UPDATE: UOB reports 2Q net profit rose 8 percent amid strong wealth management flows

Singapore UOB bank branchSingapore UOB bank branch

This article was originally published on Friday, 2 August 2019 at 7:20 A.M. SGT; it has since been updated to add more details.

UOB reported Friday second quarter net profit rose 8 percent on-year to a record S$1.08 billion, beating forecasts from CGS-CIMB and Daiwa, amid strong wealth management flows, higher credit card volume and higher trading income.

Net Interest income ended 30 June increased 7 percent on-year to S$1.65 billion, the bank said in a filing to SGX before the market open.

Net interest margin, or the difference between the interest rate banks charge to lend and their cost of funds, improved to 1.81 percent, up 2 basis points on-quarter on loan repricing, the filing said.

Net fee and commission income increased 6 percent on-year to S$527 million in the quarter on strong wealth management flows, higher volume in credit cards and loan-related fees, UOB said.

Other non-interest income rose 33 percent on-year to S$403 million on higher trading income and gains from investment securities, UOB said.

Total allowances fell 44 percent on-year in the quarter on the write-back of allowances on non-impaired assets, UOB said.

CGS-CIMB forecast second-quarter net profit of S$1.05 billion, with net interest income of S$1.65 billion and non-interest income of S$746 million. It estimated UOB’s NIM would come in at 1.81 percent.

Daiwa had estimated UOB’s second quarter net profit would come in at S$1.04 billion, with net interest income of S$1.65 billion and non-interest income of S$797 million. Daiwa forecast UOB’s NIM at 1.80 percent.

“The record set of results for the first half of 2019 was achieved against the increasingly challenging macro environment. Our balance sheet remained healthy with robust capital and liquidity positions, while asset quality stayed sound as we continue to grow our franchise selectively,” Wee Ee Cheong, UOB’s deputy chairman and CEO, said in the statement.

“Our results reflect the relevance of our strategies in connecting our customers to opportunities across the region, deepening their engagement through our omni-channel approach and offering them the right solutions through our ecosystem partnerships,” Wee added.

For the first half, UOB reported net profit rose 8 percent on-year to a record S$2.22 billion, with net interest income up 8 percent on-year at S$3.24 billion, net fee and commission income down 1 percent on-year at S$1.01 billion and other non-interest income up 36 percent on-year at S$743 million.

UOB declared an interim dividend of 55 Singapore cents a share, up from 50 cents a share in the year-ago period.


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