United Overseas Bank Ltd

SGX:U11

Q2-2025 Earnings Call

[Operator]

Good morning, everyone, and thank you for coming in a little earlier than usual today. Welcome to our second quarter 2025 results media briefing. Today, we have with us our Deputy Chairman and Group CEO, Mr. Wee Ee Cheong; and our Group CFO, Mr. Leong Yung-Chee. As usual, Mr. Wee will begin by giving a broad overview of how our franchise has done and the operating landscape we are in, and then Mr. Leong will then go into more details on the financials and business performances. After both presentations, we will take questions from the media. I'd now like to invite our CEO to get us going, Mr. Wee.

[Ee Cheong Wee, executive]

Okay. Thank you. Good morning. Thank you for joining us today. The macro environment remains fluid with geopolitical tensions and shift in global trade in a multipolar world. Amid uncertainties, regional economies are holding firm. ASEAN, while not immune, shows resilient growth. ASEAN fundamentals remain strong with competitive cost structure, improving infrastructures and deepening trade linkages. This positions the region well to adapt and thrive in a complex global landscape. Amid global uncertainties, our core business and financial performance held steady. Operating profit for the first half year rose 3% from the same period last year, driven by strong fee growth. After taking a conservative approach to increase our reserve, net profit came in at $2.8 billion, down 3% year-on-year. Net interest income was flat as loan growth offset the impact of declining interest rate. Margin compressed, in line with the external environment, but we continue to proactively optimize our cost of funds and rebalance our portfolio. Fee income showed strong momentum, up 11%, led by loan and wealth fees and robust treasury income supported by healthy client flows. This performance reflects the strength of our diversified business model.

We continue to pace our costs, keeping it flat year-on-year. We remain vigilant on asset quality. Our overall loan portfolio remains sound with NPL steady at 1.6%. Total credit costs were higher at 34 basis points, including the preemptive general allowance set aside to ensure healthy provision buffers. Our balance sheet remains strong with CET 1 ratio at 15.3% and robust liquidity ratios. The Board has recommended an interim dividend of $0.85 per share, representing a payout ratio of 50%. We also paid the second tranche of the $0.50 special dividend to mark UOB's 90th anniversary. For the second half of 2025, while the external environment remains challenging, we see pockets of opportunity. Government across the region are also stepping up support to cushion businesses through the transition. This includes recently announced 100,000 SME grant in Singapore and fiscal and sector-specific measures in other countries to keep growth on track.

As a long-term player, we remain committed to our clients, including SMEs, standing by them through economic cycles, supporting them with working capital cross-border financing and digital tools to help them scale efficiently. Our strategy is clear and consistent, focused on ASEAN long-term potential. The region offers relative political stability, resilient fiscal positions and growing economies. Its competitiveness as an FDI destination is supported by well-connected infrastructure and a young, outwardly mobile population. In a multipolar world order, opportunities arise with regional integration and trade diversification. At the same time, megatrends, including digital and green economies, will continue to drive investment and generate growth. We are well positioned with our extensive ASEAN footprint, deep connectivity to China and global market, and a diversified client base.

On the wholesale front, we are seeing strong traction across multiple revenue drivers, rising CASA balances, growing regional trade flows and supply chain finance, robust trade and loan fees, strong treasury income from active client flows. We are intensifying our focus on emerging opportunities in digital and green economies and infrastructure investment aligned with ASEAN integration agenda. Our retail franchise has gained significant scale following the Citi acquisition, where our customer base has grown to more than 8.4 million. We are well positioned to ride on the region rising affluence and Singapore position as a leading global wealth center. We see robust growth in card billings underpinned by pan regional partnerships. Our latest being the principal partner for the Michelin Guide Hotel, reinforcing our leadership in lifestyle privilege across dining, entertainment and travel.

Our Citi integration is complete across all Four ASEAN markets with Vietnam customers successfully onboarded last month. The focus now is on deepening customer engagement to unlock further growth. Since the Citi acquisition, our ASEAN franchise has delivered robust growth in CASA, wealth AUM, unsecured receivable and card billing. To position for sustainable growth, we have been reshaping our business franchise. We see good progress in moving towards a more diversified and resilient revenue mix, including connectivity, fee-based, recurring income and asset-light businesses. We have been investing to strengthen our capabilities and digital platform that will support our ambitions to scale.

