Good morning, and welcome to UOB's first quarter 2024 results briefing. I'm Wendy Wan from the Group Strategic Communications team, and I'll be your MC for today. This morning, we have Mr. Wee Ee Cheong, UOB's Deputy Chairman and CEO, and Mr. Lee Wai Fai, our CFO, to present the results. A few house rules before we start: please keep your questions till after the presentations are done. For those in the room with us, please put your mobile phones to silent. For those on Microsoft Teams, please put yourself on mute for now. Without further ado, I will now pass the time to our CEO. Mr. Wee, please.
Good morning. Thank you for joining us today. The global environment remains uncertain. For now, we expect fewer interest rates cut due to strong U.S. economy and sticky inflation. Interest rate is set to remain higher for longer. But we are cautiously optimistic about this year's outlook. For Southeast Asia, despite the impact from high rates and a strong US dollar, we continue to see ongoing shift in global supply chains and sustained tourism activities. China is taking steps to reduce its reliance on property sector and diversifying into new economic growth drivers. This should generate more trade and FDI opportunities between China and Southeast Asia. Against this backdrop, we have a relatively good start to the year. We deliver a core net profit of SGD 1.6 billion, held steady year-on-year, and 5% higher quarter-on-quarter. Core ROE stood at 14%.
Our core business driver for the first quarters are trending well overall. Net interest income was 2% lower, as the 2% loan growth was more than offset by the lower net interest margins year-on-year. However, net interest margin stabilized at 2.02% quarter-on-quarter, as we actively optimize our balance sheets. Fee income grew 5% across the board, and momentum will pick up in the coming months. Other non-interest income surge, with record high trading and investment income. We are keeping a firm grip on costs, with core cost-to-income ratio at 41.9%. Asset quality stayed resilient, with NPL ratio stable at 1.5%, and lower credit costs for the quarter at 23 basis points. Our balance sheet remains strong, with healthy levels of capital and funding. Now, let me give you some update on our core business segments.
Our group retail business. Our retail banking business has done well across different revenue drivers. Wealth management is picking up. Our ASEAN business remains strong, growing double-digit year-on-year across all markets. We are seeing increasing demand for investment products, mostly into fixed income and structured products. There is potential to do more. At the same time, net new money continued to grow, bringing our total AUM to SGD 179 billion, or 11% higher than last year. Deposit balances are seeing growth across all countries, reflecting our solid deposit franchise. As we transform our private wealth business, we added capabilities. We aim to attract new customers, grow our AUM, and convert more of our AUM from deposits into wealth products. Our wealth offerings in the UOB TMRW app were recently refreshed, and we are seeing positive feedback.
Just to give you an example, now three in four unit trusts subscriptions are performed digitally. For new-to-wealth customers, one in two have started to invest in unit trusts on our app. We will be launching a revamped advisory platform for our private bank, with a focus on growing our customer wealth sustainably. We continue to attract quality RM and wealth management professionals to UOB. All of this should give a strong boost to our wealth management business. Card fee income grew 11% year-on-year to SGD 90 million. Other than concerts, which all of you are very excited about, we plan to do more events targeting younger customers. And to share some colors, customers who use UOB cards to buy Taylor Swift concert ticket have continued to actively use our cards, even after buying the tickets. We expect consumer spending to stay strong this year.
With our expanded regional franchise and more lifestyle offerings, we are well-placed to ride on this trend. Our Citi integration is on track. We have integrated our portfolios in Malaysia, Indonesia, and just recently, Thailand. Our focus on cross-sell synergies is starting to gain traction. We aim to uplift customer spend and strengthen deposit balances and investments. Now, on group wholesale business. Our wholesale business was resilient despite a challenging environment. We are now reaping the benefits from the investment in our platforms. Since 2018, after we roll out our cash management platform, wholesale CASA has almost doubled, and customer cash balances are stable since last quarter. Our financial supply chain management platform has rolled out in six of our key markets. Since then, we have added a healthy level of asset through the platform, and the platform is set to further drive our asset growth in the region.
