UOB Group has reported a net profit after tax of $1 billion for the 1QFY2021 ended March, rebounding 46% q-o-q from $688 million in the 4QFY2020. It also represents an 18% growth y-o-y.
In the bank’s update on the quarter dated May 6, UOB attributes the better performance to “broad-based growth with record fees”.
SEE:Large amounts of general provisioning
Net interest income amounted to $1.5 billion for the 1QFY2021, up 1% q-o-q due to loan growth of 4% to $293 billion while net interest margin (NIM) remained stable at 1.57%. However, net interest income declined 4% y-o-y as the loan growth was offset by rate cuts on margins across the region.
UOB achieved record fee income for the period, totalling $638 million. This represents 22% growth q-o-q and 24% growth y-o-y, attributable to wealth management, loan-related, fund management, and investment banking activities.
Trading and investment income also improved, growing by 62% q-o-q to $246 million on higher net gains from investment securities and stronger trading income. On a y-o-y basis, it grew 10%.
Total operating expenses grew 4% q-o-q to $1 billion, driven by higher staff costs in tandem with the higher income. However, the cost-to-income ratio improved 2.9 percentage points to 43.8% on improved productivity and management of discretionary spend as well as investments in digitalisation. Total expenses remained flat y-o-y, while cost-to-income ratio improved 1.3 percentage points.
Total impairment charge was lower by 49% q-o-q given that most of the pre-emptive impairments have been recognised in 2020, while the credit outlook is currently improving. On a y-o-y basis, total impairment fell 29% y-o-y to $201 million mainly due to allowance for impaired assets.
UOB’s non-performance loans (NPL) ratio improved to 1.5% as of March from 1.6% as of the 4QFY2020, with total credit costs on loans halved to 29 basis points from 55 basis points
In terms of liquidity, the bank’s all-currency liquidity coverage ratio (LCR) remained flat at 139%, while its net stable funding ration (NSFR) stool at 121%. Its loan-to-deposit ratio remained 87% (vs. 85.4% the previous quarter).
The bank’s Common Equity Tier-1 (CET-1) ratio eased slightly to 14.3% in the 1QFY2021 from 14.7% in the last quarter due to strong loan growth, UOB says it remains well-positioned to continue supporting customers with outlook cautiously improving.
Wee Ee Chong, deputy chairman and CEO of UOB, says the bank has achieved “a strong start” to 2021. “Our core businesses are growing well across our diversified franchise and we are seeing quality growth with record fee income.”
“We expect this momentum to continue as economic and business activity picks up and market sentiment improves across the region, starting with Singapore and Greater China,” he adds.
Shares in UOB closed 13 cents or 0.49% lower at $26.30 on May 5.
