UOB reports 4.4% net profit decline for first quarter
An elderly man seen using the UOB ATM. Photo: Koh Mui Fong/TODAY
SINGAPORE — United Overseas Bank (UOB) reported a 4.4 per cent decline in net profit to S$766 million for its first quarter ended March 31 from S$801 million a year earlier, with gains in net interest income offset by a drain in earnings from wealth management, trading and investment.
Net interest income was up 6.1 per cent at S$1.27 billion, driven by improved net interest margin and an expanded loan base, while fee and commission income fell 4.5 per cent to S$433 million, said the bank.
UOB’s first-quarter net interest margin rose to 1.78 per cent, against 1.76 per cent a year ago, on the back of gains from higher interbank and swap offer rates in Singapore, said the bank.
Wealth management fees dropped 26 per cent to S$81 million from a year ago, weighing on total fee and commission income, said UOB. Other non-interest income dropped 8 per cent to S$695 million on the back of lower profits from investment securities. Volatile market conditions during the first quarter, according to the bank, curbed investor appetite.
UOB’s non-performing loans ratio remained flat in the first quarter against 1.4 per cent of total loans in the December quarter last year but rose from 1.2 per cent a year ago, said the bank.
The bank’s income decline, said Mr Wee Ee Cheong, UOB’s CEO, was due to the slower growth environment.
“Even as the region faces macro headwinds in the near term, we believe its economic fundamentals are largely capable of coping with bouts of market volatility,” said Mr Cheong in a statement.
The group’s funding position remained strong. Customer deposits increased 6.4 per cent from a year ago and 5.9 per cent quarter-on-quarter to S$255 billion as at March 31, mainly from growth in Singapore dollar and US dollar deposits, said UOB in the earnings statement. The group’s loan-to-deposit remained healthy at 80.7 per cent as at March 31, added the lender.
UOB reported 58 per cent of its first-quarter operating income came from Singapore, and generated a loan growth of 5 per cent in constant-currency terms in the first quarter.
Shares in UOB closed at S$18.85, down 0.159 per cent. The benchmark Straits Times index closed at 2,862.3, down 0.43 per cent.
Post easing of the policy stance by the Monetary Authority of Singapore to fight the slowdown in the economy, UOB is the first Singapore bank to report first-quarter results.
DBS will be releasing its first-quarter results on May 3 while OCBC will report results on Friday.