Together with our deep expertise in seven growth sectors that drive about 70% of Greater China and ASEAN FDI and trade flows, we have the platform ready to benefit in the next upturn of the trade and investment cycle. Our connectivity strategy is playing out well. Cross-border income now make up a quarter of wholesale banking revenues, while transaction banking income contribute more than half. These are stable revenue stream with low capital requirements derived from sticky client relationships. For this quarter, loan-related fee remains strong, driven by loan drawdown. Customer-related trading and investment income is up 8%. With our regional footprint, local expertise, and sector-specific capabilities, we are well-placed to connect our customers to opportunities across ASEAN and achieve our ambition of becoming the number one cross-border trade bank in ASEAN. Looking ahead, 2024 so far has been good.
While the operating environment ahead may be uncertain, we will stay vigilant and nimble. With ASEAN's strong fundamentals, we remain confident of the region's underlying prospects and upside potential. As a long-term player, we believe in balancing growth with stability. We remain disciplined and prudent in maintaining surplus liquidity to give us strategic flexibility. When it comes to our customer investment, we believe in doing right by them, providing solutions to help them grow their wealth in a sustainable manner instead of product pushing. In recent years, we have invested in building product capabilities in a diverse engines of growth, and we are now seeing positive results. We will also focus on harnessing these capabilities for our next stage of growth. Our 2024 guidance remains unchanged.
Low single-digit loan growth, double-digit fee growth led by our retail franchise, total income growth to be positive from 2023 levels, core cost-to-income ratio at around 41-42% on continued cost discipline, and total credit costs at the lower end of 25-30 basis points. I thank my colleagues for their teamwork and dedication. I now invite Wai Fai to elaborate on our financials.
Thank you, Ee Cheong. And once again, good morning, everyone. On our results, I think Ee Cheong mentioned that our core net profit increased 5%, against the last quarter to SGD 1.6 billion. I think including the one-off, Citi integration expenses, core profit would be down to SGD 1.5 billion. Net interest income is this quarter, first owing to a shorter day count, but NIM was stable at 2.02%, as active management of the excess liquidity buffered the lower loans margin. Fees income saw a good start to the year, with higher loans related fees and pickup in wealth demand, while card fees normalized from last quarter seasonal high. Treasury and investment income surged to an all-time high, boosted by record customer treasury income, as well as strong performances from trading and liquidity management activities.
Cost-to-income ratio, excluding the one-off expenses, improved to 41.9% from strong income growth and disciplined spending. Asset quality remained resilient, with NPL ratios unchanged at 1.5%. Total credit costs on loans decreased as NPL formation was lower and exposures were well secured. Our capital and funding positions remain strong, with CET1 at 13.9 and NSFR at 121%, respectively. On some of the details, as mentioned, our first quarter core profit grew 5% Q-on-Q to SGD 1.6 billion, driven by record trading and investment income and higher fees income. Year-on-year, core profit saw a decline of 1%, mainly due to lower net interest income and the margins. I think the year-on-year decline on margins is still there. One-off costs are starting to taper off as we progressively complete the operational integration of Citi.
Let me go through the segment performance in the next few slides. Against last year, retail registered healthy growth in cards and wealth fees across the region. This, along with CASA volume growth, helped offset the margin impact on the mortgage portfolio from intense competition. Wholesale saw healthy CASA growth from last year. Strong investment banking activities, coupled with the regional pickup in trade volumes, cushioned the impact of margin compression as the market competes for higher quality loans. Global Markets captured opportunities in commodities trading, alongside with improved performances from liquidity management activities. For our consumer business, post-Citi integration, our retail customer base has further grown organically by around 1% to 8.1 million. The proportion of digitally-enabled customer continues to rise across the region, highlighting our success in onboarding the former Citi customers onto our TMRW platform .
