UOB sees Q4 net profit up 0.3% at S$788m, as higher bad loan provisions cap income gains

A man passing the United Overseas Bank Limited (UOB) offices in Singapore's central business district.
A man passing the United Overseas Bank Limited (UOB) offices in Singapore's central business district. PHOTO: REUTERS

SINGAPORE - The UOB Group reported net earnings inched up 0.3 per cent to S$788 million for its fourth quarter ended Dec 31 from S$786 million a year ago as higher provisions for bad loans offest gains in income.

The bottomline matched the average forecast of S$788 million in a Bloomberg survey of seven analysts.

Total allowances rose 14.6 per cent to S$190 million from a year ago, said UOB. Specific allowances on loans jumped 58.1 per cent to S$115 million mainly due to non-performing accounts in Singapore, Indonesia and Greater China.

 

The fourth quarter scoreline was 8.1 per cent lower over the third quarter mainly due to lower gains from the sale of investment securities and higher one-off expenses in 4Q15, said UOB in its statement on Tuesday (Feb 16).

Net interest income grew 9.3 per cent to S$1.28 billion in 4Q15, led by a 10 basis point increase in net interest margin to 1.79 per cent.

Non-interest income increased 17.9 per cent from a year ago to S$803 million. Fee and commission income grew 6.7 per cent to S$480 million with increases recorded across most fee businesses.

Trading and investment income surged 64.3 per cent to S$263 million mainly from higher trading income.

Excluding the one-off expenses in 4Q15, total expenses increased 14.4 per cent from a year ago. Some S$43 million was incurred for the UOB80 commemorative events and brand campaign during the quarter.

For the full 2015, net earnings of S$3.21 billion was 1.2 per cent lower from a year ago as prior year results included a higher write-back of tax provisions. Total income grew 7.9 per cent to reach S$8.05 billion, led by strong client franchise income and higher gains on sale of investment securities, said UOB.

"Despite the slowing environment and bouts of market volatility during the year, we have kept our earnings steady and our balance sheet strong," said UOB chief executive Wee Ee Cheong.

""Financial markets will continue to grapple with volatility and uncertainty in 2016 underpinned by ongoing concerns such as the impact of falling oil prices and China's slowdown on the global economy. Our view is that the risks are largely manageable and the underlying economic fundamentals are strong enough to withstand the shocks even as we enter an environment of slower growth."

UOB's board recommended a final dividend of 35 cents per share, down from 50 cents a year ago. Coupled with the 35-cent interim dividend and the 20-cent one-off dividend for the bank's 80th anniversary, total dividend for 2015 was 90 cents a share, up 20 per cent from 75 cents in 2014.