actually lengthened a bit, okay? So I think that's something that we're watching and whether Trump policy will work because his objective is to drive down long term and not short term. Okay? So I think we're also watching that to make sure that our carry book that is there which is the accrual book, which will affect the NIM itself versus the mark-to-market. So we watch it closely. But technically, yes, we have started looking at it. Because today, it's not like 2 years ago where it was 2%, 3%. I mean, today at 5%, I think at least is not like carry. At the same time, we also have to be careful of the lock-in gaps. You start to lock in too long. So at ALCO, we discussed this every month itself. We are quite careful, but we have slowly started to add to that book, in fact, for the last few quarters. Your next question really related, which is SP and MO. I think the -- I mean that is actually two things that the SP that's coming in. One is a few chunky accounts that we mentioned. I think over the last few quarters -- last few months, there was more evidence in market activities happening, okay? So not happening in the sense that you see structures being skewed, okay? So two things, number one is the collateral value is actually at lower than what we normally expected. So hence, half of that is really marked down in collateral value. It's a conservative stand that we take. But we think that now it doesn't mean that we'll get that loss because when we get out, we are quite hopeful that we get up because today, there are many voucher funds out there offering prices that are ridiculous, okay? But from the accounting standard standpoint, unfortunately, if there are evidence, we use that. So -- there are a few chunky accounts that we mentioned that previously we were hopeful of restructuring. But recent events have indicated that either changes in management strategy or macro, we think that those events will not happen, okay? Hence, we recognize that. And that's where the new NPL formation comes in. I mentioned most of this were in U.S. and Greater China. I think U.S., we all know, okay, we really look at the commercial real estate with the U.S. pricing coming down to ridiculous level. We decided to take that hit. So I think the U.S. book, we are quite clean, at least going forward. We will still have some in Greater China and North Asia, but those we think have some hope of recoveries. So you saw us accelerating...

This is actually at the bottom, right? And this is why we are very prudent to make a provision. And the MO is actually able to support all this. It does not affect the bottom line.

So which was your next question on MO. I think you have mentioned and you have asked this and analysts have asked us, although we don't say the amount. Some of this weakness, we knew, okay? We knew that we are not sure whether it will happen because we are hopeful that it doesn't. So previously, we had MO, okay? So that's why we had MO to some of this because we saw this weakness, okay? There are -- there always be debate whether I can recover, not recover. But really, from a macro standpoint, we feel that to be prudent, some of it might not happen, which is true enough, some of it didn't happen. So those are the MO that we added. That's why when this happens, it's not new to us. I think we have guided many times that we expect some weakness in NPL, but we think that we are either secured or we have MO to cover. So I think that's where we are and hence, the reversal of MO. I don't -- we don't disclose how much MO we have, but I think we have adequate. But the good news is the big chunk of your weakness in our book is taken out. I think that's the good news. Going forward, it will be a more stable.

I think important, our balance sheet is strong. Otherwise, we will not come up the capital reductions. So basically, I think we are very positive. We are still targeting 25% to 30% credit cost. That is a net loss. Whatever provision you see the SP, these are all provided. Otherwise, we will not come up with high dividend capital. So you can see the management is very, very positive, right? This thing maybe the next 1, 2 quarters, certain account could be written back. But we just being prudent. The fact is we are prudent means we are confident. We are not here too high. We just take it very upfront.

And your last question on AM -- AI, where does it help credit. That's a tough call because if there's a silver bullet, I think we have done it long ago. A lot of credit is judgment. But I think what AI can help is really market information, okay, because I think that will be more updated, but we still need a lot more prudent and probably the lesson learned is closer follow-up, okay? We need to follow cases because the market turned around so fast. We have never seen valuation drop so much in shorter time. Historically, we don't see this happening. We don't see it dropping 40%, 50% in 1 quarter. So I think that's the lesson that we learned. But I think the bank has set up a team to really look at credit, okay? More important is not to manage it after it comes on. It's before it comes on. I think that's where we wanted to. So while we clean up this, we want to make sure that the new one coming in will not result in another. So that's what we are doing. And I think that's the team that we are doing. So there is some market information on AI that we take, but it's really, in my mind, it's more market because in the wholesale, it's really individual credit, you have to know what they are doing, okay? So AI won't have that market information. AI, you can look at a generic information on the whole country for GWB is very specific. So we have to learn. We have to be faster in our turnaround time, faster in management and some of the external information will have to -- will help us do that better.

So how does all this relate to you're going regional, you're going to countries where you don't have as big a presence as you have in Singapore. How will all this relate to that and to your future growth?

Well, you look at our region -- you look at our 4 countries start, I think we are more consumer, more consumer base to start, right? Because to understand the market, right, to straight away book chunky road, sometimes don't understand. You look at our Thailand all consumer. And today, I think Malaysia after 73 years, Thailand after 25 years, we start to understand the market better, and this is where the wholesale piece will cover. Otherwise, in the past, it's all very retail oriented very diversified. Of course, if the whole country collapse, it's starting we can do, right? But I think this is where I think we are focusing retail. And this is why during the COVID, [indiscernible] because retail needs scale, need volume. And now that we achieved the build the momentum, this is where the wholesale part will come in to hopefully improve our product.

