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UOB Q4 profit up 7% to S$916m

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UOB's deputy chairman and CEO, Wee Ee Cheong and chief financial officer Lee Wai Fai announcing the bank's Q4 results on Feb 22, 2019.

UNITED Overseas Bank (UOB) posted a 7 per cent rise in net profit to S$916 million for the fourth quarter from a year ago, on the back of higher net interest income and a healthy loan growth, the bank announced on Friday morning before markets opened. 

Earnings per share for the quarter came in at 2.15 Singapore cents, up from 1.98 Singapore cents last year. 

For the three months ended Dec 31, net interest income rose 10 per cent to S$1.61 billion, led by a 11 per cent growth in loans.

However, net interest margin eased off one basis point to 1.8 per cent, from 1.81 per cent for the year-ago period. 

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Net fee and commission income declined 8 per cent to S$467 million, as higher fees from credit cards were offset by lower wealth management, and loan-related fees amid market uncertainties, UOB said. 

It added that while growth in customer-related flows remained stable this quarter, other non-interest income fell 46 per cent to S$140 million, mainly due to unrealised mark-to-market on investment securities arising from market volatility.

Total expenses fell 4 per cent to S$984 million, driven by lower revenue-related and staff costs.

For the full-year of 2018, UOB saw net profit rise 18 per cent to S$4.01 billion, though this came in slightly below a Bloomberg consensus forecast of S$4.04 million. 

On a per share basis, earnings for the year stood at 2.34 Singapore cents, up from 1.99 Singapore cents in the preceding year.  

Total income rose six per cent to S$9.12 billion, led by strong growth in net interest and fee and commission income, said the bank. 

The directors have recommended a final dividend of 50 Singapore cents, and a special dividend of 20 cents per share for the financial year ended Dec 31. This is up slightly from a final dividend of 45 Singapore cents, and a special dividend of 20 cents in the year-ago period. The final dividend is subject to shareholders' approval at an upcoming annual general meeting scheduled for April 26. 

Together with the interim dividend of 50 Singapore cents per share paid in August 2018, the total payout for FY2018 will be S$1.20, up from S$1.00 the previous year. These dividends will be paid on May 16, UOB said. 

Looking ahead, the bank noted that it will be prudent in navigating headwinds including heightened geopolitical risks and volatile financial markets. 

Wee Ee Cheong, UOB deputy chairman and chief executive said: "As global uncertainties persist in 2019, we will stay disciplined in pursuing sustainable growth, while maintaining a risk-focused approach, and equipping our people for the future. As a long-term player with deep knowledge of and an extensive presence that connects South-east Asia, we are best positioned to ride on the region's immense growth potential.

"For our customers across the region, we will continue to invest in our omni-channel capabilities, and to forge ecosystem partnerships, such as our recent ones with Prudential and Grab, in providing innovative and relevant solutions. Starting in Thailand, we will also deepen engagement with Asean's massive base of 'mobile first' and 'mobile only' customers through our Digital Bank."

As at 12.07pm on Friday, UOB shares were trading at S$25.49 apiece, down 1.9 per cent or 49 Singapore cents. 

Separately, OCBC analyst Carmen Lee noted that the bank's weakness in its fourth-quarter earnings is widely expected, particularly with weakness in global markets late last year. 

That said, noting that UOB has sweetened the dividend payout this year with a special dividend, both OCBC Investment Research and RHB Research Institute have maintained their "buy" ratings on the counter. RHB also has a target price of S$29.80, representing a 15 per cent upside from the counter's Feb 21 close of S$25.98.