SINGAPORE - UOB Group on Friday morning (Aug 2) posted an 8 per cent year-on-year growth in net profit to $1.17 billion for its second quarter ended June 30, on the back of strong loan growth and higher trading and investment income.
Singapore's third-largest bank raised its interim dividend for the second time in two years to 55 cents per share, up from 50 cents a year ago and 35 cents in 2017. UOB said this reflects its commitment to reward shareholders while retaining adequate resources for capital and growth needs.
The dividend will be paid on Aug 27, with books closure on Aug 19.
Annualised earnings per share came in at $2.75, up from $2.51 the year prior.
Meanwhile, net profit before tax for Q2 beat market estimates by rising 9 per cent to $1.4 billion. This exceeded the $1.26 billion average estimate of three analysts, according to Bloomberg data.
Net interest income rose 7 per cent to $1.65 billion, as gross loans were up 9 per cent against the same quarter last year to $273 billion.
Net fee and commission income increased 6 per cent to $527 million for the quarter, on strong flows in wealth management coupled with higher volume in credit cards and loan-related fees. Other non-interest income surged by a third (33 per cent) to $403 million, boosted by higher trading income and gains from investment securities.
Net interest margin (NIM) edged down two basis points (bps) to 1.81 per cent for Q2, from 1.83 per cent in the year-ago period.
UOB said its funding position and capital base remained strong. As at June 30, the loan-to-deposit ratio was stable at 88.5 per cent. Customer deposits grew in tandem with loan growth, rising 6 per cent from a year ago to $305 billion.
The group's common equity Tier 1 capital adequacy ratio (CAR) stayed robust at 13.9 per cent.
Total expenses climbed 11 per cent to $1.13 billion for Q2, in line with the growth in operating income, while cost-to-income ratio was largely stable at 43.7 per cent, compared to 43.6 per cent a year ago.
Total allowances almost halved (down 44 per cent) to $51 million from $90 million, due to a write-back in allowances on non-impaired assets. The non-performing loans ratio for Q2 stood at 1.5 per cent, down from 1.7 per cent a year ago.
For the half year to June 30, net profit likewise rose 8 per cent from a year ago, to $2.22 billion.
Net interest income was up 8 per cent to $3.24 billion for the half year, led by strong loan growth of 9 per cent.
Net fee and commission income was largely flat at $1.01 billion, as higher fees from loan-related and credit cards were partly moderated by lower fund management fees. Other non-interest income climbed more than a third (36 per cent) to $743 million, with stronger gains in trading income and investments as the rebound in financial markets since the start of 2019 was largely sustained.
Half-year NIM also fell, down 3 bps to 1.8 per cent from 1.83 per cent in the year-ago period.
UOB said all business segments delivered healthy income growth in the six months compared to the year prior.
The group retail segment's income rose 7 per cent to $2.07 billion, while group wholesale banking's income increased 9 per cent to $2.06 billion, led by volume growth and stronger contribution from the investment banking and treasury businesses.
Higher expenses related to staff, revenue and IT resulted in UOB's total expenses increasing by 10 per cent to $2.2 billion for the half year.
Shares of UOB ended down 12 cents or 0.455 per cent to $26.28 on Thursday.