UOB to pay shareholders 88-cent interim dividend as Q2 profit rises 10% to $1.48 billion

SINGAPORE – UOB posted a rise in second-quarter net profit as net fee income increased, led by record wealth management fees.

Net profit for the three months to June 30 was $1.48 billion, up 10 per cent from $1.34 billion a year ago and beating analysts’ expectations of $1.45 billion in a Bloomberg poll.

The board declared an interim dividend of 88 cents per ordinary share for the half-year, up from 85 cents a year ago and representing a payout ratio of approximately 50 per cent.

Net interest income for the quarter fell 2 per cent to $2.3 billion on lower interest rates, despite healthy loan growth of 5 per cent and active balance sheet management, with net interest margin narrowing to 1.74 per cent from 1.91 per cent a year ago.

Net fee income rose 5 per cent to $665 million, supported by strong growth in wealth and fund management activities, although this was partially offset by softer loan-related fees from capital market activities. Other non-interest income jumped 28 per cent to $632 million.

Total allowances decreased 24 per cent, mainly because the bank no longer needed some of the funds it had set aside to cover potential loan losses.

UOB shares closed 0.64 per cent lower at $43.30 on Aug 7, while its peers marked new highs.

OCBC Bank shares crossed the $30 mark for the first time and closed 3.31 per cent higher at $30.30. DBS Bank shares rose 1.67 per cent to end at $76.33 on the same day.

At the results briefing on Aug 7, UOB deputy chairman and chief executive Wee Ee Cheong highlighted opportunities to grow wealth, support cross-border ambitions and capture a larger share of trade and investment flows across ASEAN.

For one, he said that encouraging momentum in foreign direct investment into ASEAN creates opportunities to deepen customer relationships across UOB’s retail and wealth businesses.

The bank also aims to realise the full value of its regional retail franchise of more than eight million customers across ASEAN, a scale significantly boosted by its integration of Citigroup’s consumer banking businesses in Malaysia, Thailand, Indonesia and Vietnam.

This presented “the opportunity... to become the primary bank for more customers”, Wee added.

To support its regional wealth push, UOB is investing in talent, platform and product capabilities, while expanding its North Asia presence.

UOB’s strategic distribution partnership with Allianz Global Investors, announced on Aug 5, will further sharpen its focus on wealth advisory, Wee said.

UOB chief financial officer Leong Yung Chee said new non-performing asset formation in the second quarter was mainly attributable to a single real estate account in Greater China. But the bank continues to have adequate provision buffers, and credit costs remain within guidance.

“The provisions that we had set aside in the third quarter of last year had taken this into account, and we continue to remain very proactive in reviewing and monitoring our credit portfolio. In terms of total credit costs, it stood at 28 basis points this quarter, or 27 basis points in the first half – both within our target range,” Leong said.

For its 2026 outlook, UOB largely kept its guidance unchanged, except that it now expects low single-digit fee income growth, down from its previous forecast of high single-digit fee income growth.

When asked about the lower fee income guidance, Leong said that some fee-generating deals in the pipeline have been delayed until the second half of 2026, making the bank’s previous guidance of high single-digit fee income growth no longer an accurate reflection of the outlook.

It also expects low single-digit loan growth, unchanged from its previous guidance. UOB maintained its full-year guidance for net interest margin of 1.75 per cent to 1.8 per cent, low single-digit operating cost growth and total credit costs at 25 to 30 basis points.

Meanwhile, the bank expects 2026 earnings to be broadly flat compared with 2025.

UOB and OCBC reported their second-quarter earnings on Aug 7, with DBS kicking off the earnings season on Aug 6.

DBS will pay shareholders 81 cents in dividends per share for the second quarter, as net profit grew 9 per cent on record wealth management income.

Net profit amounted to $3.08 billion, up from $2.82 billion a year ago, beating analysts’ expectations of $2.87 billion.

OCBC declared an interim dividend of 47 cents per share for the first half of 2026, as net profit for the second quarter grew 22 per cent.