So maybe to add to Ee Cheong's point, when we go in on the GWB, we always say that we have to understand customers. And there's this concept where you understand the value supply chain because when you are not -- you are the last in the -- to know, it's very dangerous. So when we look at sector solutioning, we look at the supply chain, we look at cross-border, we look at cash management that you understand where the cash flows are. Those are important for us. So that when we land, we understand where the cash flows will come in, will be the source that comes in to take out that. Previously, if not when you do it lying into the countries, the SME, you are the last to know. Singapore, we're actually very confident. Malaysia, we are quite confident because they've been there so long. In many other countries, you are the last. So the supply chain will give us advantage hopefully that when the top is weaker, you know that the bottom is a matter of timing coming in. So at the same time, you dare to lend to the bottom because the cash flow comes from the top. Means they will say that from the normal payment, they take off the loan to the supplier rather than they pay the supplier as the supplier to pay you. So those are things that we are actually fine-tuning, which is really very important is our knowledge of the region, our knowledge that we can bring different parts of the ecosystem together across different countries itself. So I think those are the things and investment into our wholesale system in both trade and cash management is actually now bearing fruits. It's also those we need to do better.

[ Nicola ], I want you to pay attention to this. If you look at our cross-border income and our transaction banking -- you look at the cross-border 26% of the Wholesale business now, the income. And then the transaction banking pick up about more than 50%. We are trying to shift the shape of the Wholesale rather than just continuing to book chunky loan, okay? This is why we are trying -- and this is not overnight, you can do that. In order to do that, you need to invest your infrastructure and technology. You are talking about the last 8 to 10 years to where we are today. It's a flow business. And the flow business is easier to predict. They are short term in nature, right? This is the shape we try to do, right? Hopefully, they are more our WA friendly. Hopefully, it doesn't take too much of the capital. This is why we are confident in capital buyback. So these are all the lessons that we learned. But in order to do all this, we need to invest. This is why you look at our IT cost, if you are talking about SGD 700 billion to SGD 800 billion. Without technology, you can't do all this. You can't improve your CASA, still early stage, but you can see we are [ shift ]...

Any other questions?

Can I just ask what is your top priority for this year? How will you continue to attract investments? And what do you hope to achieve at the end of this financial?

I think we are basically still a commercial bank. I think if you look at the tailwind is strong, the wealth continue to come in. If you look at our private bank, our wealth business last year, we achieved about SGD 12 billion, okay? And we will continue to do that. And our emphasis is cross-sell rather than focus on individual [indiscernible], our wholesale banker cross-sell the wealthy individuals, the customer base to our private banking and privilege reserve is a business class kind of right? And because we have the license for the whole [indiscernible], and we are able to penetrate that. We have 400, 500 branches outside of this ASEAN. So we are actually trying to institutionalize the relationship. If you look at our private bank, our overhead income is about 30%, 40%. If you compare to some other private bank, they are talking about 70%, 80%. So to me, it's not just the AUM. It's end of the day, it's the total income that you are looking, right? You can generate huge AUM, but what does it mean? Mean nothing. So we are trying to institutionalize, try to have a lot of revenue synergy between Wholesale and Retail. And you look at Citibank franchise, we have 8.4 million, 8.5 million customer base, how you cross-sell. It's not just one single product. This is where I think to answer your question, for this year, we try to hopefully get that happen. And these are all ROE friendly, well, be friendly. And as far as the supply chain is concerned, trade system is try to monetize it as aggressive. So I'm still very hopeful. I think even though the market is uncertain, in fact, market is uncertain, if you understand the market, you are actually help you a better opportunity. The market is so bullish, everybody is bullish, then not have the opportunity. So it's a customer segment that we are going after. It's the experience that in the country that we are going.

Sorry, just one follow-up since you mentioned Wealth. Could you share net new money for 2024, please? Net new money for the wealth management?

About SGD 12 billion. Am I right, actually? I just want to make sure.

Net SGD 12 billion.

Net new money.

Around SGD 3 billion a quarter roughly.

Singapore dollar.

Yes.

Because there's movement, right? So this is the net new increase.

So there is also increase in market pricing and all I talk about net new money. I think normally it's around SGD 2 billion, SGD 3 billion. We can come back to that. No, no net new number. Net new money this quarter is SGD 20 billion.

But the whole year is...

I think it's around SGD 2 billion, SGD 3 billion per quarter. So it's around can give you -- we can confirm the exact number...

Around...

Do you also see business sentiment in China finally improving?

The stock market has improved among your financials. I think China is a big economy. In the long run, I'm confident. You go to China, you see the infrastructure, you look at the people, they are well educated. I'm very confident. I think it may not be as fast as the oversupply of property markets but you can see the stock market could be a leading indicator, okay? They are focusing a lot on technology. But how much is a pent-up demand, I don't know. But today, I think -- but it's a market that is -- you cannot ignore. It's too big to ignore. You have a huge population base. So we have to be more selective. But generally, I think China is doing quite well. The country, China is to generate about 5% return, I think, is quite -- despite all this, there will be pocket of uncertainties.

Any of your customers looking to go into China? Does anyone to...

Yes, there are people looking at it. There are some of the funds that's already going in. Otherwise, how can the stock market go up? There must be some [indiscernible].

The increase in AUM for the Wealth segment, there's significant flow from China?

Yes. Some of the fund manager, they will allocate, right, in terms of asset allocation, right? Put some in U.S., put some in Europe, some in Asia. And obviously, China is the one...

The private banking operations.

Yes, yes, yes.

As such, I mean Chinese clients come to Singapore.

Yes, a lot of Chinese customers come to Singapore to set up family offices, right?

So the net new is SGD 12 billion because every quarter is...

SGD 12 billion, right?

For the full year.

Yes, my memory is still okay.

Yes, very good.

Nice about you, no one ever doubts that at home.

Any other final questions? If not, thank you, everyone. And if you have any further questions, we will push the team after that. Thank you.