Our strong balance sheet enables us to address risk and to seize the right opportunity to grow. This transformation take time, and we are confident that it will reinforce our foundation for long-term growth. We have previously suspended guidance due to heightened volatility and limited visibility. We are now reinstating our this year guidance. Full year NIM of 1.85% to 1.9%, factoring in three expected Fed rate cuts second half. Low single-digit loan growth, focusing on quality assets, high single-digit fee growth driven by card, wealth, trade and investment bank. Flat operating costs, net credit cost of 25 to 30 basis points, and we expect further top-up to boost general provision buffer preemptively. As usual, we remain committed to our $3 billion capital distribution plan. Now I will hand over to my CFO, Yung-Chee, to share more. Thank you.

[Yung-Chee Leong, executive]

Thank you, Mr. Cheong. Good morning, everyone. If you allow me, I'll take you through the financials update. This quarter, we reported a net profit of $1.3 billion. It's 10% lower quarter-on-quarter and 6% lower year-on-year. The net interest margin narrowed by 9 basis points for the quarter to 1.91%. This is driven by a sharp reduction in benchmark rates. In terms of the net fee income, it was $636 million, a decrease from last quarter's high, but this is our second highest quarter. Investment banking activities returned to normalized levels, while wealth fees were subdued as we took a more cautious approach amid macro uncertainties. In terms of treasury and investment income, it has softened, reflecting lower trading and liquidity management activities, but customer-related treasury income sustained momentum. On asset quality, NPL ratio was stable at 1.6%. Total credit costs on loans were at 32 basis points. We continue to maintain prudent preemptive provision reserves.

Our capital and funding positions remain robust with CET 1 ratio at 15.3% with post-dividend payout included and NSFR at 118%. Now let me share an update on the performance for the first half. With this set of results, we delivered a positive operating profit rising 3% year-on-year. This was largely driven by double-digit growth in fee income across wealth management, investment banking and credit cards. The performance underscores the continued strength and diversification of our franchise. Cost-to-income ratio improved to 43.5%. This reflects our continued focus on cost discipline across the bank. As we set aside preemptive allowances amid the macroeconomic uncertainties, our net profit, after tax, moderated 3% year-on-year to $2.8 billion. This translates to a return on equity of 11.7%.

In the next section, we have included some new slides focused on our business segment performance. These slides are designed to provide deeper insights into our income drivers and strategic levers that are shaping future growth. These efforts are beginning to bear fruit. Moving forward, our focus continues to unlock value and monetize these investments for sustainable long-term growth. We'll start with a dive into our group retail business. Group Retail delivered a strong performance for the first half of 2025. It reports a $1.1 billion year-on-year, that's an 11% increase. This was the result of our focus on CASA, wealth and cards, which countered income pressures from lower rates from the market as well as competition. If you look at the deposits, our retail deposits have exceeded $200 billion for the first time, driven by robust CASA growth, and anchored by strong customer value propositions. Our wealth management income recorded double-digit growth, 15%. This was boosted by effective conversion of deposits into invested AUM, while AUM continued to build new momentum. Net new money coming into the bank this quarter was about $3 billion.

Card billings grew year-on-year 12%, supported by our ASEAN franchise, partnerships and enhanced rewards offerings to our customers. And in terms of the customer base, we have exceeded 8.4 million customers as at the end of June 2025. Again, a testament to the differentiated lifestyle offerings and consistent value delivery to our customers. Asset quality for this segment remains solid with credit costs nearly halved to 22 basis points. The operating friction in Thailand we experienced last year as a result of the integration has subsided, further stabilizing our retail portfolio quality. I'll next turn you to the Wholesale Banking business.

Our Wholesale Banking business delivered a profit before tax of $2.2 billion for first half. This was down about 12% year-on-year, but reflected the impact of lower benchmark rates, intense competition for quality assets as well as a rise in allowance from a low base. Transaction banking contribution remains a cornerstone of performance. It constitutes about 50% of wholesale banking income. This was supported by enlarged CASA base and 12% year-on-year growth in our trade loans. This underscores a deeper client engagement because of our integrated cash, trade and supply chain platforms across multiple markets. In terms of investment banking, they achieved a record fee in the first half of 2025, demonstrating strong execution and client confidence in our advisory capabilities. Our diversified growth strategy continues to gain traction with stable income contribution from our non-real estate sectors at 69% and cross-border income at 26%. Our regional connectivity and franchise development is growing from strength to strength.

