UOB is starting to shed its reputation as the most conservative of Singapore’s local banks as its third-quarter financial report shows big upticks in average compensation and headcount.
Staff costs per head at UOB – total employee expenditure (such as salaries and bonuses) divided by total headcount – rose by a substantial 10.4% ($6,728) year on year to reach $71,633 for the first nine months of 2018. While earnings at UOB are unlikely to exceed those at larger rival DBS, which reports on Monday, they are already higher than those at OCBC, which paid its employees $65,514 on average in the year to end-September.
If compensation continues to rise at the current nine-month rate, UOB will end up spending more than $95k on its average staff member for 2018.
What explains UOB’s inflation-busting generosity? The bank has added 928 people to its payroll over the past year (taking its headcount to 25,826) – but more importantly, many of these new recruits are working in well-paid roles. UOB has been hiring in technology, a job sector which is experiencing above-average pay increases because the Singaporean tech talent pool isn’t growing quickly enough to meet demand from global banks, local banks and tech firms.
An 11% year-on-year rise in total (i.e. staff and non-staff related) costs was partly driven by, “IT-related expenses as the group continued to invest in talent, technology and infrastructure to enhance productivity, product capabilities and customer experience”, according to UOB's Q3 report. UOB announced plans in October to increase its 120-strong digital bank team by 50% over the next 12 months. And as we reported last week, almost a fifth of all vacancies at UOB are currently in tech and digital roles.
Pay is also rising in tech because the jobs on offer at banks in Singapore typically now demand more specialist skills than they did just two or three years ago. Business-as-usual vacancies focused on legacy systems or hardware infrastructure are declining in popularity as UOB and its rivals seek people in high-earning emerging fields such as machine learning and data science.
Away from tech, UOB has also been increasing its spending on its expensive front-office employees: those working in group wholesale banking (which serves corporate and institutional clients) and in global markets (which provides foreign exchange, interest rate, commodities, equities, and other treasury products). Expenditure increases of 14.8% and 6.8%, respectively, in these two divisions were partly attributed to staff-related costs.
UOB appears to be paying better bonuses than it did last year. The bank also pinned the overall increase in its expenses on “higher performance-related staff costs”.
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