UOB Q2 profit rises 27% to S$1.4 billion
Vivienne Tay
UOB ’s net profit for the second quarter rose 27 per cent on higher net interest income, and trading and investment income – the latter hitting an “all-time high”.
Fee income dipped slightly, however, and allowances rose, the lender said on Thursday (Jul 27).
Net profit for the three months ended Jun 30, 2023, stood at S$1.4 billion, including one-off expenses mostly related to the integration of Citigroup, compared with S$1.1 billion from the same period the previous year.
Excluding these expenses, net profit would have been S$1.5 billion – 35 per cent higher than the same period a year earlier.
The earnings were in line with a S$1.4 billion consensus forecast in a Bloomberg survey of six analysts.
Net fee income was down 8 per cent to S$524 million from S$567 million, as loan and trade-related fees dropped due to a slowdown in lending activities.
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Net interest income (NII) for the quarter was 31 per cent higher on the year to S$2.4 billion from S$1.9 billion, as net interest margin rose 45 basis points to 2.12 per cent, while NII from loans grew by 26.6 per cent to S$2 billion.
Other non-interest income was up 112.8 per cent to S$581 million, from S$273 million, buoyed by a rise in customer-related treasury income, and a stronger showing from trading and liquidity management activities.
Trading and investment income hit a new high, rising 123 per cent to S$478 million, from S$214 million.
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Cautious investor sentiment had also weighed on the recovery of wealth fees, partially offset by credit card fees, which rose year on year.
Total allowance on loans rose 37.6 per cent to S$238 million for the quarter, from S$173 million in the previous corresponding period.
UOB said specific allowances were higher this quarter mainly due to a major Thailand corporate account, while general allowance was set aside pre-emptively to “maintain prudent provisioning level”.
Its non-performing loans ratio was 1.6 per cent, down from 1.7 per cent. Its Common Equity Tier 1 ratio was also steady at 13.6 per cent.
The bank has declared an interim dividend of S$0.85 per share for the first half of its financial year, which represents a payout ratio of 49 per cent.
For the six months ended June, net profit, including the one-off expenses, was 45 per cent higher year on year at S$2.9 billion.
Core net profit climbed 53 per cent to S$3.1 billion, supported by “robust earnings growth” across UOB’s diversified business franchise.
Shares of UOB closed 0.8 per cent or S$0.23 higher at S$28.69 on Wednesday.
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