We continue to grow strategic partnerships with established brands in the region, and we aim to boost the customer spending by providing a wider range of lifestyle offerings. Our quarterly card fees has sustained at a higher level post-Citi acquisition. Card fees for the quarter increased 11% compared to a year ago. Our assets under management continue to demonstrate strong growth. We saw another $3 billion new money inflows in the first quarter this year, bringing our asset under management to $179 billion. Our wholesale business have held up well in the face of an elevated interest rate environment. We continue to execute on our strategy by providing business connectivity across the region. Cross-border income is now a quarter of our wholesale banking income.
While the number of anchor customers in our supply chain, those are more important because they bring in the rest of the spokes, has risen by 5% year-on-year. Our diversified strategy also allow us to capture opportunities in different segments, with income from the hospitality sector rising 9% and the healthcare rising 13% year-on-year. We have seen significant growth in transaction volume and cashless payment across the region on our cash management platform. For geography, we saw continued franchise growth in Singapore, our ASEAN Four, and North Asia this quarter. Singapore recorded higher trading and investment income, while North Asia benefited from commodity tradings. ASEAN Four overall performance grew on a constant currency basis. Although card fees were seasonally lower, this was offset by a pickup on loans-related fees.
The ASEAN Four also registered higher trading and investment income from customer treasury flows and liquidity management activities. Let me go through the details of the income drivers. Net interest income is 2% to SGD 2.4 billion due to a shorter quarter, while net interest margin stabilized at 2.02%. Loans margin continued to be suppressed by market competition for good quality credits, coupled with high cost of funding, as the impact from the recent deposit repricing has not fully come through in the quarter. Interbank and securities margins improved 17 basis points quarter-on-quarter from active management of excess liquidity. We expect NIM to hold above 2% for the rest of this year.
We have registered a good start to fees this year, increasing to SGD 580 million in this quarter, driven by loans-related fees and pickup in wealth and investor confidence gradually return. Although wealth fees increased by 8%, total wealth product income, if we include the customer-related treasury income, grew 19% quarter-on-quarter. Card spending was strong year-on-year. The decline in card fees quarter-on-quarter is mainly due to the seasonal higher spending in the fourth quarter, and some annual fee waivers from our Citi conversion. Okay, we did some of our conversion, which we actually waive some of the fees to bring them on board. Customer-related treasury income recorded a new record at SGD 290 million this quarter, as retail bond sales and hedging activities increased from market expectation on Fed rate cuts.
So I think we sense the risk-on elements slowly coming back into the market. This, coupled with robust performance from trading and liquidity management activities, boosted trading and investment income to an all-time high. On the back of an enlarged income base, cost to income ratio improved to 41.9% this quarter. Including the one-off, the CIR would be at 44.6. The one-off costs will taper off in the second half, as we have progressively completed the operational merger for three of the biggest subsidiary of Malaysia, Indonesia, and Thailand. On asset quality, the overall asset quality of our loans portfolio remain resilient, with NPL ratios unchanged at 1.5% from last quarter. New NPL formation also decreased with lower recoveries and write-off. Total NPL, NPA inched up slightly to SGD 5.1 billion for the quarter. Total credit costs improved to 23 basis points.
Specific allowance is this quarter, with net credit costs improving from 26 to 20 basis points due to lower NPL formation. As at the end of the quarter, the group total allowances remained at SGD 5 billion, of which SGD 3 billion was in general allowance. Performing loans coverage at 0.9%, as well as NPA coverage at 99%, or 204% if you take, factor in the collateral. I think they are more than adequate. For loans, on a constant currency basis, loans grew 1% against last quarter and 3% from a year ago. The growth were mainly from selective good credits and short-term trade loans. Customer deposits grew steadily by 1% quarter-on-quarter and 4% year-on-year. Both retail and wholesale CASA deposit continue to register healthy growth, benefiting from our platform and client activities.
Overall, CASA mix surpassed the 50% mark for the first time since 2022. Our liquidity position remains strong, with LCR at 160% and NSFR at 121%. These are all well above regulatory requirements. Our CET1 rose from last quarter to 13.9%, boosted by profit accretion, while RWA remained relatively stable. With that, I conclude my presentation and pass to Wendy.
