UOB beats estimates with Q4 net profit up 1.7% to $786 million, despite higher bad debt allowances

UOB Group said its net profit of $786 million for the fourth quarter of its 2014 financial year is 1.7 per cent higher than a year ago, on strong loan growth. -- PHOTO: ST FILE
UOB Group said its net profit of $786 million for the fourth quarter of its 2014 financial year is 1.7 per cent higher than a year ago, on strong loan growth. -- PHOTO: ST FILE

SINGAPORE - The UOB Group posted on Friday that net profit of $786 million for the fourth quarter of its 2014 financial year, 1.7 per cent higher than the year-ago period, on strong loan growth.

This was above an average forecast of $759 million from six analysts polled by Reuters. It reported a net profit of $773 million a year earlier.

The better-than-expected result came despite a nearly 20 per cent increase in provisioning for bad loans to $166 million, "mainly due to higher individual impairment on loans as well as collective impairment set aside for loan growth". Loans grew at a 9.5 per cent pace in 2014.

UOB's bigger rivals, Oversea-Chinese Banking Corp and DBS Group Holdings, both missed analysts estimates on higher bad debt allowances.

Net interest income grew 6.7 per cent to $1.17 billion in the quarter ended December 31, supported by loan growth, but offset by a decrease in net interest margin. With a broad-based increase in fee and commission income as well as higher trading and investment income, non-interest income improved 5.4 per cent to $682 million.

Operating expenses of $805 million was 5.6 per cent higher than a year ago on revenue and IT-related expenses.

Compared to its third quarter, net earnings fell 9.3 per cent to $786 million.

Non-interest income was 16.4 per cent lower from the previous quarter as fee and commission income decreased due to seasonal slowdown in business volume.

Trading and investment income fell 37.8 per cent over the previous quarter to $160 million mainly due to higher hedging gains in the third quarter on the back of favourable market conditions.

For the full year, UOB posted net earnings of $3.25 billion for 2014, an increase of 8.0 per cent from a year ago, on broad-based growth across core income streams.

Total income rose 11.0 per cent year-on-year to a record $7.46 billion, mainly due to healthy loan growth and higher trading and investment income, including income from increased treasury customer flows.

UOB said its group liquidity and funding position remained sound. Loan-to-deposit ratio was steady at 83.8 per cent as at December 31, 2014, with well-paced deposit and loan growth of 9.0 per cent and 9.5 per cent respectively from a year ago.

Asset quality stayed resilient with the nonperforming loans ratio stable at 1.2 per cent.

The Board recommended a final one-tier tax-exempt dividend of 50 cents and a special one-tier tax-exempt dividend of 5 cents per ordinary share.

Together with the interim one-tier taxexempt dividend of 20 cents, total dividend for the 2014 financial year will be 75 cents per ordinary share.