UPDATE: Analyst briefs: UOB 1H21 earnings

Singapore UOB bank branchSingapore UOB bank branch

This article was originally published on Wednesday, 4 August 2021 at 23:26 SGT; it has since been updated to include comments from DBS, Daiwa and Maybank Kim Eng. 

UOB reported Wednesday its second quarter net profit climbed 43 percent on-year to S$1.0 billion on robust loan growth and a higher net interest margin as well as strong growth in wealth management and other fees.

Shares of UOB ended Wednesday up 1.78 percent at S$26.31.

These are analysts’ calls on the results:

Morgan Stanley

Morgan Stanley called the report “a very solid set of second quarter results,” which beat its forecasts on better balance sheet growth and higher loan fees.

Although net interest margin (NIM) fell 1 basis point on-quarter in the second quarter to 1.56 percent, that was ahead of forecasts on slightly better-than-expected deposit growth, especially U.S. dollar deposits, causing average interest earning assets to slightly beat projections and driving a net interest income beat, Morgan Stanley said in a note Wednesday.

In addition, non-interest income also beat forecasts in the second quarter on better-than-expected loan and trade fees, the note said.

Morgan Stanley rates the stock at Overweight, with a S$29.50 target price.

Credit Suisse

Credit Suisse said UOB’s first half results were in line with its forecasts.

The key positives from the earnings report were normalisation of dividends back to a 50 percent payout ratio, improved credit cost guidance, robust loan growth and a lower cost-to-income ratio, the investment bank said in a note Wednesday.

Credit Suisse rates the stock at Outperform with a target price of S$30.00.


Daiwa said UOB’s second quarter earnings per share (EPS) beat its forecast by 9 percent on slightly higher-than-expected net interest income, despite a decline in the net interest margin, and on lower-than-expected operating expenses and allowances. The dividend payout of 60 Singapore cents also beat Daiwa’s estimate, the Japanese investment bank said in a note Wednesday.

Daiwa raised its target price to S$29.50 from S$28.10 after increasing its 2021-2023 core EPS forecasts by 1 percent to 4 percent, which is 6 percent to 10 percent above consensus levels.

“We reaffirm our Outperform call on UOB, which remains our top sector pick for its undemanding valuation with arguably the most resilient earnings recovery profile and highest sustainable dividend yields in the sector,” Daiwa said.

Maybank Kim Eng

Maybank Kim Eng said the first half results were in line with its expectations as operating conditions improve, especially in Singapore, North Asia and other developed markets.

“The momentum here is set to increase in 2H21 with wider economic opening. However, the group’s exposure in Southeast Asia may
take longer to recover given fresh lockdowns and resurging Covid there. Nevertheless, strong provisioning and capital levels should provide
sufficient offset for this risk,” the brokerage said in a note Wednesday. Southeast Asia accounts for 21 percent of the loan book, the note said.

The brokerage kept a Buy call with a S$29.34 target price.


Calling the stock “a recovery play,” DBS said UOB is on track for a rebound in return on equity with improving profitability.

DBS said it continued to look forward to multiple revenue drivers for UOB through 2021, including strong loan growth and continued momentum in wealth management and loan-related fees.

“UOB’s strong non-performing asset (NPA) coverage of 102 percent and huge management general provisions overlay of around S$1.2 billion will continue to support its share price,” DBS said in a note Wednesday.

DBS kept a Buy call on UOB’s shares, with a S$29.20 target price.