SINGAPORE - The UOB group reported on Thursday (July 28) a 5.1 per cent year on year rise to S$801 million in net earnings for the second quarter, largely on growth in non-interest income.

Net interest income was flat from a year ago at S$1.21 billion as the effects of loan growth were offset by a 9 basis point decrease in net interest margin to 1.68 per cent.

Non-interest income grew 13.9 per cent to S$813 million driven by higher net trading income on improved performance from trading activities.

Total expenses increased 5.7 per cent from a year ago to S$927 million in 2Q16 due to higher revenue and IT-related expenses.

Total allowances were S$161 million in 2Q16, a slight increase compared with S$152 million a year ago on a larger loan base.

For the first half-year, net profit was flat at S$1.57 billion from a year ago.

UOB said it continued to maintain a strong funding and capital position. Gross loans grew 4.9 per cent year-on-year and 1.4 per cent from the previous quarter to S$212 billion as at 30 June 2016. In constant currency terms, the underlying loan growth was 6.2 per cent from a year ago.

Customer deposits increased 2.8 per cent from a year ago to S$248 billion. UOB said its loan-to-deposit ratio remained healthy at 84.0 per cent.

Asset quality remained stable with the non-performing loans (NPL) ratio at 1.4 per cent.

UOB deputy chairman and CEO Wee Ee Cheong said: "While our performance reflects the effects of a cyclical slowdown, with softer revenue growth and rising NPLs, we kept our balance sheet strong.

"Even as growth in the region is on a modest trajectory, the economies are well-positioned to fend off shocks from the global financial market turmoil. We will stay vigilant and nimble, while setting our sights on the region's long-term prospects. Continued investments in furthering our capabilities and productivity will help to strengthen our franchise and to sustain our growth through economic cycles."

The board has declared an interim dividend of 35 cents per ordinary share.