UOB Q2 net profit falls 5.7% on lower treasury and investment income

The United Overseas Bank Plaza building pictured in the central business district in Singapore.
The United Overseas Bank Plaza building pictured in the central business district in Singapore. PHOTO: REUTERS

SINGAPORE - United Overseas Bank Ltd reported on Friday that a 5.7 per cent fall in net profit for the second quarter ended June 30, 2015, to $762 million from $808 million in the year-ago period.

That missed the $831.4 million average of seven analysts' estimates compiled by Bloomberg.

UOB said the lower earnings were largely due to lower treasury and investment income while client franchise income continued to show healthy growth.

Total income was up 2.2 per cent at $1.93 billion. Net interest income grew 7.9 per cent to $1.21 billion on higher loan growth and net interest margin. Net interest margin increased 6 basis points to 1.77 per cent, mainly due to higher loan yields as the loan portfolio re-priced on Sibor increases.

Fee and commission income grew 13.4 per cent to $465 million, with double-digit growth registered in wealth management, credit card and fund management income.

Trading and investment income was lower at $156 million mainly due to a one-off gain from investments and revaluation recognised a year ago. Consequently, non-interest income for the second quarter fell 6.1 per cent to $714 million.

UOB said the Group's liquidity and funding position remained sound. Gross loans increased 4.8 per cent year-on-year to $202 billion while deposits were 11.7 per cent higher at $241 billion as at June 30, 2015.

Loan-to-deposit ratio improved to 82.3 per cent as compared with 87.8 per cent a year ago.

An interim cash dividend of 35 cents per ordinary share was declared. The scrip dividend scheme will not be applied to the interim dividend.