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5 Things That I Like About United Overseas Bank Ltd’s Latest Earnings Update

United Overseas Bank Ltd (SGX: U11), or UOB, is one of the three major banks based out of Singapore, along with DBS Group Holdings Ltd (SGX: D05) and Oversea-Chinese Banking Corp Limited (SGX: O39).

The company has recently announced its 2018 first-quarter (1Q FY18) earnings update. Here are five positive things that I think investors should know about its results.

The results

Here’s a quick summary of some key financial metrics for 1Q FY18.

Source: UOB’s Results Presentation

Overall, we can see that most metrics improved on a year-on-year basis. But there are more to these numbers.

1. First of all, total income grew 9% year-on-year to S$2.2 billion, due to robust growth in both net interest income and net fee and commission income. In other words, income growth was across the board.

2. Secondly, net interest income grew 13% year-on-year due to 5% loan growth and higher net interest margin. Moreover, loan growth was broad-based across most territories and industries.

3. Thirdly, UOB’s Thailand business performed well in the quarter with operating profit up by 49% year-on-year to S$101 million.

4. Next, annualised return on equity (ROE) improved to 11.0% from 10.0% a year ago. Similarly, annualised return on asset grew from 0.95% to 1.09%.

5. Last but not least, UOB maintained an extremely sound capital position as of 31 March 2018. Its Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR and Total CAR were 14.9%, 16.4% and 18.8% respectively. These ratios were well above the respective regulatory requirement of 6.5%, 8% and 10%.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Ltd and United Overseas Bank Ltd.