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3 Important Charts From United Overseas Bank Ltd’s 2018 Annual Report

United Overseas Bank Ltd (SGX: U11) enjoyed another fantastic year in 2018. The bank achieved a record high net profit of S$4 billion, up 18% from the previous year and driven by both higher net interest income as well as net fee and commission income.

The bank recently released its 2018 annual report. Here are three interesting charts that illuminate a few important aspects of the business.

Total income growth

Total income rose 6% in 2018 to S$9.12 billion, with net interest income growing 13%. More impressively, the bank has managed to consistently grow its net income over the past five years. The chart below shows the total income growth and the breakdown between net interest income and non-interest income.

Source: UOB 2018 Annual Report

Over the past five years, net interest income has increased by 36.5%, while total income grew by 25%.

Healthy loan and deposit growth

Customer deposits grew 7% to S$293 billion in 2018, led by strong growth in Singapore dollar deposits. Net customer loans grew 11% year-on-year to S$259 billion.

Despite net loans growing faster than deposits, UOB still maintained a safe loan-to-deposit ratio (LDR) of 88.2% in 2018. The LDR compares a bank’s loans to its deposits and is a measure of liquidity. Traditionally, an LDR of 80% to 90% is ideal for a bank. The chart below shows UOB’s LDR and loan and deposit volume over the last five years.

Source: UOB 2018 Annual Report

Shareholder equity and return on equity

UOB has managed to give out dividends each year whilst increasing its total shareholder equity. Moreover, despite its higher shareholder equity base, the bank still delivered a four-year high return on equity of 11.3%. The chart below illustrates this point.

Source: UOB 2018 Annual Report

The Foolish bottom line

2018 was a year of records for UOB. On top of the growth in net interest income, its fee and commissions income continues to grow at pace, too. Despite the ongoing U.S.-China trade tensions and a slowing China economy, UOB Deputy Chairman and Chief Executive Officer Wee Ee Cheong is optimistic, saying:

“Despite near term uncertainties, we see the long-term potential of Asia, particularly ASEAN, through the increased connectivity and intraregional business flows, favourable demographics and rising affluence which underpin economic growth.”

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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 Jeremy Chia doesn’t own shares in any companies mentioned. The Motley Fool Singapore recommends United Overseas Bank Ltd.