SINGAPORE (July 28): United Overseas Bank (UOB) Group posted a 5.5% increase in earnings to $845 million in 2Q ended June from a year ago, coming on the back of growth in net interest income as well as fee and commission income.
This brings earnings to $1.65 billion for the first half of 2017, up 5.5% from earnings of $1.57 billion a year ago.
On a quarterly basis, net interest income in 2Q17 increased 12% to $1.36 billion. This was mainly due to gross loan growth of 7.3%. Net interest margin improved by seven basis points y-o-y to 1.75%.
Non-interest income increased 1.8% to $828 million, as fee and commission income grew 9.0% to $517 million on higher credit card, fund, and wealth management fees.
However, other non-interest income declined 8.3% in 2Q17 on lower net trading income.
Total expenses rose 7.3% to $995 million in 2Q17, mainly due to higher staff and IT-related expenses.
Total allowances increased 11.9% to $180 million, from $161 million a year ago.
Specific allowance on loans increased 42% to $172 million, mainly due to non-performing loan (NPL) recoveries last year.
NPL ratio increased to 1.5%, from 1.4% a year ago.
In a filing to SGX on Friday, UOB says its “capital and funding positions remained sound".
Gross loans grew 7.3% y-o-y to $228 billion while deposits were 4.7% higher at $260 billion as at June 30. The loan-to-deposit ratio remained at 86.1%.
As at June 30, the group’s Common Equity Tier 1 and Total CAR remained strong at 13.8% and 17.8%, respectively. On a fully-loaded basis, the Common Equity Tier 1 CAR stood at 13.3%.
The group’s leverage ratio was 7.8%, well above Basel’s minimum requirement of 3%.
Cash and cash equivalents stood at $21.49 billion as at June 30, 2017.
The board has declared an interim dividend of 35 cents per share.
“Amid the moderate environment, we have achieved healthy performance with broad-based growth in revenue streams. Our asset quality was stable and core capitalisation remained high, reflecting our discipline in keeping a strong balance sheet through economic cycles,” says Wee Ee Cheong, UOB’s deputy chairman and CEO.
“Asia continues to hold much promise and UOB’s presence and expertise enable us to connect our customers with the opportunities across the region arising from burgeoning consumer affluence and growing intra-regional trade and investment,” he adds.
Shares in UOB closed 32 cents higher at $24.60 on Thursday.
