UOB Group has reported a record core net profit of $1.64 billion for the 3QFY2024 ended Sept 30, 11% higher y-o-y and 10% q-o-q driven by new record highs in net fee income and trading and investment income.
Including one-off expenses, which are integration costs with its Citi portfolio, UOB’s net profit for the 3QFY2024 rose by 16% y-o-y to $1.61 billion. Core return on equity (ROE) stood at 14.3%.
The quarter’s core net profit surpassed the average estimate of $1.51 billion from analysts polled by Bloomberg.
9MFY2024 core net profit grew by 11% y-o-y to $4.69 billion while net profit including one-off expenses rose by 16% y-o-y to $4.52 billion.
UOB’s 3QFY2024 net interest income rose by 1% y-o-y to $2.46 billion supported by loans, which rose by 5% y-o-y. 3QFY2024 net interest margin (NIM) fell by 4 basis points or 0.04 percentage points y-o-y to 2.05% but remained stable q-o-q. Net fee income increased by 7% y-o-y and 2% q-o-q to a record $630 million. Trading and investment income surged by 82% y-o-y and 77% q-o-q to $709 million. Customer-related treasury income increased by 36% y-o-y to $270 million.
Other non-interest income surged by 70% y-o-y to $744 million on record high trading and investment income.
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Total income rose by 11% y-o-y to $3.83 billion while total expenses increased by 12% y-o-y to $1.59 billion.
Credit costs for the 3QFY2024 increased to 34 basis points due to UOB’s Thailand retail portfolio after its integration with Citi in the previous quarter. According to the bank, credit costs for the full year will remain within its guidance of 25 basis points to 30 basis points.
During the quarter, core cost-to-income stood at 41.5% as core operating expenses increased from investments in growing its franchise.
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As at Sept 30, UOB’s non-performing loan (NPL) ratio fell by 0.1 percentage points y-o-y but stood stable q-o-q at 1.5%.
The bank had non-performing assets (NPA) coverage at 99% or 210% after taking collateral into account.
As at the same period, UOB’s all-currency liquidity coverage ratio (LCR) stood at 141%, 12 percentage points lower y-o-y while its net stable funding ratio (NSFR) fell by 5 percentage points y-o-y to 116%.
Its common equity tier 1 (CET-1) ratio stood at 15.5% after the implementation of Basel 3 reforms, 2.5 percentage points higher y-o-y and 2.1 percentage points higher q-o-q.
“The group achieved a strong quarter with record net profit, driven by broad-based growth across all business segments and our key markets in Asean. Backed by our strong balance sheet and core franchise, we are well-positioned to maintain the momentum of revenue growth,” says Wee Ee Cheong, deputy chairman and CEO of UOB.
He adds that Southeast Asia stands out as a “bright spot” amid a “volatile global economy, with the bank remaining confident in Asean’s long-term potential.
“[The region is] bolstered by strong economic fundamentals and a surge in foreign direct investment inflows with shifting supply chains,” he notes. “Our strength in connectivity, coupled with strong tailwinds, has propelled growth in our wholesale banking business.”
"Our successful integration of the Citigroup portfolio in Malaysia, Thailand and Indonesia marks a significant milestone. Our cross-sell synergies from the expanded portfolio are delivering promising results, and we are committed to intensifying our efforts to build capabilities in our key Asean markets. We are primed to seize emerging opportunities and drive further growth," Wee concludes.
Shares in UOB closed 61 cents higher or 1.87% up at $33.30 on Nov 7.
