United Overseas Bank (UOB) is one of Singapore's largest retail banking institutions. It was founded by the Wee Cho Yaw family of Tiger Balm fame. The bank has survived the Asian financial crisis, the global financial crisis of 2008 and has emerged as a rock solid institution operating with a conservative approach. Over the last ten years the bank has compounded earnings per share growth by 11% and book value per share growth by 12% per year, using far lower levels of leverage than western institutions. The banks average ROE during the same period was 12%.
We continue to hold UOB because of its relatively reasonable valuation (1x book value), high dividend yield (5%) and excellent management.
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Photo: Siddharth Mehta-Thomas