UPDATE: UOB 4Q18 net profit rises 7 percent, but misses some analyst forecasts

UOB branch at Raffles Place, SingaporeUOB branch at Raffles Place, Singapore. Photo taken pre-Covid.

This article was originally published on Friday, 22 February 2019 at 7:25 A.M. SGT; it has since been updated.

Singapore bank UOB reported on Friday its fourth quarter net profit of S$916 million, up 7 percent on-year on higher loan growth, offset by lower wealth management fees amid market volatility in the period. The results missed some forecasts.

Net interest income for the quarter ended 31 December rose 10 percent on-year to S$1.61 billion amid loan growth of 11 percent, it said in a filing to SGX before the market open on Friday.

Net fee and commission income fell 8 percent on-year to S$467 million, UOB said, adding “higher fees from credit cards were offset by lower wealth management and loan-related fees amid market uncertainties.”

Other non-interest income declined 46 percent on-year to S$140 million, on unrealized mark-to-market on investment securities due to market volatility, UOB said.

Credit card income increased 10 percent on-year and 12 percent on-quarter to S$123 million, but fund management income dropped 10 percent on-year and 7 percent on-quarter to S$60 million and wealth management income declined 20 percent on-year and 14 percent on-quarter to S$114 million, UOB said.

Wee Ee Cheong, UOB’s deputy chairman and CEO, pointed to healthy growth in the core business, and the bank’s new partnerships with Prudential and Grab.

“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,” Wee said in the statement. “As a long-term player with deep knowledge of and an extensive presence that connects Southeast Asia, we are best positioned to ride on the region’s immense growth potential.”

Full-year net profit at record, but misses forecasts

For the full year, UOB reported net profit of S$4.01 billion, up 18 percent on-year and a record, with net interest income up 13 percent on-year at S$6.22 billion on loan growth and a higher net interest margin (NIM), or the difference between the interest rate banks charge to lend and their cost of funds. The NIM for the full year rose 5 basis points on-year to 1.82 percent.

Net fee and commission income increased 5 percent to S$1.97 billion on stronger loan-related, credit card, trade-related and fund management fees, the filing said.

The earnings came in a below an average forecast.

UOB’s full-year net profit was expected to come in around S$4.08 billion, with net interest income at S$6.29 billion, based on the average of five analyst forecasts. Non-interest income for the full year was expected around S$3.08 billion, based on the average of four analyst forecasts.

The analysts’ forecasts for NIM for the full year were in a range of 1.80 percent to 1.84 percent.

Total allowances for the full year dropped 46 percent to S$393 million, UOB said.

“This reflected the fairly benign credit environment for most of 2018 as well as lower residual risks from the oil and gas and shipping sectors from the preceding years,” the bank said.

UOB declared a final dividend of 50 Singapore cents a share and a special dividend of 20 Singapore cents, which brings the total dividend for the year to S$1.20, up 20 percent on-year.


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