To recap, UOB had outperformed in sequential loan growth for three straight quarters. This follows the preceding two quarters where UOB had also outperformed its peers in sequential net interest income growth.
Management has said that their strategy was not to expand loans at the expense of NIMs and Leng believes this could be one reason for its outperformance.
Looking ahead, UOB’s NIM should widen with the expected hike in US Fed Funds rate, which would contribute to stronger net interest income.
“We forecast all three banks to record 2017 NIMs wider than their respective 1Q17 NIMs. For UOB, we are forecasting 2017 NIM of 1.76%, 3 bps higher than its 1Q17’s 1.73%,” says Leng.
With all three banks recorded robust 1Q17 fee and commission income growth on a y-o-y basis, Leng sees continued strength in the subsequent quarters.
Finally, UOB has robust balance sheet strength with loan loss coverage of 117% higher than its two peers’ average of 102%.
“In fact, UOB’s loan loss coverage has been the highest amongst peers over the past four quarters,” adds Leng.
Shares of UOB are up 5 cents at $23.35.
