United Overseas Bank (UOB) racked up a strong performance in the third quarter despite its oil and gas loan book staying under pressure.
The bank's stellar result yesterday came a day after it announced that Mr Wee Cho Yaw will retire from the board, which he had steered for six decades.
Net profit rose 12 per cent to $883 million in the three months to Sept 30 compared with the same period a year earlier, driven by broad-based growth in both net interest income and non-interest income.
Total income rose 10 per cent from a year ago to $2.24 billion.
Net interest income increased 15 per cent to $1.41 billion, driven by higher net interest margin and loan growth. Net interest margin rose to 1.79 per cent from 1.69 per cent, which UOB said was due to "active balance sheet management" and rising interest rates.
Non-interest income rose 2 per cent year on year to $830 million. Fee and commission income from the wealth management, fund management and credit card businesses grew 12 per cent to $551 million.
AT A GLANCE
$883 million (+12%)
$2.24 billion (+10%)
Compared with a year ago, specific allowances on loans and other assets for the quarter decreased by $51 million to $247 million.
The amount of non-performing loans (NPL) grew 7 per cent year on year to $3.75 billion as of Sept 30.
"However, new formation of NPL was mainly driven by a large account in the oil and gas sector, which remained under stress," UOB said in a statement.
"Though the NPL ratio moved up to 1.6 per cent, NPL coverage remained strong at 108 per cent, or 236 per cent after taking collateral into account."
Deposits were 7 per cent higher year on year at $268 billion while gross loans increased 7.8 per cent to $234 billion. The loan-to-deposit ratio stayed healthy at 85.8 per cent.
OUTLOOK FOR ASIA
Despite ongoing uncertainties in the external environment, we believe in Asia's long-term prospects, which are backed by its favourable growth drivers.
CHIEF EXECUTIVE WEE EE CHEONG, on Asia's long-term prospects.
Earnings per share was $2.07 in the third quarter, up from $1.90 a year earlier, while net asset value per share was $19.88, up from $18.54.
Chief executive Wee Ee Cheong said: "The asset quality of our overall portfolio was stable, apart from a couple of oil and gas-related issues, and our reserves buffer and capitalisation remained high.
"Despite ongoing uncertainties in the external environment, we believe in Asia's long-term prospects, which are backed by its favourable growth drivers. We continue to invest in capabilities to support our customers' regionalisation ambitions and rising wealth needs."
UOB said on Thursday that Mr Wee will retire from the board at the shareholders' meeting on April 20 next year, after six decades of dedicated service.
It added that it has nominated former deputy prime minister Wong Kan Seng to succeed incumbent independent non-executive chairman Hsieh Fu Hua who will be retiring early next year.
UOB shares closed two cents lower at $24.77 yesterday, after the results were announced.