United Overseas Bank (UOB) U11 has reported earnings of $2.56 billion for the 2HFY2022, 24% higher than earnings of $2.06 billion in the same period the year before.
This brings the bank’s total earnings for the FY2022 to $4.57 billion, 12% higher y-o-y and a record for the bank.
Excluding one-off expenses relating to the acquisition of Citigroup’s Malaysia and Thailand consumer businesses, UOB’s core net profit also stood at a record high of $4.8 billion for the FY2022, 18% higher y-o-y. The acquisition was completed in November 2022. The completion of the acquisition of Citigroup’s Indonesia and Vietnam consumer businesses is planned for 2023.
During the period, the bank has recommended a final dividend of 75 cents per share bringing its total dividend for the FY2022 to $1.35 per ordinary share. This represents a payout ratio of 40%.
In the 2HFY2022, net interest income (NII) increased by 46% y-o-y to $4.79 billion boosted by the continued expansion in its net interest margin (NIM), which rose by 53 basis points (bps) to 2.08%.
During the 4QFY2022, UOB’s NIM rose by 27 bps q-o-q to 2.22% as the quarter’s NII reached a new high of $2.6 billion.
2HFY2022 net fee and commission income fell by 13% y-o-y to $1.0 billion due to a seasonal slowdown in wealth management and loan-related activities during the final quarter. This was mitigated by a new high in credit card fees on the back of higher customer spends and the consolidation of Citigroup’s consumer business.
Other non-interest income increased by 59% y-o-y to $716 million, boosted by the “exceptional” performance in 3QFY2022 on market volatilities and offset by the 34% y-o-y drop in the 4QFY2022.
Total income for the 2HFY2022 increased by 33% y-o-y to $6.51 billion.
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During the 4QFY2022, UOB’s cost-to-income ratio excluding one-off expenses improved to 42.6% from 45.0% in the same period the year before.
For the quarter, the group logged a total allowance of $184 million, 65% higher y-o-y from higher specific allowance.
For the FY2022, NII grew by 31% y-o-y to $8.34 billion thanks to the higher NIM, which expanded by 30 bps to 1.86% on rising interest rates and loan growth of 3%.
Net fee and commission income fell by 9% y-o-y to $2.14 billion on lower wealth and fund management fees, which were offset by higher credit card fees.
Customer-related treasury income grew 20%, driven by hedging demands amid market volatility and partly offset by impact on hedges and lower valuation on investments. As a result, other non-interest income increased 4% to $1.09 billion.
During the FY2022, the bank’s cost-to-income ratio improved to 43.3%, down from FY2021’s 44.1%. This is due to the bank’s strong income growth and disciplined spending.
For the 4QFY2022, UOB’s cost-to-income ratio stood at 42.6%, down from 45.0% in the 4QFY2021.
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In the 4QFY2022, UOB’s non-performing loan (NPL) ratio stood flat y-o-y at 1.6%.
As at Dec 31, 2022, the bank’s loan-to-deposit (LDR) ratio stood 0.4 percentage points higher q-o-q at 85.6%.
Its current account, savings account (CASA)/deposit ratio fell 8.7 percentage points y-o-y to 47.5% as at Dec 31, 2022.
As at Dec 31, 2022, the group’s Common Equity Tier 1 (CET-1) ratio stood at 13.3%, up by 0.2 percentage points y-o-y. Its leverage ratio stood at 6.6% for the period.
Earnings per share (EPS) for the 2HFY2022 and FY2022 stood at $3.14 and $2.68 on a fully diluted basis.
Cash and cash equivalents as at Dec 31, 2022, stood at $43.27 billion.
“The group delivered a record net profit for the year, on higher margins driven by our robust core businesses, strong balance sheet and resilient asset quality,” says Wee Ee Cheong, deputy chairman and CEO of UOB.
“Importantly, 2022 was a milestone year for UOB with our acquisition of Citigroup’s consumer banking businesses in four markets... This transformational deal, sealed in the midst of the pandemic, positions us well in our strategic ambitions in the regional consumer banking space. We are excited to serve our enlarged customer base of 7 million with our expanded network and strengthened capabilities,” he adds.
Looking ahead, Wee says the bank remains positive on the Asean region, which is “vibrant with immense long-term potential” despite the near-term gloom in the global economy.
“Looking ahead, we are confident that our strategy of seeking growth while ensuring stability will continue to create value for our customers and other stakeholders,” he adds.
Shares in UOB closed 34 cents higher or 1.11% up at $30.99 on Feb 22.
