United Overseas Bank (UOB) has posted earnings of $2.06 billion for the 2HFY2021 ended December, 52% higher than earnings of $1.36 billion from the same period a year ago.
Earnings for the 4QFY2021 stood at $1.02 billion, up 48% y-o-y and down 3% q-o-q alongside a seasonally soft quarter.
For the 2HFY2021, the earnings growth was driven by a strong performance across the bank’s business and geographies, along with lower credit costs.
In the FY2021, UOB posted earnings of $4.08 billion, 40% higher y-o-y.
2HFY2021 net interest income (NII) increased 10% y-o-y to $3.28 billion due to strong loan growth, with net interest margin (NIM) stable y-o-y at 1.55%.
In tandem with the loan growth, customer deposits grew 9% y-o-y and 4% h-o-h to $353 billion as at Dec 31, 2021. UOB’s current account savings account (CASA ratio) rose to a new high of 56.2% in the 4QFY2021, up 2.7% y-o-y and 0.4% q-o-q.
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Net fee and commission income for the 2HFY2021 also rose 14% y-o-y to $1.18 billion driven by strong growth in loan-related fees from increased trade and investment transactions.
During the half-year period, credit card fees surged on the back of higher customer spending.
Other non-interest income for the 2HFY2021 decreased 12% mainly due to lower investment gains.
With the strong income growth, cost-to-income ratio improved 1.3 percentage points to 44.3%.
The bank’s total allowance fell 69% y-o-y to $275 million in the 2HFY2021. In the FY2021, UOB’s total allowance declined 58% y-o-y to $657 million as the pre-emptive general allowance taken in the year before remained adequate.
Total credit costs on loans decreased from 57 basis points to 20 basis points.
As at end-December, UOB’s loan to deposit ratio (LDR) ratio increased 1.6 percentage points to 87.0%, with gross loans increasing 10% y-o-y to $310.8 billion led by a broad-based increase of wholesale loans.
Non-performing loan (NPL) ratio remained steady y-o-y at 1.6%. The non-performing assets coverage remained strong at 96% or 239% after taking collateral into account.
As at end-December, the group’s Common Equity Tier 1 capital adequacy ratio (CET-1 CAR) stood at 13.5%, down 1.2 percentage points y-o-y and stable q-o-q.
UOB’s leverage ratio came in at 7.2% as at end-December.
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UOB is proposing a final dividend of 60 cents per share, bringing the total dividend for the FY2021 to $1.20, representing a payout ratio of approximately 49%.
Wee Ee Cheong, UOB’s deputy chairman and CEO says the overall operating environment has “stabilised” as we enter into the third year of the Covid-19 pandemic, and that the “worst is behind us”.
“In Singapore, there are signs of market recovery where we see strong institutional loan growth and a rebound in card spending and wealth management activities. We see significant upside in Southeast Asia, though the pace of recovery may vary by country. Our confidence in the region is underscored by our continued efforts to deepen our customer franchise and to build scale, through organic growth and acquisition.”
“The opportunity to acquire Citigroup’s consumer business in Indonesia, Malaysia, Thailand and Vietnam came at the right time, with the right strategic fit. Subject to regulatory approval, the acquisition will double our retail customer base across these four markets,” he adds. “At the same time, we continue to invest in capabilities such as supply chain, sustainability and digitalisation to tap the structural trends propelling our region’s growth. Our strong balance sheet, disciplined business approach and resilient asset quality will position us well for new opportunities as we ride on the region’s recovery.”
Shares in UOB closed 2 cents lower or 0.06% down at $32.68 on Feb 15.
