UOB third-quarter profit tumbles 72% as bank hikes allowances by $1 billion
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UOB noted that its dividend payment would not be affected by the pre-emptive general allowance.
PHOTO: LIANHE ZAOBAO
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SINGAPORE - UOB on Nov 6 posted a sharp 72 per cent drop in third-quarter net profit to $443 million from $1.61 billion in the year-ago period on a surge in allowances for credit and other losses.
The bank said it took proactive steps to shore up pre-emptive general allowances to strengthen its provision coverage amid ongoing macroeconomic uncertainties and sector-specific headwinds.
UOB set aside $1.36 billion in allowances, up from $304 million in the year-ago period. It included $615 million in pre-emptive general provisions. This lifted general allowance coverage to 1 per cent of performing loans.
The general provisions cover all sectors, including small and medium-sized enterprises as well as multinational corporations.
UOB’s shares took a hit on the news, falling 3 per cent or $1.06 to $33.81 as at 9.18am on Nov 6.
“We proactively set aside general allowances to significantly enhance provision coverage, backed by our strong capital base,” its deputy chairman and chief executive Wee Ee Cheong said in a statement.
UOB noted that its dividend payment would not be affected by the pre-emptive general allowance.
Its earnings for the July to September quarter fell short of a $1.34 billion consensus forecast in a Bloomberg poll.
At the operating level, UOB’s profit fell 16 per cent year on year to $1.86 billion from $2.21 billion.
Net interest income dropped 8 per cent to $2.3 billion, as net interest margin narrowed by 23 basis points to 1.82 per cent, from 2.05 per cent a year ago.
Non-interest income came in at $1.1 billion, down from $1.4 billion previously, due to higher card rewards expenses and lower trading and investment income.
The non-performing loan ratio edged up to 1.6 per cent, from 1.5 per cent in the same period in 2024.