Expenses rose marginally by about 5%. This is through investments to enhance our product capabilities and deepen market presence across ASEAN. Allowance increased to $167 million, primarily due to the collateral markdown for a few non-systemic borrowers, while overall portfolio quality remained resilient. Global Markets sustained strong momentum in our customer treasury income, supported by continued client demand for hedging and investment products. Noncustomer treasury income also improved from lower cost of funds, capturing market opportunities across bonds, equities, FX and rates amid financial market volatility. Net interest income eased by about 3% quarter-on-quarter to $2.3 billion, as asset growth helped to cushion the impact of lower net interest margin. Net interest margin declined 9 basis points to 1.91% this quarter. Again, I mentioned earlier that this was primarily driven by sharp reductions in benchmark interest rates. If we give a breakdown of how the impact came from different areas, the SORA, which is the Singapore overnight rate, fell by 50 basis points, reflecting abundant domestic liquidity, partly driven by safe haven inflows. While the Hong Kong interbank offered rate, or HIBOR, was at its lowest since 2022.

These movements affected our asset pricing, contributing about 23 basis points decline to the NIM this quarter. Although there was pressure on asset yields, this was mitigated by our ongoing proactive efforts in managing our own cost of funds, and this includes repricing of fixed deposit and savings account rates and also a mix of our asset liability. In terms of fee income, gross fee income reached $829 million this quarter, marking the second highest quarter on record. Again, this underscores the strength and diversification of our retail and wholesale banking franchise. Loan-related and credit card fees remained resilient. Investment banking fees returned to normalized levels after an extraordinary first quarter. Wealth management fees were impacted as we took a more cautious, preservation-focused approach, supporting our customers amid uncertainties in the market. Expenses declined 2% quarter-on-quarter to $1.5 billion. This reflects the group's disciplined cost management initiatives.

Cost-to-income ratio rose to 44.3% due to the lower income this quarter. We will continue to exercise discipline in how we manage costs and spend, but continue our targeted investments in talent and technology to support our franchise growth and regulatory requirement. Turning now to asset quality. New NPA formation edged up this quarter, and this stemmed from one large corporate account in the U.S. This was within expectations and with higher write-offs and recoveries during the quarter, our NPL ratio remained at 1.6%. The higher specific allowance this quarter resulted from new U.S. NPL account. As mentioned, this was within our expectation and preemptive allowance had already been set aside earlier, and net credit costs were at 32 basis points this quarter. While preemptive general allowance would usually be written back and reclassified to specific allowance upon an account downgrading to NPL, we continued the same level of general provisions this quarter as a prudent measure to strengthen the coverage in view of near-term macro uncertainties.

As at June 2025, our total allowance was ID $4.8 trillion, of which $2.8 billion relates to allowance for non-impaired assets. Our general allowance coverage was maintained at 0.8%, while NPA coverage remained adequate at 88% or 209% after taking collateral into account. Gross loans grew a healthy 4% year-on-year and 1% quarter-on-quarter. This was mainly from corporate and mortgages in Singapore. Our liquidity and funding positions remain sound with LCR at 141% and NSFR at 118%, both well above the minimum regulatory requirements. CASA deposits continue to grow steadily, leading to an improved CASA to the total deposits mix of 56.5%. Capital position stayed robust, CET ratio at 15.3%, even after accounting for the FY 2024 final dividend, and special dividends as part of the capital distribution strategy we announced earlier.

In appreciation of our shareholder support, the Board has declared an interim dividend of $0.85 per ordinary share, reflecting our commitment to a consistent dividend payout ratio of 50%. We are also pleased to report that as at the end of June 2025, about 13% of the $2 billion share buyback program that we had announced has been completed. We are on track to fulfill our commitment on the capital distribution to shareholders by 2027. With that, I conclude my presentation. Thank you.

[Operator]

Thank you, Yung-chee. We will now begin the Q&A segment. [Operator instructions] Maybe we'll start from those in the room. Any questions?

