UOB Continues Its Ladder Of Growth, Reported Another Record Earnings For First Quarter

UOB logoUnited Overseas Bank (SGX: U11) is the largest company under the United Overseas brand. It is one of the top 3 banks in Singapore and has a global presence in 19 countries. UOB reported its first quarter earnings on 30th April 2014, and investors are unlikely to be dissatisfied with its record earnings.

Operating Result

United Overseas Bank recorded a net interest income of S$ 1,110million for the quarter, which is a more than 15% growth from last year. However, its non interest income suffered a hit as it dropped 8.6% to only S$ 414million this quarter. This was mainly due to a decline in its loan processing fees and fund management fees. The bank was able to improve its net interest margin (NIM) to 1.73% despite the lower non interest income. Overall, it was still able to report a net profit before tax of S$ 882million, which is 1.5% more than last year’s earnings. Furthermore, because of a lower tax this quarter, its net income improved 9.2% to end the quarter with record earnings of S$ 788million.

Non performing loan ratio was controlled at 1.1% of the total customers’ outstanding loans. This comes after the bank increased its impairment charges by 20.5% to S$ 157million, which is partially due to loan growth. Customers’ loans increased 12.7% year on year to S$ 189billion. With this set of result, the company was able to earn a return on assets of about 1.1%, which is similar to previous quarters. Its loan to deposit ratio increased slightly to 85.5%. The company continues to have a strong balance sheet with a total capital adequacy ratio of more than 17%.

The bank is seeing growth in all of its major regions except Indonesia. However, in terms of profit, only Malaysia and Thailand are showing strong growth. The company ended the quarter with a net asset value per share of S$ 15.90. With its closing price on 30th April 2014 of S$ 21.76, it is trading at a price to book ratio of 1.37 times.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.