(Bloomberg) -- United Overseas Bank Ltd. second-quarter profit fell slightly as a dip in its main lending income was cushioned by strong fee gains including from wealth management and loans.
Net income, excluding one-off costs, fell 1% to S$1.49 billion ($1.11 billion) from a year earlier in the three months ended June 30, Southeast Asia’s third-largest lender said Thursday. That compared with the S$1.47 billion average estimate of three analysts surveyed by Bloomberg.
Chief Executive Officer Wee Ee Cheong said the bank is confident in its ability to navigate the uncertain environment. Global growth continues to be weighed down by geopolitical tensions and prolonged high interest rates, though Southeast Asia is expected to stay relatively resilient, he said. He maintained the 2024 outlook, with low single-digit loan growth and double-digit fee growth.
UOB, controlled by the billionaire Wee family, is the first of the three major Singapore lenders to report results that show strength in wealth management. The bank, together with its rivals, has expanded this business over the past decade as the city-state became a global hub for managing assets, creating an alternative income driver when the key lending growth isn’t firing.
The bank’s results came in line with expectations, said Morgan Stanley analysts led by Nick Lord. “UOB remains our preferred Singapore bank,” they said.
Fee Growth
Net fee income grew by 18% to a near-record level, thanks to loans-related and wealth fees. Credit card fees also registered a double-digit growth.
Net interest income dropped 1% to S$2.4 billion as net interest margin, a gauge for lending profitability, contracted by seven basis points from a year ago, the bank said.
One-off expenses following its acquisition of Citigroup Inc.’s retail business in four regional markets will drop substantially after the operations in Malaysia, Indonesia and Thailand are folded in, Wee said during a briefing. The Vietnam integration will be in 2025, according to him. The Citigroup integration costs amounted to S$64 million this quarter, a drop of 30% from a year ago.
Oversea-Chinese Banking Corp. will report its earnings on Friday, followed by DBS Group Holdings Ltd., Southeast Asia’s largest bank, next week.
- Interim dividend of 88 Singapore cents per share declared
- Net interest margin shrank 7 basis points from a year ago to 2.05%
- Wealth assets under management at S$182 billion, from S$179 billion in preceding quarter
- Wealth fees rose to S$173 million, 22% higher than a year ago
- Total credit costs on loans improved to 24 bps, from 30 bps
(Adds analyst comment in fifth paragraph, and earnings details throughout.)
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