[Unknown Analyst]

Yes, please. Congratulations on the numbers. And please, could you talk a little bit about the tariffs that have been slapped on many countries in Southeast Asia in the past few weeks? And second question to Yung-chee who mentioned safe haven flows. Could you give more colors on this and whether such flows were more extraordinary than previously?

[Ee Cheong Wee, executive]

Based on our detailed analysis of our portfolio, I think the first order impact is manageable.

[Unknown Analyst]

The what?

[Ee Cheong Wee, executive]

First order impact.

[Unknown Analyst]

First order impact.

[Ee Cheong Wee, executive]

People directly affected by the tariff. I would say 1.3% of our total loans to exporter with 25% of sales exported to U.S. So I think it's quite minimal. And trade loans make up about 10% of total. So the first order impact, I think, is generally quite manageable. We are a little bit more concerned about the second order impact would affect consumer spending, people stop investment, consumers stop spending. So that is something that is still quite fluid. We are monitoring closely. But I would say, generally, we are here to support our customers. I think it is important, especially -- and you can see the government also setting up committee to look at proactively how to manage this. And we are on top of it. If any customer that require any assistance, any help, we are here, especially in volatile environment. We are always here to help our customer to restructure.

[Yung-Chee Leong, executive]

On the second question, [indiscernible], the Safe Haven flows question. I think I mentioned earlier on that our net new money for the quarter was $3 billion. So we are still seeing flows in terms of wealth and deposit flows into our franchise. I think this reflects the fact that Singapore is very well positioned amidst all the uncertainties happening around the world.

[Unknown Analyst]

I see. The flows of SGD 3 billion in the second quarter, did it help with the Singapore dollar strength as well?

[Yung-Chee Leong, executive]

I think the Sing dollar FX rate has other factors affecting it, given how open we are as an economy.

[Ee Cheong Wee, executive]

As you asked the question, given the tariff situation, we see is very volatile. The well that -- the AUM that would say 60% stay as a fixed deposit -- partly because we are conservative, we are more cautious. I don't want my customer to lose money, right? So as a result, rather sacrifice on some of the wealthy, but I'd rather let them stay conservative. There's always a better opportunity out there because these are all businesses. They're already taking the front-end risk of running the business. The last thing I want is whatever capital they have put with us, right, they also encounter the risk. So we are quite conservative in that sense.

[Unknown Analyst]

So, just to clarify, you said about 60% stay as deposits. You refer to 60% of the net new money -- so net 60%...

[Ee Cheong Wee, executive]

Of General.

[Yung-Chee Leong, executive]

Overall deposit. 60% is in deposits, 40% invested -- this increase in liquidity does help to support the Sing dollar strength. But it actually lowers dollar rates as a result.

[Unknown Analyst]

[Indiscernible] Mortgage

[Yung-Chee Leong, executive]

[Indiscernible]

[Operator]

We have a question from [ Tso-pao ] (sic).

[Unknown Analyst]

Thank you for the sharing and the confirmations on the numbers. So actually, the -- [indiscernible] already asked my first question, but could you help me clarify like many ASEAN countries will face tariff and you also mentioned that you are concerned about the second order impact from the tariffs. So could you help me clarify, is that part of the reasons for trimming your loan growth forecast this year?

[Ee Cheong Wee, executive]

We are financial intermediary, right? It's not whether I want to trim, I would trim. End of the day, it's also customer demand. If customers don't feel comfortable given the outlook of the market, they will slow down, right? So it's the end result of demand and supply, okay? And we continue to chase after the quality loan to start off with, right?

[Yung-Chee Leong, executive]

That affects both corporate as well as individual customer. So if the uncertainties create worries for whether businesses or individuals, you see some of these actually tapering off in terms of demand. And then from our perspective, the competition for quality assets become more intense as us and our competitors chase after growth from the quality portfolios.

[Unknown Analyst]

[indiscernible] Second question is about the competition from your per bank, we have been more and more severe competition, especially in credit card sector. I'm just wondering how will you manage to [indiscernible] and what is the main strategy [indiscernible]?

[Ee Cheong Wee, executive]

Credit card?

[Unknown Analyst]

Yes, credit card.

