Southeast Asian Banking Giant Surprises with Resilient Profits Amid Global Tumult


United Overseas Bank Posts Slight Net Profit Decline in Q1, Maintains Growth Outlook

Singapore’s United Overseas Bank (UOB) has reported a smaller-than-expected decline in its first-quarter net profit, despite being impacted by narrower net interest margins. The bank also reiterated its forecast for income growth during the full year 2024.

Squeezed Margins, Smaller Profit

On Wednesday, UOB announced that its net profit for the January-March period reached SG.49 billion, down from SG.51 billion recorded in the same quarter last year. The drop was primarily attributed to a reduction in net interest income, caused by lower margins.

Despite the decrease, UOB’s performance exceeded market expectations, as analysts had forecasted a net profit of SG.43 billion.

Solid Economic Foundations

Despite geopolitical tensions, UOB CEO Wee Ee Cheong expressed confidence in the resilience of Southeast Asia, the bank’s home region. “We continue to witness shifts in global supply chains and sustained tourism activities,” he noted.

Loan Growth Forecast

UOB reaffirmed its guidance for steady loan growth and a surge in fee income. The bank anticipates single-digit loan growth and double-digit fee growth in 2024, according to Wee’s presentation.

Additionally, the bank intends to maintain its core cost-to-income ratio within the 41% to 42% range and credit costs in the lower band of 25 to 30 basis points for the whole year.

Singapore’s Financial Hub

Singapore’s political stability has attracted significant wealth inflows from various regions, including Asia, Europe, and the Americas. This is reflected in UOB’s results, particularly with an 11% increase in assets under management to SG9 billion.

Competitive Market

UOB’s larger competitor, DBS Group, reported an impressive 15% surge in first-quarter net profit earlier this month, surpassing expectations. The bank projects its 2024 net profit to surpass last year’s record.

Another major player in the Singaporean banking sector, Oversea-Chinese Banking Corp (OCBC), is scheduled to release its financial results on May 10.

Key Performance Indicators

UOB’s net interest margins dropped to 2.02% in the first quarter, compared to 2.14% in the same period last year. Meanwhile, the bank’s return on equity declined to 14.0%, down from 14.9% a year ago.