United Overseas Bank Ltd (SGX: U11) is one of the three big banks in Singapore. Two weeks ago, UOB announced its 2018 third quarter earnings update. Here are five positive things that I think investors should know about the bank’s latest results:
1. UOB’s total income for 2018’s third quarter grew 8% year-on-year to S$2.33 billion, led by loan volume growth, a higher net interest margin (from 1.79% to 1.81%), and higher net fee income. In other words, there was broad-based growth for the bank.
2. Net interest income jumped by 14% year-on-year to S$1.6 billion due to broad-based loan growth (up 9%) and the aforementioned higher net interest margin.
3. Total allowances fell by 57% from a year ago to S$95 million due to the absence of specific allowances set aside for non-performing loans (NPLs) from the oil & gas and shipping sectors that were incurred in 2017’s third quarter. UOB’s NPL ratio remained flat at 1.6%.
4. UOB’s annualised return on equity (ROE) for the third quarter of 2018 improved from 10.5% a year ago to 11.7%, driven by improvements in the bank’s annualised return on assets, which grew from 1.02% to 1.09%.
5. UOB continued to maintain an extremely sound capital position. As of 30 September 2018, the bank’s Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR, and Total CAR were at 14.1%, 15.1%, and 17.4% respectively. These ratios are well above the respective regulatory requirements 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. The Motley Fool Singapore has a recommendation for United Overseas Bank.