2024 OPERATING ENVIRONMENT

Global equities continued to ride on the coattails of the US stock market which turned in gains of over 20% for the second consecutive year, last seen going back 25 years ago. Market volume was also up 14.2% year-on-year. The ongoing war in Ukraine and the unrest in the Middle East did not dampen investors' enthusiasm as technology companies remained the outright favourites with Nasdaq surging almost 30%, despite some spectacular volatility during the year. The US economy managed to avert a widely expected recession (despite an inverted yield curve) with real GDP growing 2.8% in 2024 on the back of resilient consumer spending and healthy corporate earnings. In comparison, developed international stocks were well behind US equities, whereby the MSCI World ex-USA Index added just 4.7% while the MSCI Emerging Markets Index ended 2024 up 7.5%.

Over in Asia, the Hong Kong market finally ended its four consecutive years of decline as the Hang Seng Index gained 17.7% for the year 2024 and CSI300 rose 14.7%, posting its first positive performance since 2020 as the blue-chip barometer of the Shanghai and Shenzhen stock exchanges. Trading volume in the Chine market was up over 20% year-on-year, as was Hong Kong's market turnover (+27%). A more accommodative monetary policy, property market incentives, greater liquidity targeting the capital markets, and overall measures to stimulate the economy and improve market sentiments finally have produced the desired impact.

Our Singapore home market surprised with a 16.9% performance by the Straits Times Index and an 18% increase in market turnover. Likewise, we saw strong liquidity recorded by Bursa Malaysia (+52%) while its benchmark FBMKLCI rose 12.9% last year. Both economies showed resilient GDP growth (Singapore 4.3%, Malaysia 5.1%) on the back of broad-based contributions across several key sectors as well as robust foreign direct investment (Malaysia +14.9%). In contrast the Thai market was more subdued as market turnover declined 12.4% in 2024 while the SET Index recorded a disappointing negative 1.1% performance amid a pedestrian 2.7% GDP growth. Indonesia's composite index was also down 2.65% as the rupiah remained weak against the US dollar (-4.8%) though its market turnover expanded 18.6% on the back of over 5% GDP growth.

The fixed income market witnessed a significant transition in 2024. The US Federal Reserve had aggressively raised rates by a cumulative 5.25% over the preceding two years before 2024, until the second half of last year, amid softening inflation, when the Fed finally reversed its policy stance by marking three successive rate cuts totalling 100bp. The Bloomberg Global Aggregate Bond Index, a global benchmark of sovereign and corporate debt, closed the year up 3.4% (hedged) while shorter duration bonds showed a clear outperformance (T-bills +5.3% vs 10+y UST -6.4%). Current yields remain well above historical averages, presenting good income opportunities.

2024 OPERATING PERFORMANCE

In the light of the generally positive environment in 2024, UOB Kay Hian Group achieved a record performance with consolidated profit after tax and minority interests reaching S$228.6 million, up 34.2% year-on-year. Our total revenue grew 13.2% to S$669.9 million, led by commission income expansion of almost 30% to S$370.3 million due to higher trading volumes across our main markets and interest income of S$252.8 million (+3.7%) that benefitted from larger receivable balances (+33.0%).

Total expenses were well controlled, increasing by a reasonable 5.8% to S$$430.4 million last year. Given our higher trading volumes, there was a significant increase in staff costs (+23.3%) and commission expenses (+21.0%). However, finance expenses were managed lower by 36.7% even though our borrowings remained largely flat at year end. Other operating expenses also recorded a drop of 11.1% mostly due to lower depreciation and impairment charges. As a result, we recorded a 38.5% higher profit before tax of S$263.5 million in 2024.

We continue to maintain a prudent balance sheet with strong liquidity (i.e. gross cash of S$943.2 million representing 20% of total assets) while our shareholders’ equity built up to S$2,120.3 million (+12.0%). In 2024, through our UTRADE portal, we launched a new unit trust digital platform for our clients, making unit trust investing simpler and more accessible, with seamless order management, cash management, CPF administration, advanced reporting and a dedicated client service module. In recognition of our dedication and commitment to high customer service standards, our staff were recognised in the 2024 Contact Centre Association of Singapore (CCAS) awards, and UOB Kay Hian was also ranked second in The Straits Times Singapore’s Best Customer Service 2024 Award for Brokerage.

DIVIDEND

Our Board of Directors has recommended a first and final tax exempt (one-tier) dividend of 11.9 cents per share (2023: 9.2 cents per share), maintaining a payout ratio of almost 50%.

As in the previous year, our shareholders can opt to receive their dividends in cash and/or in shares.

CURRENT YEAR PROSPECTS

While the US presidential actions (tariffs, tax cuts, government downsizing, deportation) and political posturing with global leader will hog the headlines, the outlook for 2025 will be as much about the resilience of global economies as it is about whether interest rates do stay higher for longer. In Aisa, we will be closely watching the economic momentum in China and if the government executes on its transition to a consumption and innovation driven economy. Overall, we expect markets to remain volatile.

Meanwhile, we continue to identify and plan to roll out enhancements to our product and service offerings in the course of 2025, in order to stay competitive and relevant in our clients’ investment journey.

COMMUNITY SERVICE

We supported various community, charity and scholarship projects with donations totalling S$492000 during the year.

NEW APPOINTMENT

I am pleased to extend a warm welcome to Mr Jason Leow, our Independent Director, who joined the Board and Audit Committee on 1 May 2024. Mr Leow is also a member of the Remuneration Committee from 2 January 2025.

I wish to express my sincere appreciation to our shareholders and various stakeholder in extending their trust and support to my management team and we remain committed to serving you to the best of our abilities.