Thank you, Mr. Lee. We will now move on to the Q&A. For those present here, if you would like to ask a question, please raise your hand, wait, wait for my cue. For those on Microsoft Teams, please use the Raise Hand function to indicate that you would like to ask a question. Kindly wait for my cue and turn on your camera before asking your question. Please introduce yourself first. We will now start off with those in the room with us. First question from Bloomberg.
Hi, Mr. Wee and Mr. Lee. Congratulations, and this is Jenny Apone from Bloomberg. I have four questions. First, can I have NIM outlook for 2024? Net interest margin outlook for 2024. Second question, given your CRE exposure, mostly in Singapore, can we get some outlook about the market? Do you see a softening trend, and are you concerned? The third question,
Commercial real estate.
Commercial real estate, yeah. Third question on wealth. Congrats on the rising AUM. Could you share how much the net new money is of the total? And I noted that 60% plus came from overseas customers. Could you provide the breakdown on dominant origins of the funds? And fourth question, at the beginning, Mr. Wee mentioned a cautious optimism. Could you give some colors? What are the main risks that you see that keep you cautious? Thank you.
You thought that NIM will be a bit challenging this year. Now that the Fed has deferred, I mean, we started the year with consensus of 13 rate cuts. Now we are down to maybe 2, and there are even questions whether it happened. A lot of this will be passed, pushed back to the last quarter. So, so our NIM held up stronger than we thought. Okay, so you expect-- Actually, I personally expect some positive upside in the short term, okay? Because we have cut rates on deposits. A lot of them will flow through in the second, third quarter. After that, it's a function on whether there will be rate cuts, and how steep are the rate cuts. So, so we are a little bit positive.
We still hold back to our guidance that we can keep it well above, above 2%. And now maybe I can just add that I think we can keep it well above 2%. If I can keep it at current level, will be something that we aim to do.
Two.
Yeah, keep it above current level will be what we hope to do, depending on the last, if the Fed suddenly cuts sharply. But I think with the things go, that are going, we are actually comfortable keeping it at the current level.
But you also mentioned pressure on competitiveness-
So-
- on quality deposits.
Right. So no, no, it's not that the competitiveness is on loans.
Loans.
Okay, because there are two things, right? You really look at it, the yields are the one coming down, okay? Especially in Singapore. Because Singapore, I mean, all the competitors have excess liquidity, and if you're to compete, like I said, don't look at margins. Also, help us look at volume. If I go in and compete more on the trade, which we are more optimistic, if, Mr. Wee's vision on, on the rising RCN and a little bit more positive in more trade flows, that. Those are slightly lower margins, but it should add to the total income. So that's why we entered a range of where margins would be. NII, we are quite positive that we will bring it back to a positive level from the negative 2% that we saw in the first quarter drop.
...I think the fundamental is, I think, the philosophy is we need the liability in order for us to grow loans, right?
This is where the quality of the deposit is important. If the loan is robust, of course, we can go to the market and buy some fixed deposit, right? Just to, to support the loan growth. But generally, we will focus on the investment that we have put in, to grow CASA. You can see the CASA is picking up, right? That is important. The stickiness, that is very, very important for us in the long term. Right. Now, you talk about the commercial, right?
Commercial real estate, yes.
I would say generally, even our building here, I think the demand is still quite high. What is the rate now today? It's about 11-12 dollars.
Yeah. It got past eleven.
Yeah.
Past eleven.
So I think with the foreign people coming in, I think there is still a demand. It's unlike other market. So Singapore, in a way, is quite fortunate, right? So I would say, commercial property will continue to stay quite firm.
Quite firm?
Quite firm, yeah.
So I think we disclosed the commercial real estate outside of Singapore, right? In total, we have 7.4%, more than half is in Singapore. There are two big markets that we highlighted, which is Hong Kong and US. Okay, the rest of the market, I think LTVs, occupancy rates are quite comfortable. I think we are positive with some of the actions taken by the Chinese government on stabilizing the commercial on the property sectors, in China itself. Okay, that should help us. We always says that our customers, they are actually asset rich. Okay, it's just that they take time to restructure and sell it. So we are confident that we can manage the Hong Kong portfolio. US is where I think there's some stabilization coming in. We have taken the big hits.
