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UOB posts 8% rise in Q1 profit to S$1.05b on stronger income growth

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United Overseas Bank (UOB) reported higher net profit for its first quarter of 2019, up 8 per cent to S$1.05 billion, from S$978 million for the year-ago period.

UNITED Overseas Bank (UOB) reported higher net profit for its first quarter of 2019, up 8 per cent to S$1.05 billion, from S$978 million for the year-ago period.

Earnings per share was S$2.47 for the three months ended March 31 versus S$2.28 for the year-ago period. UOB shares were down 1.04 per cent, or S$0.29, at S$27.56 as at 10.48am. No dividend has been declared for the quarter, the bank reported on Friday morning, prior to the start of trading.

Total income was up 8 per cent to S$2.41 billion from S$2.23 billion previously, led by a recovery in trading and investment income, and healthy loan growth as macro conditions stabilised and financial markets rebounded. 

Net interest income increased 8 per cent to S$1.59 billion on the back of broad-based loan growth of 12 per cent, which was partially offset by net interest margin compression of five basis points to 1.79 per cent.

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Net fee and commission income declined 7 per cent to S$479 million due to lower wealth management and fund management fees as market sentiment was more subdued compared with a year ago. UOB added that this was partially offset by higher loan-related and credit cards fees, which grew 9 per cent and 7 per cent respectively.

Its group retail business saw profit before tax increase by 1 per cent to S$471 million from S$466 million. Total income grew 4 per cent to S$1 billion from S$963 million, driven by net interest income from deposits and loans growth and increased deposit margin. This was offset by lower fees from wealth management products.

Expenses increased 9 per cent to S$494 million from S$453 million mainly due to continued investments in digitalisation and headcount for franchise growth. 

As at March 31, 2019, the group’s common equity tier 1 CAR (capital adequacy ratio) - its available core capital as a percentage of its risk-weighted credit exposures - was 13.9 per cent, down 1 per cent from the year-ago period.

The group’s leverage ratio of 7.6 per cent was more than double the regulatory minimum requirement of 3 per cent. It said it "remains well capitalised to navigate the macro uncertainties ahead".

“We started 2019 with strong quarter earnings, underpinned by our continued focus on our fundamentals and prudence in managing our business," said Wee Ee Cheong, UOB’s deputy chairman and chief executive officer.

"This discipline is key especially when the macro environment remains uncertain due to the slowing global economy and ongoing trade tensions.

"Our steadfast approach to ensuring continued sustainable growth has seen strong investor support, which was also recently reflected in their response to our debut Panda bond and US dollar-denominated subordinated notes issuances."