UOB - RHB Invest 2017-07-28: Wider 2Q17 NIM & Continued Balance Sheet Strength

UOB - RHB Invest 2017-07-28: Wider 2Q17 NIM & Continued Balance Sheet Strength UNITED OVERSEAS BANK LTD U11.SI

UOB - Wider 2Q17 NIM & Continued Balance Sheet Strength

  • UOB’s 2Q17 results were in line with expectations. 1H17 net profit accounted for 50% of ours and consensus full-year expectations. 
  • 2Q17 positives include slightly wider NIM (up 2bps QoQ to 1.75%), stable asset quality with NPL ratio unchanged sequentially at 1.5%, high GP-loan ratio of 1.2% (vs 1.1% average for the other two banks), and robust 113% loan loss coverage (102% average for the other two banks). 
  • We will review our earnings forecasts and TP after the analyst briefing to be held later today.


UOB released its 2Q17 results this morning. 

  • Highlights for 2Q17 include: 
    1. 2Q17 net profit of SGD845m was 5% higher YoY, and also 5% higher QoQ. 1H17 net profit of SGD1,652m represented 50% of EFASynopsis2 both ours and consensus 2017 net profit forecasts of SGD3.33bn & SGD3.28bn respectively. We rate the results as in line; 
    2. 2Q17 net interest margin (NIM) of 1.75% was 2bps wider QoQ, and 7bps wider YoY; 
    3. 2Q17 non-interest income rose 1% QoQ, and accounted for a 38% share of total income; 
    4. 2Q17 overall credit cost of 32bps was the same as 1Q17. Total allowances fell 3% QoQ to SGD180m, and 1H17 provisions of SGD366m represented 52% of our FY17 provisions expectations. 2Q17 specific credit cost of 30bps was down from 1Q17’s 49bps, which is a major positive. NPL ratio of 1.5% was unchanged QoQ; 
    5. 2Q17 loans contracted 0.6% QoQ. The drag came from USD loans which contracted 10% QoQ, and accounted for a 19% share of loans. Overall loans however expanded 7% YoY.
  • More highlights after the analyst briefing to be held later today.






Leng Seng Choon CFA RHB Invest | http://www.rhbinvest.com.sg/ 2017-07-28
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 25.950 Same 25.950



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