United Overseas Bank (UOB) U11 has reported a core net profit (or earnings) of $1.58 billion for the 1QFY2023 ended March, 74% higher than the net profit of $906 million in the corresponding period the year before.
The core net profit, which was up by 13% on a q-o-q basis, is a record for the group.
Including the $67 million in one-off expenses related to the acquisition of Citigroup’s consumer banking businesses for Malaysia, Thailand and Vietnam, UOB’s net profit increased by 31% y-o-y to $1.51 billion in the 1QFY2023.
During the period, net interest income (NII) rose by 43% y-o-y to $2.41 billion thanks to the 56 basis point (bps) uplift in net interest margin (NIM). On a q-o-q basis, however, NII fell by 6% q-o-q due to the lower NIM and the first quarter being a shorter one.
NIM in the 1QFY2023 stood at 2.14%, down from the 4QFY2022’s 2.22% but up from the previous year’s 1.58%.
Net fee and commission income fell by 4% y-o-y to $552 million due to softer loan-related and wealth management fees. On a q-o-q basis, net fee and commission income rose by 14% led by a recovery of wealth management fees from improved investor sentiments as well as higher loan-related fees, which rebounded from its lows in the previous quarter.
Other non-interest income surged by 5.6 times y-o-y to $563 million from $101 million in the 1QFY2022 on record high trading and income. On a q-o-q basis, this was up by 98% as customer-related treasury income stood at a record supported by hedging demand. Trading and investment income also stood at an all-time high due to the improved performance from trading and liquidity management activities.
Total income for the 1QFY2023 stood at $3.52 billion, up 49% y-o-y and 6% q-o-q.
As at March 31, UOB’s cost-to-income ratio fell by 3.9 percentage points y-o-y and 1.7 percentage points q-o-q to 40.9% as income growth outpaced the increase in total core operating expenses.
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Total allowances fell in the 1QFY2023 as more pre-emptive provisions were taken in the same period the year before. On a q-o-q basis, this fell by 8% on lower specific allowance.
As at March 31, UOB’s non-performing loan (NPL) ratio stood flat y-o-y and q-o-q at 1.6%. During the quarter, UOB had pre-emptive general allowances set aside, which resulted in credit costs of 25 bps, up 6 bps y-o-y and 4 bps q-o-q.
Its current account savings account (CASA) ratio stood at 47.9%, down by 8.0 percentage points y-o-y but up 0.4 percentage points q-o-q.
UOB’s loan-to-deposit (LDR) ratio stood at 83.3% as at March 31, down 4.0 percentage points y-o-y and 2.3 percentage points q-o-q.
The bank’s Common Equity Tier 1 (CET-1) ratio stood at 14.0%, up 0.9 percentage points y-o-y and 0.7 percentage points q-o-q.
“Recent pockets of banking instabilities in the US and Europe have led to some market volatility and added to concerns over the global growth outlook. Amid the challenging operating environment, our prudent management and long-term focus have put us in good stead,” says Wee Ee Cheong, deputy chairman and CEO of UOB.
In his statement, Wee adds that the bank’s Citigroup integration is “progressing well” with the bank being on track to completing its acquisition of Citigroup’s Indonesia consumer banking business by the end of 2023.
“As we scale up our regional franchise, we will continue to invest in capabilities and to forge partnerships. Asia is poised to register growth this year and we are well-positioned to ride on the region’s economic recovery with our strong balance sheet, backed by healthy capital and liquidity positions,” he says.
Shares in UOB closed 14 cents lower or 0.48% down at $29.26 on April 26.
