UPDATE: UOB reports 3Q18 net profit up 17 percent on higher net interest income

UOB logoPhoto by Leslie Shaffer

UOB reported net profit for the third quarter of S$1.04 billion, 17 percent higher than the same period last year and mostly in line with analysts’ forecasts, on higher net interest income and lower allowances.

The first of the three Singapore banks to report its earnings said that its net interest income rose 14 percent to S$1.60 billion on-year in the quarter.

The net interest margin rose two basis points to 1.81 percent, compared with the 2017 third quarter.

Non-interest income fell 13 percent to S$244 million, the bank said in a filing to SGX before the market open on Friday.

Fee and commission income rose two percent to S$484 million from the previous quarter. Total expenses for the quarter increased 12 percent from a year ago to $1.01 billion, mainly from higher staff costs and IT-related expenses, it said.

Total allowances fell more than 50 percent to S$95 million, largely due to high allowances in the year-ago quarter for impaired loans from the oil and gas and shipping sectors, the bank said.

Deutsche Bank had forecast earnings of S$1.03 billion with “flattish” net interest margin. Nomura had forecast net profit of S$1.06 billion, with estimated net interest income of S$1.68 billion, net fee and commissions of S$550 million and trading and other income of S$371 million.

Daiwa had forecast NIM of 1.83 percent, flat with the second quarter. Daiwa estimated UOB’s net profit for the quarter would come in at S$1.08 billion, with net interest income of S$1.59 billion, non-interest income of S$808 million and fee and commission income of S$521 million.

“Amid headwinds posed by escalating trade tensions and cautious business sentiment, we sustained stable performance in the third quarter,” Wee Ee Cheong, UOB’s deputy chairman and CEO, said in the statement. “Our overall balance sheet remained healthy with robust capital and liquidity positions. Our disciplined management of capital and diversified funding base enable us to navigate near-term uncertainties.”

The company said “no dividend on ordinary shares has been declared for the third quarter of 2018.”

The dividend payout has been closely watched as analysts consider the bank’s balance sheet overcapitalized, spurring expectations it would increase its dividend payouts to lower its CET1 ratio.

This article was originally published Friday 26 October 2018 at 8:48 A.M. SGT; it has since been updated.

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