I think last two years, we already have taken some to NPLs. I may have one or two remnants coming in, but they are not big. So overall, we are quite comfortable with the commercial real estate exposure. You had a question on wealth. Like I said, the 60% that we talk about origin, actually is quite well spread. This 60% is the base. And remember, before the days of China, a lot of the rich from Indonesia, Thailand, et cetera, keep their wealth here, so that continues to be true. Of course, the recent talks about how much of that flow originates out of China itself, it does, but I think it haven't picked up significantly to the momentum.
To be very frank, there was some cautiousness and some slowdown because of the enhanced due diligence that we put on that. So, it's quite a good spread itself that we have. We will make sure that there are 2 sectors of the wealth. 1 is private banking, 1 is consumer. And the consumer side, with the 50 ASEAN integration, that will pick it up, okay? And that will pick up, so that will really be our original focus. Private bank, we just started building. Our North Asia exposure has done well, although it's a small portfolio. They'll continue to. But the challenge in that segment, like Ee Cheong said, was that our philosophy is very different. We look at wealth preservation. So as wealth preservation, deposits is actually a key element that we bring in, okay?
Then the question is cross-sell of that into wealth products when they happen, okay? I think recent statistics for those FDs in the private bank, we are cross-selling 70%-80%. But again, it's the type of products you cross-sell into. That's the next one. Okay, we prefer more conservative products, although there are some people who think that there is already a risk on element. I think we prefer conservative products to make sure that it's sustainable for the customers. So that's probably our model itself, steady growth, I mean, we don't know where the cycles will be, right? Cycles will happen. Now, maybe we are positive on the upside. Equities in the U.S. is still positive, but if interest rate drop or go up, nobody knows. But that's where we watch.
That means we want to be responsible to customer.
Well, I think, I think this is something very important. That is our DNA. That is our philosophy, right? You cannot compare, UOB as a commercial bank compared to the wealth bank, okay? You look at UBS of the world. I would say generally, the wealth product will take up maybe 80% of the AUM, but for us, we are talking about maybe 30%-35%. But we are focusing not only just on wealth product, but certain segment, yes, private banking, maybe we focus a little bit more.
But if you look at it as a group, okay, our Privilege Banking customer cut across the whole ASEAN market. We don't just sell, keep, continue to sell, push product.
Sure.
We're focusing on liquidity, deposits, providing solution to the customer, to hope, to make them, how to generate, how to create wealth for them.
Sure.
Solution.
Could you share specifically how much is the net new inflows in the quarter, and-
I mentioned it's about SGD 3 billion.
Oh, SGD 3 billion. I'm so sorry.
3 billion, yeah.
Thank you.
Last quarter.
Oh, last quarter, SGD 3 billion. Yeah. Thank you.
Thank you. Thank you, Chanya. Next question, sorry, from Fox?
...Just to follow up on the wealth question, could you give us some color on the outlook for wealth, considering your fee income from wealth has been steadily increasing the last five quarters, at least I see on my screen. And, what's driving this? And then second question, with the completion of the Citigroup, Citibank, integration, are you looking at more M&A opportunities around the region?
Give us some digestion first.
Okay. We are still yet to milk our customer base, the new customer base that we have in Citibank, okay? But you can see the telltale sign is encouraging, because you must remember the portfolio that we bought for Citibank is basically credit card and unsecured. Okay? There is no wealth piece in the four markets, okay? So our job is to make sure that we are able to offer multiple products, deposits, wealth, mortgages, and all these things. This is where the cross-selling become very important, okay? So that is something we are still working on.
So, as far as M&A is concerned, yeah, we're always on the lookout, but I think for the time being, I think this is something quite strategic for us. I think we have gained a lot of traction in the region. We want to make sure it's successful, so that the next move that we have to make, the shareholders will be a bit more confident in our acquisitions. Yeah. Yeah, Xiao Pop.