[Ee Cheong Wee, executive]

Well, credit card, I think we do have some benefits because during the COVID, we bought all the -- buy all the Citibank portfolio. That will give us a strong customer base. And if you have a strong customer base, the ability for you to do things in a more competitive way, to deal with your partners, to deal with your merchant because you have the scale, you can bargain better and you also can offer better quality product. This is what exactly we do. We have about 8.4 million or 8.5 million customer base across the whole ASEAN region. We will continue to deepen our lifestyle products. So hopefully, people will start to see, UOB is a card that you must have for you to enjoy the lifestyle, for you to enjoy the Taylor Swift, for you to enjoy different kind of -- this is where -- because end of the day, consumer business is [indiscernible] we are trying to take -- we are the big in ASEAN, okay? So we should be able to capitalize on that. Hopefully, that takes time. And also given the customer base, we are cross-selling a lot of [indiscernible], not only just credit card, the wealth product, make them open account, improve our CASA, also CASA club. So these are multipronged approach that hopefully -- it's not every quarter you can -- we are moving towards that direction. Obviously, the execution is important. And we'd like to see more of that because otherwise, it's what a point of having quite a big customer base, you are not taking advantage of that.

[Yung-Chee Leong, executive]

That scale of customer base allows us to differentiate some of our offerings. I think your question earlier mentioned about what differentiation. Our lifestyle rewards is really geared towards some of the customer preferences that we see across our base. And that's primarily around travel, entertainment and dining. So our rewards, if you are a card member of us, you would see that we've been very focused in terms of value propositions to clients along those three lines.

[Unknown Analyst]

And the savings account, you have lowered the [indiscernible]account. When can we see the effects from it, maybe the third quarter?

[Yung-Chee Leong, executive]

We announced it in May. So it will flow through and take some time. Yes, we should see it reflect through the financials in the third quarter.

[Unknown Analyst]

In the third quarter. thank you.

[Operator]

A question from the business lines.

[Unknown Analyst]

I have a few questions. First on the -- lowering the guidance, right? I think during Q4, the projection was high single-digit loan growth, double-digit fee growth. Now it sort of moderated to low single-digit loan growth, double -- high single-digit fee growth. I think NIM went from about 2% to 4% can you give a bit more color on this lower guidance?

[Ee Cheong Wee, executive]

I think generally, it's a reflection of [indiscernible] right? If you look at most of the ASEAN region despite --they are strong, they have the foreign reserve, but then the growth is also quite muted given the tariff. So we cannot grow for the sake of growing, right? And the loan -- I mean, the GDP growth of the country is not as high. So we -- this is why the first quarter last year [indiscernible], we did not give a little bit more certain. Of course, it's not a magic sign, okay? We think, based on our own calculation, we think -- I think the loan growth will be quite subdued.

[Yung-Chee Leong, executive]

If you look at what has changed 2024 to now in each of the countries that we operate -- in each of the countries that we operate in, the GDP growth forecast have all been trimmed, in every market we've operated in. The benchmark interest rates for these countries have also been reduced. And there is also the FX movements that [indiscernible] was referring to earlier. The environment has shifted significantly. But for some of these metrics, if you look at the underlying numbers that we are still projecting, it actually shows the strength of the franchise that the fact that the loan growth, we are still able to grow. The fee income, we are still able to grow. But the income numbers are affected by asset pricing and market volatility. So I think look at the underlying franchise, the strategy that we said we would execute is paying off in terms of how we are shaping our portfolios.

[Ee Cheong Wee, executive]

If you look at the region, it is good. But if you translate Sing dollar, Sing dollars is high, and we are reporting in Sing. But if you say Malaysia in all these countries, they are growing.

[Unknown Analyst]

Focusing in on housing loans, right now, what sort of the growth outlook for the book of [indiscernible]

[Ee Cheong Wee, executive]

I think we projected about single digit, yes. I know the market seems to be quite hot. But end of the day, I think we are generally to be selective. This is a very uncertain world.

[Unknown Analyst]

And are you sort of seeing customers shift more towards floating rate mortgages given that interest rates have to go down further. I don't know if you have that number on hand now.

