UOB Q1 profit rises 18% to $1 billion, beating expectations

SINGAPORE – UOB, like DBS Group last week, posted a strong start to 2021 with broad-based growth driven by record fee income.

Singapore’s third-largest bank topped market forecasts, recording an 18 per cent increase in first-quarter earnings – its first rise in more than a year. The lender’s net profit jumped to $1 billion from $855 million a year ago, and beat the $926 million average estimate of three analysts polled by Bloomberg.

Chief executive Wee Ee Cheong expects this momentum to continue as economic and business activity picks up and market sentiment improves across the region, starting with Singapore and Greater China.

“Across our key markets, we are seeing robust credit demand from our large corporate and institutional clients… Asia’s prospects remain bright. Even so, we stay vigilant and nimble,” he said.

Net interest income dipped 4 per cent to $1.53 billion as loan growth was more than offset by the impact of rate cuts on margins across the region.

Net interest margin – a key gauge of banks’ profitability – was stable at 1.57 per cent.

Fee income was 24 per cent higher at $638 million, led by wealth, loan-related and fund management fees.

Trading and investment income rose 10 per cent to $246 million largely due to higher net gains from investment securities.

The bank’s impairment charges fell 29 per cent to $201 million. Its non-performing loans (NPL) ratio eased to 1.5 per cent, an improvement from 1.6 per cent a year ago.

Credit costs fell 7 basis points to 29 basis points as it set aside lower allowance for impaired loans due to payment recoveries and lower NPL formation.

Annualised earnings per share for the quarter stood at $2.36, up from $2 a year ago.

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