UNITED OVERSEAS BANK LTD
UOB bank
U11.SI
United Overseas Bank - Consistent performer
- In-line. Commendable 3Q15 results, topped with an one-off dividend of SGD20cts/share to commemorate 80th anniversary. Total income and net profit +8.2%/+12.6% QoQ.
- Earlier provisions may soften impact from delinquencies ahead. Heightened risk and sluggish loan landscape typically present an unfavourable risk-return trade-off for the sector.
- We prefer UOB as it is best positioned to navigate the current cycle. Maintain HOLD w/TP of SGD 21.00, at 1.2x FY15 P/BV.
Stable 3Q15
- 3Q15 NIMs were flat QoQ at 1.77% but up from 1.71% in 3Q14. As expected, loan growth was muted rising 3.7% YoY, but slightly higher at 5.5% YoY in constant currency terms.
- Non-interest income was boosted by gains from sale of AFS securities and stronger trading income. Provisions +5.3% QoQ and -1.2% YoY, was cushioned by earlier pre-emptive provisions, especially for the Indonesian operations.
- Overall 9M15 PATMI of SGD2,421m was in-line with our expectations.
- An one-off dividend of SGD20cts/sh was declared.
Impressed with management
- Our 14 Oct report, The NIM Enigma, suggests that UOB is sensitive to both repricing interval and credit spreads. We see slight upside to NIMs.
- Management also intends to raise credit spreads in view of weak economic outlook and guided constant currency loan growth of 5%.
- Management is optimistic that current provisioning level is adequate for Indonesian NPLs for at least the next 2-3 quarters and looking to selectively add to the Indonesian book.
- Singapore credit approvals are up for two consecutive quarters.
- We have marginally revised our net profit estimates by 0.3%/- 0.2%/1.2% for FY15/16/17 after adjusting for total income, overhead costs and taxes.
- UOB is our preferred bank play. Maintain HOLD with SGD21.00 TP, at 1.2x FY15 P/BV, close to 0.5SD below its mean since 2005.
Ng Li Hiang
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2015-11-02
Maybank Kim Eng
SGX Stock
Analyst Report
21.00
Same
21.00
