UOB to reward junior staff with one-off payout despite fall in Q4 and 2025 net profit

SINGAPORE – UOB will give junior employees an extra half-month base salary payout to recognise their contributions amid a challenging external environment.

About 6,000 employees across the group are expected to benefit from the one-off payment.

The payouts will total about $4 million and be disbursed in the second quarter of 2026, the bank said in its earnings report on Feb 24.

UOB also recommended a final dividend of 71 cents per ordinary share, down 23 per cent from 92 cents a year earlier, bringing the total 2025 payout to $1.56. Total 2024 payout, including special dividends of 50 cents, was $2.30.

It comes as UOB reported a 7 per cent fall in fourth-quarter net profit as net interest income moderated amid margin headwinds. Earnings for the three months ended December were $1.41 billion, down from $1.52 billion a year ago. The figure missed analysts’ forecast of $1.44 billion in a Bloomberg poll.

UOB shares fell after the news, with the stock closing 4.12 per cent, or $1.60, down at $37.20. DBS closed 0.5 per cent lower at $57.86, while OCBC fell 1.2 per cent to $21.43.

In the fourth quarter, UOB’s net interest margin (NIM) – a key gauge of profitability – shrank to 1.84 per cent from 2 per cent a year earlier. Net interest income declined to $2.35 million from $2.45 million a year earlier.

UOB said fourth-quarter net fee income delivered broad-based growth of 10 per cent year on year, while other non-interest income fell 28 per cent on lower trading and investment income. Total expenses declined 3 per cent from disciplined spending, while total allowances halved due to lower specific allowance.

Total credit costs normalised in the fourth quarter, falling to 19 basis points from 134 basis points a quarter earlier.

For 2025, net profit was $4.7 billion, a 23 per cent drop from $6 billion a year ago, beating a Bloomberg forecast of $4.64 billion.

UOB said the drop in earnings was largely due to the pre-emptive general allowances that the group proactively set aside in the third quarter to strengthen provision coverage amid growing macroeconomic uncertainties. Allowances for credit and other losses more than quadrupled in the quarter to $1.36 billion.

NIM for 2025 slid to 1.89 per cent from 2.03 per cent a year ago. Net interest income dropped 3 per cent to $9.36 billion.

UOB deputy chairman and chief executive Wee Ee Cheong said in a statement: “The group delivered a resilient full-year performance, fuelled by strong fee momentum across our diversified business franchise. Our balance sheet is strong with robust capital and liquidity and stable asset quality.”

He noted that ASEAN’s growth trajectory remains intact and the group is seeing steady momentum across its business lines.

On the bank’s 2026 outlook, Mr Wee said fee income growth would be in “high single digit”. He had previously guided at the release of UOB’s third-quarter results for high single- to double-digit growth.

Guiding for the lower bound of the range was due to a more conservative loan growth outlook, the bank said.

Mr Wee maintained a full-year NIM of 1.75 per cent to 1.8 per cent and low single-digit loan growth.

UOB chief financial officer Leong Yung Chee, speaking at a media briefing on Feb 24, said exit NIM as at end-January is 1.82 per cent. Exit NIM is used as a forward-looking indicator to estimate future profitability, rather than looking at the average margin over the entire period.

“NIMs are sort of bouncing around that level, giving us some confidence in terms of what NIM and Sora rates are looking like,” he said, referring to the Singapore benchmark interest rate.

Mr Leong said the bank is well positioned to navigate emerging credit pressures with stronger coverage for key hot spots Greater China and the United States.

Higher allowances in the third quarter of 2025 were mainly to the commercial real estate sector in Greater China and the US.

General allowance coverage for performing loans in 2025 was 1 per cent, up from 0.8 per cent a year earlier. Coverage for Greater China increased to 2.1 per cent from 1 per cent, while coverage for the US rose to 4.7 per cent from 0.8 per cent.

“Provisions that we put aside for these two hot spots are more than adequate for us to navigate any potential issues coming from these hot spots,” Mr Leong said.

On UOB’s bankwide initiative to upskill employees with artificial intelligence training, he said most of the bank’s 30,000 staff have access to AI tools and about 20,000 staff have received basic AI training.

“We see tools as enablers to enhance productivity, to help us gain insights into customer behaviour, to improve service quality for customers. It’s not a tool for cutting headcount,” he added.

He noted some key use cases include customer servicing, contact centres and branches. AI tools can help to curate faster and better responses to customers whenever a query comes in, he said.

UOB’s results followed those of DBS Group, which posted a 10 per cent year-on-year fall in fourth-quarter net profit as sharply lower interest rates and a stronger Singapore dollar hit loan margins.

OCBC is set to report its earnings on Feb 25.