Next question from Xiao Pop.
Hi, good morning. Could you share the outlook of China? Because I noted that the bank exposure is about 45% to mainland China. So what is the outlook, given the uncertainties in the economy? And would you think that this 45% is comfortable, or would you seek to reduce or re-increase?
Our exposure, immediate exposure to China is not big, okay? Our... We have 16 branches in China, but basically, we make money outside of Chinese company, right? Because that is where our competitive advantage is. We don't compete with the Chinese bank in the domestic market, so our exposure is actually, manageable. And if you ask me about China economy, yes, I think for the time being, it's no different than any economy. I think, they are facing a bit of headwind, but I'm very confident. Chinese people, they are very enterprising, right? They have got no energy. There's no work-life balance, okay? They are, they are very productive. They're so much so that, you know, create a, a bit of threat to a lot of people outside of China. But as an economy, I think it's big economy, right?
The turnaround may take a while, but I think generally, I'm confident. Give them some time, they will turn around. Yeah.
Next question from Natalie Business Times.
Hi. So one of your competitors actually say that the higher for longer rates might cause their 2024 earnings to be better than 2023. Do you see the same for UOB?
Wow, I like to see that, too. Right. Yeah.
Any color on?
No, no, I think we are all budgeting for slightly higher, right? But again, the market is very uncertain, okay? You look at the war in Middle East, you look at all these things, right?
So we are cautious and we are always. We can set a budget, right? End of the day, we are tracking on a quarterly basis, right? We don't grow for the sake of growing. At the end of the day, if I grow too much, you will come and question me, how is my balance sheets, right? So I think we have to balance, right, growth with stability.
Like Wee Ee Cheong said, the challenge really would be margins versus demand, right? I think that's the balance. The other thing that's actually now in the top of everybody's mind is the higher for longer is resulting in a stronger U.S. dollars.
Okay? That actually has some implication, especially to the region. So, so you saw Indonesia recently forced to increase, okay, because the rupiah weakened so much. And, and similarly, if you really look at our ASEAN performance, the currency in Thai, and even in baht and in ringgit, they have all been weakened significantly. So that's something that we are watching. But that being said, will all the money flow back to US? I mean, that was the hypothesis. Okay, higher for longer, and we, we don't think so, because we think that there's enough activities in this part of the world, like Yick Chung said, okay? You really look at the ASEAN region, you really look at the supply chain, and you really look at the tourism flow and all.
Yeah.
We are a little bit more positive that there will be activities. So we are just balancing and I'm sure every government is balancing interest rate and how it will affect the domestic growth. So that's something that we are actually watching. But margin-wise, we might be slightly better off. But like I said, we're also cautious on when will customers be comfortable with the rate position in order to commit, because volume has been muted, and we are hoping that some of it will turn around in the second half. So we are a little bit more positive now than the last time we spoke. Okay, if you ask me, yes, we are more positive. I think the economy isn't going to a sharp recession like the U.S. and all.
So that gives us some comfort that the engineered soft landing, and once we can manage that-
... that geopolitical differences has nothing to do with economics. I think we'll all be better off now.
Thank you.
Yeah.
Next question from ST.
Yeah, thanks so much for the presentation. Congrats on the good results. I followed up a question on wealth. Do you have a sense of how many family offices the bank is currently serving, right now? And also, whether it sees any competition with Hong Kong since the city has rolled out some measures to attract SFOs. And also a question on deposits. Is the bank planning for further cuts in deposit FD rates to manage costs and bring costs down?
I think both Singapore and Hong Kong do offer opportunities for family offices, right? There are people going to Hong Kong, there are people coming to Singapore. Offhand, I cannot tell you specifically what is the number, but there is a... I would say if, as a country, I wouldn't be surprised if you look at some of the statistics are talking about $4-$5 trillion, right? Funds flowing into Singapore. Okay, how many family offices? It could be 500, 600, 700, I have no idea. But, as I said, our AUM grew about $3 billion, okay? So we do get some traction coming in. Not only just Singapore, we also have operations in Hong Kong, right? So we attract both now. Yeah.
