This article was originally published on Friday, 3 May 2019 at 7:17 A.M. SGT; it has since been updated with more details.
UOB reported Friday its first quarter net profit increased 8 percent on-year to S$1.05 billion as strong loan growth of 12 percent offset a drop in its net interest margin.
That beat a forecast from Daiwa for net profit of S$1.02 billion.
Wee Ee Cheong, UOB’s deputy chairman and CEO, said the earnings were strong as the bank remained prudent.
“This discipline is key especially when the macro environment remains uncertain due to the slowing global economy and ongoing trade tensions,” Wee said in the statement.
Net interest income for the quarter ended 31 March rose 8 percent on-year to S$1.59 million, UOB said in a filing to SGX before the market open.
That was despite UOB reporting the net interest margin, or the difference between the interest rate banks charge to lend and their cost of funds, dropping 5 basis points to 1.79 percent. Daiwa had forecast NIM would come in at 1.82 percent, with net interest income of S$1.63 billion.
Total expenses increased 9 percent on-year to S$1.07 billion on higher performance-related staff costs and IT-related costs, the filing said.
“The group remained committed to investing in talent and technology to strengthen product capabilities, to enhance customer experience and to improve productivity,” UOB said in the statement.
Net fee and commission income fell 7 percent on-year to S$479 million on lower wealth management and fund management fees amid more-subdued market sentiment, UOB said. But loan-related and credit card fees increased 9 percent and 7 percent, respectively, the bank said. Daiwa had forecast fee and commission income of S$516 million.
Other non-net interest income jumped 40 percent on-year to S$340 million on improved customer-related income and higher trading income, UOB said.
On a quarter-on-quarter basis, net profit increased 15 percent, while net interest income fell 1 percent and net fee income increased 2 percent, UOB said. Other non-net interest income more than doubled on-quarter.