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Hot stock: UOB down 1.12% despite stronger Q3 showing

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Shares of United Overseas Bank (UOB) edged down on Friday morning, despite the lender posting an 8 per cent growth in net profit for its third quarter before the market opened.

SHARES of United Overseas Bank (UOB) edged down on Friday morning, despite the lender posting an 8 per cent growth in net profit for its third quarter before the market opened.

Net profit for the quarter increased to S$1.12 billion, thanks to stronger client franchise income and trading and investment income. Net interest income rose 5 per cent to S$1.69 billion on the back of healthy loan growth. However, net interest margin fell by four basis points amid declining interest rates and a competitive price environment.

UOB was trading at S$26.53 as at 11.25am on Friday, down 1.12 per cent or 30 cents on the day. About 1.2 million shares had changed hands, making it the second-most active counter by value on the Singapore bourse during the morning session.

On Friday morning, RHB Securities maintained its "buy" call on UOB with a target price of S$29.50 under review, pending an analyst teleconference later in the day.

RHB analyst Leng Seng Choon said the current target price offers a 10 per cent upside plus 4.8 per cent of fiscal 2019 forecast yield. This will yield a target FY2020 forecast price-to-book-value ratio of 1.24 times.

UOB’s Q3 net profit was in line with expectations, Mr Leng said. The earnings for the first nine months this year accounted for 77 per cent and 76 per cent of RHB’s pre-results and consensus FY19 forecasts respectively.

Meanwhile, DBS was the most heavily traded by value on Friday morning. South-east Asia’s largest bank lost 0.73 per cent or 19 cents to S$25.81 as at 11.25am, with 1.6 million shares changing hands. DBS will report its financial results for its third quarter on Nov 11, the last of Singapore’s three banks to do so.

On the other hand, OCBC Bank rose 0.18 per cent or two cents to trade at S$10.98 as at 11.25am, on some 1.1 million shares traded. It will release its third-quarter financial results on Nov 5.

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