United Overseas Bank Ltd (SGX: U11), or UOB, is one of the three major banks based out of Singapore. The bank announced its 2019 first-half earnings update in early August. Here are five positive things that I think investors should know about its results. But first, let’s run through the company’s numbers.
Here’s a quick summary of some key financial metrics.
Source: UOB’s Results Presentation
Overall, we can see that most metrics improved on a year-on-year basis. Here are five things I liked about the numbers.
- First of all, total income grew 9% year-on-year to S$5.0 billion while net profit improved 8% year-on-year to S$2.2 billion (both metrics at record highs). What’s more, all business segments reported higher operating profit for H1 2019 on a year-on-year basis.
- Secondly, non-performing loan ratio reduced from 1.7% last year to 1.5% this year. This indicates that the bank has improved the quality of its assets in H1 2019.
- Thirdly, annualised return on equity (ROE) improved to 12.0% from 11.6% a year ago. What this means is that investors are getting a higher return on the capital invested in the business.
- Next, the strong performance has allowed UOB to announce a higher interim dividend to shareholders, up from 50 cents last year to 55 cents this period. Assuming that the bank maintains a similar payout for the second half of 2019, investors should expect the total dividend for 2019 to exceed that of 2018.
- Last but not least, UOB maintained an extremely sound capital position as of 30 June 2019. Its Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR and Total CAR as of 30 June 2019, were 13.9%, 14.9%, and 17.2% respectively. These ratios were well above the respective regulatory requirement of 6.5%, 8%, and 10%, indicating that it is well-positioned to weather through volatile periods.
Overall, this was a strong set of results for UOB against the increasingly challenging macro environment.
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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 recommended the shares of United Overseas Bank Ltd.