SINGAPORE (Feb 17): United Overseas Bank Group reported earnings of $739 million for 4Q16, a 6.2% decline from its earnings of $788 mil a year ago.
This brings the group’s FY16 earnings to $3.1 billion, 3.5% lower than a year ago.
For the full year, net interest income increased 1.3% to $4.99 billion, led by loan growth in the consumer and non-bank financial institution customer segments. Net interest margin (NIM) decreased 6 basis points to 1.71%.
On a quarterly basis, net interest income stood at $1.28 billion as strong loan growth was offset by a 10 basis point decrease in NIM to 1.69%.
While non-interest income fell 6.3% to $753 million in 4Q16 due to lower trading and investment income, fee and commission income notably grew 10.6% to $531 million on the back of higher credit card and wealth management fees.
Total expenses for 4Q16 were $957 million, largely flat as compared to a year ago.
Specific allowance on loans increased $313 million in 4Q15 to $428 million in 4Q16 due to non-performing loans (NPLs) in the oil and gas and shipping industries.
Total allowance decreased 31.4% to $131 million in the quarter due to lower specific allowance on other assets and a release in general allowance.
As at end Dec 2016, UOB had a loan-to-deposit ratio at 86.8%, with gross loans having grown 8.8% over the year to $226 billion, while deposits increased 6.1% to $255 billion.
NPL ratio rose from 1.4% a year ago to 1.5%, while NPL coverage was high at 118.0%.
The group is proposing a final dividend of 35 cents per share, which, together with the interim dividend of 35 cents, brings the total dividend for FY16 to 70 cents per ordinary share.
In a Friday statement, Wee Ee Cheong, UOB’s deputy chairman and CEO, notes that the group has delivered a steady income stream against the subdued growth environment of 2016, as well as a strong balance sheet due to asset quality management and the diversification of the group’s funding base.
“Global uncertainty, slow growth and rapid digital transformation will continue in 2017. However, Asia with its increasing integration and consumer affluence presents opportunities for long-term players such as UOB,” says Wee.
“We will continue to draw upon our strengths and deep knowledge of the region, while staying committed to investing in our capabilities to meet our customers’ needs and to deliver value to our shareholders,” he adds.
Shares of UOB closed 7 cents higher at $20.82 on Thursday.