As to your second question on deposit cuts, I think we must be relevant to the market. Okay? I think every time we do a campaign, we also monitor whether customers take it or the monies flow out, because there's a competition out there. So far, we have been comfortable, but we are watching that if the take up is not as high, it implies that that's the threshold the market is willing to take. So far, we are comfortable, but we have to be careful, because if interest rate continues to stay higher and we continue to aggressively cut, then none of the competitors do it.
And also, it's a function of loans, right?
Yeah.
If there's no demand for loans, what's the point for me to go and take deposits, right? You know, how are we going to place it out?
So we are watched. We are watched. That's just how comfortable we are, the market will be able to take it. Yes.
Okay, thank you. Next question from The Edge.
Hi. Hello. Yeah, thanks, thanks for the presentation and congratulations on the result. Okay, I've got a well, well, three main questions. So one is the loan growth, where do you expect it to come from? Because you grew, I think 2-3% Q1Q. So where did that come from, and where, where's, what's the pipeline looking like? And can you. And well, you said you can maintain some margins. And then for the credit costs that you had on your SP, where did that come from? And is there anything systemic, or is there any sector that is particularly weak? And then, there's an FDI advisory question. You know, you opened a new office in Japan quite recently.
I mean, are you planning to open any new offices in sort of, you know, countries where you want to attract capital into, into ASEAN, if you could? And the final question, you know, yesterday there was a short letter to the BT from Mr. Hwang , who used to be at UOB, who talked about the synergies-- well, the lack of synergy between insurance companies and banks. And some years ago, I think 2010, was it, you sold your UOB Life Insurance company to Prudential. So I'm just wondering what your view is, you know, on this financial conglomerate idea. Because you seem, you're focusing a lot more now just on commercial banking without the insurance. So if you could-
Well, I think different player have a different strategy, different view now, right? To me, I think, we have our own strategy, okay? We focus on our customer base, we focus on distributions. There will be people willing to also manufacture, at the same time, focus on distribution. So that itself actually is exciting for the market, right? You provide investor diversity, right? You pick and choose, rather than everybody follow the same path. So I cannot comment on other people's strategy. That is our own strategy. You talk about, what is the-
The pipeline for your loans and-
I would say quite general. There is no, nothing very specific. We also grow some in the region, but again, if you translate back to Singapore dollars, it's hardly any growth, right? Am I right? Am I right? You look at the ringgit, you look at the Thai baht. But, but generally, I would say it's all round, right? We focus on quality customer at this point in time, right? The market, again, is very uncertain. Loan, we are the intermediary. We are not here to encourage customer to grow.
It's their business. The challenge is more competition, the pricing.
Right? Are you willing to take the risk with the current fine pricing? So that go back to the risk appetite, go back to the discipline that every organization has.
And then where do your credit costs come from in the last quarter, and what, what are you looking at for the year?
I think you are looking at SP of 20. We have always guided credit costs of 25-30.
So I think we are comfortable with that. So it is not a surprise, it's quite... There's no big single entity creating that.
So it's quite a big spread. So it's a normal addition for two, right? One is, this time around, it's mainly NPL formation. Because there are two parts of SP that we normally add. One is NPL, new NPL, second one is valuation. I think most of the valuation issue, we have taken out the equation. That's why the last,
... I think third and fourth quarter of last year, our SP was certainly higher, because we did that valuation downgrades ahead of time. So, 20 basis point is something that is within our model, we are comfortable. There's no specific single factor that stands out.
So the valuation downgrades that you did in last year, were they for property or other sectors? Were they,
Mainly properties-
... because most of our-
... NPLs are collateralized by property. 91% of our collaterals are on property.
Oh, okay.
Thank you. Any other questions from the floor? If not, thank you for joining us to a good start to 2024, and we hope you'll continue to exceed everybody's expectations going forward. Thank you, and we wish you a good day ahead.