UOB shares end 2.8% down after Q3 profit tumbles
The lender ‘pre-emptively set aside’ additional allowances
[SINGAPORE] Shares of UOB plunged as much as about 4.6 per cent on Thursday (Nov 6) after it reported a 72 per cent year-on-year decline in net profit for its third quarter.
The counter fell to S$33.25 two minutes after market open on a S$1.62 drop that momentarily slashed UOB’s market value by nearly S$2.7 billion.
It later pared some of the losses to be 3.2 per cent down as at the midday trading break.
The bank’s Q3 net profit fell to S$443 million, compared with S$1.61 billion a year earlier, reported UOB. The result was far from the S$1.34 billion consensus estimate according to a Bloomberg poll of five analysts.
The lender “pre-emptively set aside” additional allowances worth S$615 million in Q3, bringing the total allowance for credit and other losses to S$1.36 billion as at Sep 30. This compared to S$304 million a year earlier.
Citi analyst Yong Hong Tan said pre-provision operating profit was about S$1.9 billion – a much milder 3 per cent quarter-on-quarter dip and 4 per cent below his estimates.
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The weak Q3 headline profit was mainly due to one-off “kitchen-sinking” provisions rather than underlying weakness. Core operating performance held up relatively well, with stable margins and costs, said Tan.
He added that asset quality worsened slightly, mainly outside Singapore, but UOB’s stronger loan-loss buffers suggest a more conservative stance ahead.
Despite UOB’s cheaper valuation versus peers, Tan said near-term sentiment is likely to stay cautious. Investors will likely remain focused on asset quality given the rise in non-performing loans and higher specific provisions, even after this “kitchen-sinking” quarter.
Tan added that the bank’s FY2026 guidance also implies lower earnings and dividend growth, which could continue to weigh on share performance despite its strengthened balance sheet.
The counter closed at S$33.90, down S$0.97 or 2.8 per cent, on Thursday.
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