United Overseas Bank (UOB) U11 has reported a net profit of $1.42 billion for the 2QFY2023 ended June 30, 27% higher y-o-y, supported by robust earnings growth across the board.
Without the one-off integration expenses from the acquisition of Citigroup’s consumer banking businesses in Malaysia, Thailand and Vietnam, core net profit would’ve been 35% higher y-o-y at $1.5 billion.
For the 1HFY2023, the bank’s net profit rose by 45% y-o-y to $2.93 billion driven by strong net interest income (NII) and trading and investment income.
Excluding the one-off Citi integration expenses, the bank would’ve brought in a core net profit of $3.1 billion, 53% higher y-o-y and a record for the bank’s six-month period.
Earnings per share (EPS) for the 1HFY2023 stood at $3.41 on a fully diluted basis.
2QFY2023
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During the 2QFY2023, net interest income rose by 31% y-o-y and 1% q-o-q to $2.44 billion. The q-o-q increase was due to the longer calendar quarter.
Net interest margin (NIM) rose by 45 basis points y-o-y but fell by 2 basis points q-o-q to 2.12%. The moderation in q-o-q NIM was due to excess liquidity deployed to high quality assets. Loan margin held up at 2.62%.
Net fee income fell by 8% y-o-y and 5% q-o-q to $524 million. The y-o-y and q-o-q easing came as loan and trade-related fees fell on softer lending activities while wealth fees were dampened by cautious investor sentiments. Credit card fees, on the other hand, sustained their momentum after excluding one-off adjustments on rebates.
Other non-interest income in the quarter surged by over 100% y-o-y and increased by 3% q-o-q to $581 million thanks to another record quarter for the bank’s trading and investment income.
Total income rose by 31% y-o-y and 1% q-o-q to $3.54 billion.
During the quarter, the bank’s cost-to-income ratio increased by 0.8 percentage points q-o-q to 44.1%. Excluding the one-off integration costs with Citi, the bank’s cost-to-income ratio stood flat q-o-q at 40.9%.
1HFY2023
In the 1HFY2023, NII rose by 37% y-o-y to $4.85 billion.
Net fee income fell by 6% y-o-y to $1.08 billion.
Other non-interest income surged to $1.14 billion from $374 million in the corresponding period the year before.
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Total income for the 1HFY2023 rose by 40% y-o-y to $7.07 billion.
During the period, total allowances increased to $534 million from $315 million in the 1HFY2022. The specific allowance was largely higher due to a major corporate account in Thailand. Coupled with pre-emptive general allowance set aside on prudence, total credit costs on loans increased to 27 basis points for 1HFY2023.
As at June 30, non-performing assets (NPA) stood at $5.19 billion, 4.2% lower y-o-y but 0.8% higher q-o-q.
Non-performing loan (NPL) ratio fell by 0.1 percentage point y-o-y and stood stable q-o-q at 1.6%.
Specific allowance over NPA fell by three percentage points y-o-y and rose by one percentage point q-o-q at 33%.
The bank’s current account and savings account (CASA) ratio stood at 47.6%, down by 7.1 percentage points y-o-y and by 0.3 percentage points q-o-q.
As at June 30, UOB’s Common Equity Tier-1 (CET-1) ratio stood at 13.6%, 0.5 percentage points higher y-o-y and 0.4 percentage points higher q-o-q.
Its leverage ratio stood at 7.0%, 0.4 percentage points higher y-o-y and stable q-o-q.
UOB’s loan-to-deposit (LDR) ratio stood at 83.5%. The bank's liquidity coverage ratio stood at 167% while its net funding ratio stood at 121% as at June 30.
Cash and cash equivalents as at June 30 stood at $48.4 billion.
“We have delivered a commendable set of results for the first half of the year, with record core net profit driven by strong net interest income and trading and investment income. Backed by our strong balance sheet, we see continued momentum in our client franchise expansion,” says deputy chairman and CEO Wee Ee Cheong.
“While the global outlook remains uncertain, we expect the Asean region to stay relatively resilient. Growth will be supported by a more moderate interest rate environment in this region and a pick-up in tourism and demand for services,” he adds.
On the bank’s Citigroup acquisition, Wee shares that it is “progressing well”, noting that the move has opened up “more opportunities for global partnerships and enhanced offerings for our customers”.
For the half-year period, the board has declared an interim dividend of 85 cents per share, representing a payout ratio of about 49%. This year’s interim dividend is 42% higher than the interim dividend for the 1HFY2022.
Shares in UOB closed 23 cents higher or 0.81% up at $28.69 on July 26.
