UOB had a muted start to 2024 as its margins from interest rates dropped, even as loans picked up pace and fee income rose.
Net profit for the first quarter fell 2 per cent to S$1.49 billion, down from S$1.51 billion a year ago, it said on May 8.
Still, UOB’s results were better than expected, beating the mean estimate of S$1.43 billion from three analysts polled by LSEG.
Excluding costs from the integration of Citigroup’s consumer units in four Asean markets, net profit stood at S$1.57 billion, dipping 1 per cent from a year ago.
Net interest income decreased 2 per cent to S$2.36 billion as the bank’s net interest margin, an important measure of profitability, fell to 2.02 per cent, down from 2.14 per cent a year ago and unchanged from the previous quarter.
This came even as loans gained momentum, growing 3 per cent from a year ago and 1 per cent from the fourth quarter on a constant currency basis.
Net fee income fared better. It rose 5 per cent year on year to S$580 million across loan-related, card and wealth activities, while other non-interest income was also higher from stronger trading and investment income.
Meanwhile, total core operating expenses increased 2 per cent, largely on staff costs, while total allowances set aside for potential bad loans dropped 4 per cent due to lower specific allowances.
The bank’s non-performing loan ratio stood at 1.5 per cent, improving from 1.6 per cent a year ago and unchanged from the previous quarter.
Compared with the previous quarter, the earnings of Singapore’s third-largest bank rose 6 per cent while its core earnings that exclude its Citi integration costs, edged up 5 per cent.
On May 2, Singapore’s biggest bank DBS Group Holdings posted record earnings as it said that its fee income had received a boost from stronger market sentiment and higher spending on credit cards.
Its net profit for the first quarter rose 15 per cent to a new high of S$2.95 billion, up from S$2.57 billion a year ago. – The Straits Times
