UOB Q3 net profit slips 1% but beats forecasts on higher margins, one-off dividend for 80th anniversary

UOB's net profit came in at $858 million in the three months ended September, versus $866 million a year earlier and an average forecast of $784 million from six analysts polled by Reuters.
UOB's net profit came in at $858 million in the three months ended September, versus $866 million a year earlier and an average forecast of $784 million from six analysts polled by Reuters.PHOTO: REUTERS

SINGAPORE - United Overseas Bank reported a marginal drop in net profit during the third quarter, hit by a lower net trading income that partly offset the broad-based earnings growth in the period.

Net profit for the July to September period was down 1 per cent year-on-year to $858 million, despite a 5.8 per cent rise in revenue to $2.09 billion. This followed the 5.7 per cent year-on-year net profit drop in the second quarter.

In the third quarter, UOB's net trading income was down 26.5 per cent year-on-year to $163 million, but there was a net gain of $148 million from investment securities sale.

With fee and commission income also rising slightly by 2.1 per cent year-on-year to $485 million - including a $4 million increase in wealth management income to $104 million compared with last year - total non-interest income was up 4.2 per cent to $850 million.

Meanwhile, the quarter saw UOB affected by a tepid demand for loans, which grew 3.6 per cent year-on-year to $199.6 billion. As a result, net interest income rose 6.9 per cent to $1.24 billion.

"Net interest margin increased 6 basis points to 1.77 per cent, contributed mainly by improved loan yields as the loan portfolio re-priced on rising interbank and swap offer rates in Singapore," UOB said when announcing the results on Friday (Oct 30).

Non-performing loan ratio was at 1.3 per cent, up one basis point from a year ago, but NPL coverage remained strong at 142.7 per cent, the bank added.

Total expenses increased 13 year-on-year to $904 million mainly on higher staff costs and revenue-related expenses. Part of the increase came from spending on activities surrounding SG50 and UOB's own 80th anniversary.

Notably, UOB declared a one-off dividend of 20 cents per share to commemorate its 80th anniversary.

Commenting on the third quarter results, Chief executive Wee Ee Cheong noted that UOB's core earnings remain stable despite the market disruptions in recent months.

"Our results demonstrate continued resilience amid volatility. Core revenue growth was led by net interest income and fee income while capital and funding positions remain robust," he said.