SINGAPORE: United Overseas Bank reported a smaller-than-expected 19 per cent drop in first-quarter net profit on Wednesday (May 6), but it increased impairment charges to reflect worsening economic conditions due to the coronavirus outbreak.
UOB said its impairment charges rose to S$286 million in the three months to Mar 31 from S$93 million a year earlier and it booked an additional regulatory loss allowance reserve of S$260 million, up five times from a year ago.
Net profit at Singapore's third-largest listed lender dropped to S$855 million in the latest quarter from S$1.05 billion a year earlier, compared with an average estimate of S$739.3 million from three analysts, according to Refinitiv data.
The profit level was the lowest in just over two years, according to Refinitiv data.
Total income was stable at S$2.41 billion despite a lower interest rate environment and slowing business momentum towards the end of the quarter due to the effects of the global pandemic, UOB said in a press release.
Customer loans grew 4 per cent, largely from Singapore and Hong Kong.
"We are in a period of unmatched challenges and disruption brought on by the rapid contagion of COVID-19 across the world," said UOB CEO Wee Ee Cheong.
The bank said more than three-quarters of its workforce in Singapore are working from home during the COVID-19 outbreak. Across the region, around 19,000 staff members are working from home.
UOB said that as of end-March, outstanding oil and gas (O&G) loans stood at S$10.2 billion, representing 3.6 per cent of total loans, as compared with 4.7 per cent on Jun 30, 2018.
Three-quarters of its O&G exposure is to downstream players and traders, of which 70 per cent are national oil companies and global firms. The remaining exposure is mainly short-term structured exposure, it added.
Upstream exposure is mainly to national and international oil companies.
DBS last week reported a 29 per cent year-on-year drop in net profit for the first quarter to S$1.17 billion.
Oversea-Chinese Banking Corporation will release its earnings results on Friday.