UOB Q3 profit jumps 57% to $1.05 billion, above estimates

Total allowances for the quarter fell 67.9 per cent to $153 million, compared with $476 million a year ago. ST PHOTO: KUA CHEE SIONG

SINGAPORE - UOB's earnings continued to rebound from last year on the back of loan growth and sustained fee income, as well as lower allowances.

Singapore's third-largest lender on Wednesday (Nov 3) posted a 57 per cent year-on-year increase in third-quarter net profit to $1.05 billion - slightly above the $1 billion average estimate of four analysts polled by Bloomberg.

UOB chief Wee Ee Cheong said the bank's results came amid a challenging macroeconomic backdrop with disruptions in global supply chains, a slowdown in China's economy and resurgent Covid-19 infections across the region.

"Amid near-term uncertainties, the gradual reopening of borders bodes well for business flows and we remain positive of strong activities along the Greater China-Asean trade corridors," he added.

Net interest income climbed 9 per cent to $1.6 billion, while net interest margin - a key gauge of banks' profitability - rose 2 basis points to 1.55 per cent.

Net fee income rose 15 per cent to $589 million amid broad-based growth, especially in loan-related, wealth and fund management, and credit card fees.

Other non-interest income dipped 5 per cent to $259 million, mainly from lower investment gains.

Total allowances for the quarter fell to $153 million, compared with $476 million a year ago.

The group's net profit rose 4 per cent from the previous quarter. Its earnings for the first nine months of this year rose 37 per cent to $3.06 billion.

Mr Wee told a media briefing on Wednesday that the bank sees growing opportunities in areas like central bank digital currencies (CBDCs) and sustainability.

"We believe CBDCs can help drive financial inclusion and boost economic growth. We are working with central banks so that customers can benefit from the use of CBDCs in the coming years," said Mr Wee.

UOB has also expanded its reach in the asset tokenisation space, he added, citing recent partnerships with digital asset platforms Marketnode and ADDX.

The bank is, however, still cautious about cryptocurrencies.

"This is something we are observing and we are not 100 per cent convinced yet... We are focusing more on areas where the visibility is more obvious," said Mr Wee.

Chief financial officer Lee Wai Fai said there is growing demand for digital assets and the bank prefers to work with established third parties for now, rather than setting up its own exchange.

He added that CBDCs will help countries like China verify the genuineness of trades and currency flows, and result in greater economic activity.

UOB is also set to hit by next year its initial goal to build a sustainable finance portfolio of $15 billion by 2023.

It approved $14 billion in sustainable financing - comprising green loans, sustainability-linked loans and loans for green-certified buildings - as at September.

"Beyond the number, what is important is we are working closely with customers and the ecosystem to co-create end-to-end solutions under various frameworks," said Mr Wee, citing UOB's initiatives like the U-Energy financing platform for energy efficiency projects and U-Drive solution for electric vehicle businesses and end-users.

"This is where the multiplying effect takes place, rather than just a whole financing number."

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