OCBC, UOB raise dividends amid higher Q2 earnings

UOB enjoyed a buoyant second quarter as customer deposits grew in tandem with loan growth, rising 6 per cent to $305 billion.
UOB enjoyed a buoyant second quarter as customer deposits grew in tandem with loan growth, rising 6 per cent to $305 billion.ST FILE PHOTO

Investors benefit as banks' showing reflects positive lending milieu and business activity

Investors are in line for bumper payouts after OCBC Bank and United Overseas Bank lifted second-quarter earnings.

Both lenders reported results yesterday with numbers reflecting the stronger lending environment and steady business activity.

UOB lifted net profit 8 per cent to $1.17 billion for the three months to June 30, while OCBC's earnings rose 1 per cent to $1.22 billion.

OCBC's figure was below the average estimate of $1.29 billion from two analysts, according to Refinitiv. UOB's pre-tax figure, at $1.4 billion, exceeded the $1.26 billion average estimate of three analysts polled by Bloomberg.

Investors will be in the money. UOB lifted its interim dividend to 55 cents a share from 50 cents in the same period a year earlier, while OCBC will pay 25 cents a share, 25 per cent up on the 20 cents last year.

OCBC said its higher earnings more than offset lower contributions from its Great Eastern Holdings insurer.

  • AT A GLANCE

  • UOB

    TOTAL INCOME: $2.58 billion

    NET PROFIT: $1.17 billion

    OCBC

    TOTAL INCOME: $2.62 billion

    NET PROFIT: $1.22 billion

Total income was $2.62 billion, up 6 per cent from a year earlier, while net interest income grew 10 per cent to $1.59 billion.

This was mainly driven by a 4 per cent increase in customer loans and a rise in net interest margin of 12 basis points to 1.79 per cent, in part due to increased asset yields in Singapore, Hong Kong and China.

Wealth management fees shot up 8 per cent to the highest level in five quarters, helping to propel net fees and commissions to $522 million.

Annualised earnings per share came in at $1.15, up from $1.06 for last year.

Operating expenses went up 11 per cent to $1.15 billion from $1.04 billion a year earlier, mainly due to a 13 per cent rise in staff costs to $713 million.

Net profit for the first six months hit a record $2.45 billion, up 6 per cent from a year earlier on the back of higher net interest income, trading income and contributions from associates.

Total income rose 10 per cent to $5.29 billion.

UOB also enjoyed a buoyant second quarter.

Total income rose 10 per cent to $2.58 billion while net interest income advanced 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 and other non-interest income went up as well.

Net interest margins edged down from 1.83 per cent in the second quarter last year to 1.81 per cent.

Customer deposits grew in tandem with loan growth, rising 6 per cent to $305 billion. Total expenses climbed 11 per cent to $1.13 billion for the quarter, in line with the growth in operating income.

The non-performing loans ratio was 1.5 per cent in the quarter, down from 1.7 per cent a year ago.

Annualised earnings per share came in at $2.75, up from $2.51 a year earlier.

Net profit for the half-year rose 8 per cent to $2.22 billion while net interest income was up 8 per cent to $3.24 billion. This was driven by strong loan growth of 9 per cent.

UOB shares closed 1.07 per cent down at $26 yesterday while OCBC lost 1.84 per cent to $11.21.

A version of this article appeared in the print edition of The Straits Times on August 03, 2019, with the headline 'OCBC, UOB raise dividends amid higher Q2 earnings'. Print Edition | Subscribe