UOB Q4 profit grows 16% to S$855m

UNITED Overseas Bank on Wednesday reported a 16 per cent rise in its fourth quarter net profit to S$855 million, mainly due to an increase in net interest income, fee and commission income and net trading income.

The increase was partly offset by higher operating expenses and allowances.

The bank is recommending a final dividend of 45 Singapore cents per share and a special dividend of 20 Singapore cents per share. Together with an interim dividend of 35 Singapore cents, the core dividend for FY17 amounts to 80 Singapore cents per share, an increase of 14 per cent over FY16.

UOB closed 49 cents higher to S$26.84 on Tuesday.

For full-year 2017, net profit rose 9 per cent to S$3.39 billion.

For the three months ended Dec 31, net interest income rose 15 per cent to S$1.46 billion, contributed by higher net interest margin and loan growth.

Net interest margin improved 12 basis points to 1.81 per cent, attributed to active balance sheet management and a rising interest rate environment. Non-performing loans formed 1.8 per cent of gross customer loans, 0.3 percentage points higher than the year-ago 1.5 per cent level.

Non-interest income increased 12 per cent to S$846 million.

Fee and commission income grew 10 per cent to S$585 million, as a result of strong growth in the wealth management, fund management and credit cardbusinesses.

Trading and investment income increased 18 per cent to S$198 million contributed mainly by higher net trading income.

Total expenses increased 15 per cent from a year ago to S$1.1 billion due to higher performance-related staff costs, IT-related and revenue-related expenses. The expense-to-income ratio increased slightly to 47.8 per cent, UOB said.

As at Dec 31, 2017, non-performing loans (NPL) ratio stood at 1.8 per cent, while NPL coverage was 91 per cent, or 195 per cent after taking collateral into account.

The loan-to-deposit ratio stayed healthy at 85.1 per cent.

Wee Ee Cheong, UOB's deputy chairman and CEO, said: "Despite headwinds in the last couple of years, particularly in the oil and gas sector, our balance sheet remains strong, with robust capitalisation and reserves buffer as well as ample liquidity."