Three Things To Like About United Overseas Bank

uobFrom its humble beginnings in 1935 as a bank to serve Singapore’s Fujian community, United Overseas Bank (SGX: U11) has grown into a strong financial force in Asia Pacific. That is the first thing to like about UOB – its track record of growth.

Since 1991, UOB has grown its book value from around S$2.4b to over $27b today. Over the same period, the number of full-time employees has increased from 6,000 to almost 25,000. Meanwhile Net Income has jumped from S$261m to S$3.1b. Or put another way, productivity per employee has grown from S$43,500 to S$124,000. In other words, UOB’s full-time workers are almost three times more efficient today than 20 years ago.

Another thing to like about UOB is its consistent payout to shareholders. Since paying its first dividend of S$0.17 in 1997, UOB has only reduced its payout once – in 2006. Today, the dividend is S$0.70 per share – more than four time higher than in 1997.

The third thing to like about UOB is its Return on Equity (RoE) of 11.7%, which is higher than the market average. The RoE for the 30 companies that make up the Straits Times Index (SGX: ^STI) stood at 10.5% last year. UOB’s impressive Return on Equity goes some way to explain the bank’s Total Return to shareholders.

Over the last 17 year, the bank has delivered an annual Total Return of 10.3% to shareholders. It means that S$1,000 invested in UOB in 1997 would be worth S$5,300 if dividends were re-invested.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.