UOB Q1 profit rises 5.4%, topping forecasts, as income offsets provisions

A logo of the United Overseas Bank Limited (UOB) outside a branch in Singapore's central business district. PHOTO: REUTERS

SINGAPORE - United Overseas Bank, the first of Singapore's Big Three lenders to report results, posted a better-than-expected 5.4 per cent increase in first-quarter earnings as higher income from loans, trading and wealth management outweighed higher bad loan provisions.

Net profit came in at S$807 million compared to S$766 million a year earlier, UOB said on Friday (April 28). That beat the S$757 million average forecast in a Bloomberg survey of seven analysts.

Net interest income for the quarter grew 2.3 per cent year on year to S$1.3 billion from a year earlier.

Non-interest income increased 18 per cent to S$819 million. Fees and commission income rose 17.5 per cent to S$508 million, driven by higher fund management and wealth management income. Trading and investment income also registered an increase of 20.5 per cent to S$243 million.

Total allowances for loans rose 59 per cent to S$186 million. Specific allowance on loans amounted to S$277 million, largely from the oil and gas and shipping industries.

UOB said its asset quality remained sound, with non-performing loans (NPL) ratio stable at 1.5 per cent compared with the previous quarter. NPL coverage stayed at 118 per cent.

Non-interest income increased 18 per cent to S$819 million. Fees and commission income rose 17.5 per cent to S$508 million, driven by higher fund management and wealth management income. Trading and investment income also registered an increase of 20.5 per cent to S$243 million.

Mr Wee Ee Cheong, UOB's deputy chairman and chief executive officer, said: "We started the year on a bright note with a steady growth trajectory from our core businesses. Against an unpredictable and volatile macro backdrop, we have maintained a resilient portfolio and strong balance sheet. Our recent successful issuances of covered bonds, senior bonds and subordinated notes reflect the confidence investors have in us. In February, UOB was the first Asian issuer to print dual-currency covered bonds, which were well-subscribed.

"We remain disciplined in pacing our growth, tapping the increasing connectivity and affluence in the region through targeted investments to build a sustainable franchise. The recently announced preliminary approval to establish a subsidiary bank in Vietnam will further strengthen our ability to participate in the growing intra-regional flows and to serve our customers' needs more comprehensively."

Join ST's Telegram channel and get the latest breaking news delivered to you.