UOB’s outlook is positive for this year, OCBC said, raising its forecasts for the bank.
It noted that UOB’s fourth-quarter earnings were in line with expectations, up 16 percent on-year at S$855 million, while the total dividend of S$1.00 was up from S$0.70 the previous year.
“Overall, we deemed it a good set of results,” OCBC said in a note on Monday.
OCBC raised its earnings forecast for UOB to S$3.841 billion for 2018, up from S$3.791 billion forecast previously, noting that this would mark a 13 percent improvement over 2017 results.
“We believe this is achievable on the back of better net interest income and net trading income expected for 2018,” OCBC said.
It said it expected a S$1 dividend payout was also likely for 2018, for a payout ratio of around 43 percent, compared with 49 percent in 2017.
OCBC added that the expectations for the U.S. Federal Reserve to increase interest rates four times this year, combined with the International Monetary Fund’s (IMF) forecast for 3.9 percent global economic growth this year, should be a positive backdrop for Singapore’s banking sector.
It raised its fair value for UOB to S$30.86 from S$30.10, keeping a Buy call.
Shares of UOB ended Monday down 0.5 percent at S$27.61.