[Yung-Chee Leong, executive]

No, we don't have it on hand. But there was good loan momentum. I think if you look at our second quarter numbers, and this is corporate and retail, our loan growth was up 4% year-on-year, right, and 1% quarter-on-quarter. Even on a constant current basis, you are seeing somewhat similar numbers. So the underlying momentum in loans is intact. I mentioned that loan growth primarily was driven by two portions, corporate and mortgages in Singapore. That's underpinning some of that [indiscernible] growth.

[Unknown Analyst]

So then final question for me on -- you sort of expect hiring to maintain -- be flat for H2, right? I think went up about 1.3% year-on-year for H1. Do you sort of expect -- do you expect hiring to remain hiring for the rest of the year, given some of the uncertainties you mentioned...

[Yung-Chee Leong, executive]

Recruitment...

[Unknown Analyst]

I guess you might hire for natural attrition, but overall headcount is expected to go up in the coming. . .

[Unknown Analyst]

I actually saw a 1% drop in the headcount, right?

[Yung-Chee Leong, executive]

1% increase in staff costs.

[Unknown Analyst]

1% drop.

[Yung-Chee Leong, executive]

But not headcount. Headcount, yes.

[Unknown Analyst]

Why?

[Yung-Chee Leong, executive]

Natural attrition.

[Unknown Analyst]

So the total number for H2, you expect to. . .

[Yung-Chee Leong, executive]

I think we're keeping very prudent management in terms of overall expenses across the bank. And I think in this sort of environment, there are certain things that we need to continue to do. Our regulatory compliance requirements amidst all these scams and KYC AML matters, making sure IT is not obsolete. So obsolescence replacements are something we need to continue to invest. And technology to enhance productivity, efficiency, those are areas we need to continue to invest. So overall, I think our position on expenses is very prudent. You see that we've actually reduced it over the quarter.

[Ee Cheong Wee, executive]

You see all these expenses is very strategic in Asia. Of course, we can try to make ourselves more efficient. But before you get yourself more efficient, you need some basic too. Because if you look at our ASEAN coverage, we are the most comprehensive in terms of the number of countries we are in. So can you imagine the investment that we have to do? We have to replicate all the countries. So as a result, I think if the income drop, our expenses will be a little high. I think that is an investment that we have to put in 5, 10 years from now, then you start to see this is the investment work. You cannot base on quarterly, quarterly very difficult

[Yung-Chee Leong, executive]

So in terms of people strategy, I think we adopt a very calibrated approach in terms of managing headcount. In good times, you don't want to over hire. But in bad times, you also want to protect the employment of our people as well. And this is our philosophy. This is how we've been managing our workforce.

[Unknown Analyst]

Is -- now is the bad time or good time.

[Yung-Chee Leong, executive]

Now it's...

[Ee Cheong Wee, executive]

Uncertainty I think I will say, well, I think if you read my speech, I think the underlying is still quite strong, ASEAN, okay? The volatility is something that we need to manage, okay? If you have a Tsunami coming, you have to be strong. Otherwise, you get wet, right? So the underlying, if you look at Singapore, Malaysia, Thai, they are generally okay. Even in Thailand, they are, okay? They are facing some headwind, right? But generally, you can see the tourism is not coming. But end of the day, you ask yourself, right, you still -- you have 100 million population, talented people. They are always strong in hospitality. One day, they will recover.

[Unknown Analyst]

Now we even heard about the Republican nominee for 2028 presidential election. How long this uncertainty is going to go on. And I mean, like with your strong capital base, are you still seeing any M&A on the cards for UOB?

[Ee Cheong Wee, executive]

For what?

[Yung-Chee Leong, executive]

M&A.

[Unknown Analyst]

You just finished the integration with...

[Ee Cheong Wee, executive]

Yes. Well, I think is taking care of the M&A. We're always on the lookout, right? We are always on a good opportunity. We look at the Citibank acquisition. We are in a position to acquire, especially outside of Singapore for us to attract or to improve --increase our customer base is not because we are competing with all the big domestic bank, right, in ASEAN. So that, to me, is a good opportunity for us to have a good headline. If there are anything coming along, why not? This is something we are always on the lookout.

[Unknown Analyst]

Would it be more on the retail side or on corporate side?

[Yung-Chee Leong, executive]

I would address it this way, our franchise in terms of the footprint that we want today, we have the locations, we have the footprint that we want. And we don't need additional licenses in each of these markets. And if we look at M&A opportunities, it's opportunities where it builds scale or capabilities.

