UOB reported Friday its net profit for the first quarter dropped 10 percent on-year to S$906 million, weighed by declines in wealth and fund management. The results missed forecasts from CGS-CIMB and Daiwa.
Banks globally have seen their earnings dented in the first quarter due to market volatility over the January-to-March period – driven by Russia’s invasion of Ukraine and higher interest rates.
UOB said net fee income for the first quarter declined 8 percent on-year to S$572 million, mainly on lower wealth management and fund management as the market outlook turned more subdued.
Other non-interest income also fell due to the impact of hedges, causing lower non-customer-related trading and investment income, even as customer-related treasury income was stable, UOB said in a filing to SGX.
Offsetting the decline in wealth and fund management fees, loan-related fees hit a record, UOB said.
Net interest income for the January-to-March period rose 10 percent on-year to S$1.69 billion on healthy loan growth and rising interest rates, UOB said.
The net interest margin (NIM), or the difference between the interest rate banks charge to lend and their cost of funds, came in at 1.58 percent, compared with 1.57 percent in the year-ago quarter and and 1.56 percent in the fourth quarter, the filing said.
Daiwa had forecast net profit of S$1.09 billion, net interest income of S$1.69 billion, NIM of 1.57 percent. CGS-CIMB had forecast net profit of S$961 million, net interest income of S$1.64 billion and NIM of 1.57 percent.
Credit card fees were dampened, coming in at S$42 million, up from S$40 million in the year-ago quarter, but down from S$53 million in the fourth quarter of 2021, UOB said, adding the quarter tends to seasonally lower for credit card spending.
Wee Ee Cheong, deputy chairman and CEO of UOB, pointed to geopolitical tensions as leading to market volatility.
“Despite that, our core businesses held up well, with quality loans growth, record loan-related fees and better margins,” Wee said.
Looking ahead, Wee said the bank was focused on helping businesses “seize opportunities” as borders reopen from Covid-related restrictions.
“The trade and investment corridors between Asean and China place us in a unique position to serve customers. The current disruptions to global supply chains will shore up the importance of the role of our region,” he said.