United Overseas Bank Limited - OCBC Investment 2019-08-02: Earnings Beat

UNITED OVERSEAS BANK LTD (SGX:U11) | SGinvestors.io UNITED OVERSEAS BANK LTD (SGX:U11)

United Overseas Bank Limited - Earnings Beat

  • Strong 1H net earnings which rose 8% from a year ago as all segments delivered healthy income growth.
  • Interim dividend of 55cents/share (ex-date 15 August 2019) was declared on the back of the solid performance, representing 41% payout ratio.
  • NIMs expanded 2bps q-o-q to 1.81% as transmission continues with a lagged effect, while asset quality trends remain benign, in line with recent management updates.
  • Medium term outlook continue to hinge on US-China trade developments and interest rate direction.



Record 1H19 earnings of SGD2.22bn reported as all segments delivered healthy income growth from a year ago

  • UNITED OVERSEAS BANK LTD (UOB, SGX:U11) reported a strong 1H net earnings of SGD2.22bn which rose 8% from a year ago.
  • Net interest income +8% to SGD3.24bn on the back of +9% loan growth. While net fee and commission income was largely flat at SGD1bn (higher fees from loan related and credit cards partially dimmed by lower fund management fees), other non interest income segments such as trading income and investments rose 36% to SGD743mn.
  • Total expenses grew 10% to SGD2.2bn driven by staff, revenue related and IT expenses, bringing overall cost income ratio marginally higher to 44.1%.
  • Total allowances were reduced 15% to SGD144mn reflecting the more stable credit environment.


2Q earnings rose +11% q-o-q, driven by gains in both interest and non-interest income

  • UOB's 2Q19 earnings of SGD1.17bn grew +11% q-o-q, +8% y-o-y on the back of higher trading income and lower provisioning.
  • NIMs expanded 2bps q-o-q to 1.81%, while non performing loans ratio improved -2bps q-o-q to 1.48% and credit costs fell -8bps from 1Q19, in line with recent management guidance for benign asset quality trends.


Balance sheet remains solid

  • CET1 was unchanged at 13.9%. Interim dividend of 55cents/share (ex-date 15 August 2019) was declared on the back of the strong performance.





OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2019-08-02
SGX Stock Analyst Report HOLD MAINTAIN HOLD 29.400 SAME 29.400



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