[Unknown Analyst]

So more assets rather than franchise.

[Yung-Chee Leong, executive]

Rather than branches, adding more ATMs, that wouldn't be a priority in today's digitalized environment. However, if you look at our philosophy and approach to M&A, we have been very, very prudent and disciplined because the integration of acquisitions is not easy. Even the Citi integration took us 3 years. And it takes away management bandwidth. So we take M&A very seriously, and it's not an exercise we take lightly. The last time we did a major M&A acquisition before Citi was almost 15 years prior. So this is a philosophy that...

[Ee Cheong Wee, executive]

And also I echo what Yung-Chee said. Even you look at the integration, the deal from Citibank's over. We could have just done four country at once. But we make the effort of every country. Why? It's time consuming. The synergy may not be so immediate because we do it, but we are doing it in a very calculated approach because we don't want to lose the customer base. We want each country to learn, and then we replicate some of the learning to another country. So you spend that kind of money, last thing you want is to make your customer angry and walk out. It's time consuming. It may not translate into cheaper costs to us. But in the long run, I think that is a good, right? You look at our logo right by you, right? You got to stay on that, right? Otherwise, everything right by you, but you do it in.

[Yung-Chee Leong, executive]

And I think the results speak. So from that period of time, which is around 2021 to now, I think CEO mentioned in his speech earlier on whether in terms of actual number of customers, whether it's in terms of AUM, card billings, unsecured lending, all of these have seen compound annual growth for us. That franchise has come together very nicely.

[Operator]

We have a few more minutes. Any last questions?

[Unknown Analyst]

I have questions. I have a few, but I may have to send them in. Okay. So I have a few. The first one is the large corporate account in the U.S., can you tell us which sector it is? Then my second question is what is your exit NIM? And the third one, I think, you mentioned intensifying initiatives in digital and trends. Can you share more color?

[Yung-Chee Leong, executive]

You want, I can to take on the first two questions. The U.S. account was real estate related. The exit NIM for the quarter was 1.84%. And then the third question was on digital. [indiscernible]

[Ee Cheong Wee, executive]

So this is something that I think we invest heavily on digital tomorrow. I think that's important. [indiscernible] can take advantage. As all of you know, we announced our MOU with Accenture. The whole idea is to stop and see how take full advantage of the partnership, take full advantage of Accenture being specialized in AI to see how they can help us speed to market to improve our customer service. End of the day, no point -- I always say no point to have a big customer base and your customer service. And we are still a journey to, okay? We are not happy with the customer service. We will continue to improve that, right? If there's any mistake that we make, I apologize to our customers, but I think we are genuinely want to help our customers to [indiscernible] in a digital way, in a more systematic way so that we are more predictable.

[Unknown Analyst]

Based on the exit NIM, so are you expecting a firmer environment because your forecast is for 1.85% -- that's one question. And then there was -- on the noninterest income line, there was an 11% Q-on-Q decline. I'm just wondering what that was. And also for the treasury, I mean, was it part of the interest -- your NIM, your interest rate management? Was that part of it any issue there? The treasury sales with its bank or customer, that's the second. So those are the little questions there. And then there's a 15 -- okay, your end -- your Basel -- your CET 1 at final is 15.1%. Does that also include the dividend payout and a capital payout?

[Yung-Chee Leong, executive]

Yes. So that question, let me go back to...

[Unknown Analyst]

Go back to the...

[Yung-Chee Leong, executive]

So on NIM, our guidance was given at 1.85% to 1.9%. There are -- and your question around exit was at 1.84%, how do you get back to that 1.25% I think there are three major assumptions on why we think it's going to get there. First, SORA fell quite significantly in the second quarter, right? It fell 50 basis points, even though the rates in the U.S. actually have. I think SORA maybe have [indiscernible].

[Unknown Analyst]

Diverged or whatever.

[Yung-Chee Leong, executive]

Our house view is that the 3-month SORA will probably end the year at around 1.7%. That's one of the major assumptions underpinning that.

[Unknown Analyst]

Is that lower than now?

