United Overseas Bank (UOB) has reported a net profit of $1.49 billion for the 1QFY2025 ended March 31, relatively unchanged from the net profit of $1.487 billion for the 1QFY2024, and lower than the estimate of $1.54 billion by the Bloomberg consensus. This was supported by broad-based income and franchise growth, as well as record fee income and higher trading and investment income. On a q-o-q basis, the bank’s net profit fell by 2% y-o-y from $1.52 billion.
In the 1QFY2025, net interest income (NII) rose by 2% y-o-y but fell by 2% q-o-q to $2.41 billion due to the shorter quarter.
Net interest margin (NIM) stood at 2%, down 0.02 percentage points y-o-y, but unchanged q-o-q. Loans rose by 6% y-o-y and 1% q-o-q thanks to wholesale growth and mortgages.
The bank’s net fee income surged to a new high of $694 million, up 20% y-o-y and 22% q-o-q, due to record loan-related fees as well as healthy momentum in wealth and card fees.
Other non-interest income fell by 5% y-o-y but increased by 25% q-o-q to $554 million from stronger customer treasury income and good performance from trading and liquidity management activities. Trading and investment income stood at $466 million, down 12% y-o-y but up 27% q-o-q.
During the quarter, the bank’s non-performing loan (NPL) ratio stood at 1.6%, 0.1 percentage points higher y-o-y and q-o-q.
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Total credit costs stood at 35 basis points, up from 20 basis points in the 1QFY2024 and 25 basis points in the 4QFY2024 with total allowance for credit and other losses at $290 million, up 78% y-o-y and 28% q-o-q.
In the same period, cost-to-income ratio stood at 42.6%, improving from 44.6% in 1QFY2024 and 45.6% in 4QFY2024.
The bank’s net stable funding ratio (NSFR) stood at 116%, down by 5 percentage points y-o-y and unchanged q-o-q. Its transitional common equity tier 1 (CET-1) ratio stood at 15.5%, 1.6 percentage points higher y-o-y and unchanged q-o-q. Fully-loaded CET-1 ratio stood at 15.4%.
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Noting the group’s “solid set” of results for the first quarter, UOB’s deputy chairman and CEO, Wee Ee Cheong, warned that the bank sees a slowdown in global growth in the near-term due to macroeconomic uncertainties triggered by the US tariffs.
Yet, the bank remains positive on Asean’s resilience and long-term potential.
“The region’s competitive edge in manufacturing and commodities will ensure its relevance as global supply chains reconfigure. We expect flows within Asean and between Asean and the rest of the world to continue growing as countries seek new ways to prosper,” says Wee.
“With our robust balance sheet, healthy capital and strong liquidity positions, we are well-equipped to address risks and seize the right opportunities for growth. We stand ready to support our customers and community through these extraordinary times,” he adds.
In his CEO remarks presentation, Wee says it will resume its 2025 guidance when the situation stabilises and remains committed to its $3 billion capital distribution plan. At the bank's 4QFY2024 briefing, the bank guided for high single-digit loan growth, double-digit fee growth and higher total income in FY2025. The bank also guided for a cost-to-income ratio of around 42%, which it achieved this quarter, and credit costs of 25 basis points to 30 basis points.
Shares in UOB closed flat at $34.98 on May 6.
