Here's why UOB is bent on building niches in Malaysia

The bank's also fine-tuning exisiting capabilities.

UOB recently hosted a Malaysia Corporate Day to showcase its Malaysian operations, a consumer- and SME-centric bank which accounts for 16% of group PBT.

According to a research note from Maybank Kim Eng, UOB Malaysia is the seventh-largest bank in Malaysia by loans and deposits, and that while loan growth is slowing, management expects to reap further fruits of its labour.

Efforts made years ago to deepen relationships with clients through customised banking solutions via its regional platform should continue to show results.

The report said the bank is focusing on finding and creating niches, while fine-tuning capabilities to meet market demands.

Here’s more from Maybank Kim Eng:

Management expects easing ROEs in Malaysia (FY13: 17.6%, FY12: 17.8%, FY11: 18.6%) due to necessary franchise investments, possibly in Islamic banking.

There are limited excesses for pruning given its already lean cost structure.

The saving grace is potentially stronger NIM and fee-based income ahead.

After its recent price correction, UOB’s P/E and P/BV premiums over peers have largely reverted to their averages in the past 10 years.

UOB has been priced at its P/E mean since 2005 and at a slight discount to its historical P/BV mean.