[Yung-Chee Leong, executive]

1.7-ish. We think there's probably a little bit more room because we are expecting 3 more rate cuts from the Fed through the course of this end of the year. There will still be some impact, but probably the magnitude of the transmission to be more moderated. The second impact that I think your colleague mentioned earlier on in terms of one account savings rate. While we've announced it in May, the impact of some of our initiatives in terms of reducing funding costs and so on, we will see in the second half of this year, right? Now the third is the HIBOR -- although the Hong Kong dollar in terms of our book exposure is small, it's only about 6%, but there is still an impact because of the significant shift in the Hong Kong rate. We do expect that the present circa 1% in terms of the 1-month HIBOR rate should recover and stabilize around 1.6% by the end of the year. So the HIBOR rate actually fell almost 200 basis points in the quarter just for perspective. So if some of these assumptions pan out, I think that expectation in terms of where we get back to in terms of the NIM.

[Unknown Analyst]

What about the wholesale funding? Will you try to let go of some of the wholesale funding and move it?

[Yung-Chee Leong, executive]

The interbank and securities margins actually stayed constant. The liquidity in the system is actually quite flush. So the movement was entirely mostly driven by asset repricing because of the rates movement.

[Operator]

Any final question...

[Yung-Chee Leong, executive]

Sorry, there was a second question. Yes. The second question around the noninterest component. So if you recall one of my slides I mentioned earlier on, actually, we have the second highest quarter on record.

[Unknown Analyst]

This is...

[Yung-Chee Leong, executive]

Fee income.

[Unknown Analyst]

In 2Q.

[Yung-Chee Leong, executive]

In 2Q. 2Q is our second highest record. Our highest -- second highest quarter on record. And the only reason it dropped was because the first quarter was our highest on record. And that was predicated upon a very chunky quarter for investment banking, where they saw extraordinary flows in investment banking fees generated. So I would say it normalized in the second quarter.

[Unknown Analyst]

It's not of treasury income. I mean, treasury income.

[Ee Cheong Wee, executive]

I think it's quite sustainable.

[Unknown Analyst]

Okay. Can I just ask one last question because I think in Mr. Wee's speech, which I didn't quite expect, you said there will be -- you are looking at sort of asset light business -- I mean more asset-light high ROE business. I think DBS also talked about this before. But what sort of --...

[Ee Cheong Wee, executive]

It is the sector that we are looking at. If you look at our trade asset, our cash management is do about 40%, 50% of the wholesale.

[Yung-Chee Leong, executive]

Wholesale, yes, but of the total loan portfolio trade is about 10% [indiscernible] 12%...

[Ee Cheong Wee, executive]

You can see turnover. That will improve our [indiscernible]-- in terms of risk management it's flow business, right? So you can't see it on a quarterly book. It's cumulative, right? So this is why our people is spending a lot of time talking about supply chain, talking about connectivity. These are hard work. But once you get them connected to you, the business is growing because if you look at the number, the trade.

[Yung-Chee Leong, executive]

[Indiscernible] you see the green shoots already. That trade income today is growing at about 12% growth rate. But you look at the customer treasury income that we are able to generate from that, that has actually grown very strongly. If you think about it, trade, if you have trade loans and trade assets with customers, you naturally would lead to helping them with the hedging, right? FX hedging. And with that, naturally, if you are proactive about it, lead to operating CASA accounts. So if you look at our CASA ratio today for wholesale bank, that's at 57%. CASA ratio is at 57%. The same mentality we adopt in our retail business. Our retail CASA ratio is 56%. So these are very important elements in terms of looking at how to grow stickiness of the franchise and shape it so that you have a better proposition, right?

[Ee Cheong Wee, executive]

So I think this is important. So I hope you as a reporter, don't just analyze on a quarterly, because very easy for me to achieve better quarter. I just build up my loan base, easy. This is the one that is shifting the balance sheet. We are a big bank. 1, 2 years, 3 years from now, you can [indiscernible] otherwise in the past is all property-based something [indiscernible] so we are trying to manage our risk to continue to invest in our technology platform, cash management, to improve our CASA to improve our cost of funds. So hopefully, the margin better. And also on supply chain [indiscernible]. So it will be a lot more visible to everyone. At the moment, it's a decimal point, but [indiscernible].

[Unknown Analyst]

You said you spend about SGD 800 million a year on technology alone? And [indiscernible] Casa?

[Ee Cheong Wee, executive]

Yes.