By Yantoultra Ngui
SINGAPORE (Reuters) -Singapore’s United Overseas Bank (UOB) said it had a more positive outlook for net interest income (NIM) following the latest U.S. rate rise, as it chalked up a 27% rise in second-quarter earnings in line with expectations.
“We are having a more positive outlook in NIM going forward, especially after this morning’s Fed’s announcement,” UOB’s Group Chief Financial Officer Lee Wai Fai told reporters in a briefing after the bank’s earnings results.
“We are hopeful that we can stay above the 2.14%,” he added, referring to UOB’s exit NIM in June.
UOB said NIM, a key gauge of profitability, averaged 2.13% in the first half of this year, versus 1.63% in the same period a year earlier.
Southeast Asia’s third-largest bank by assets posted a 27% jump in April-June net profit to S$1.42 billion ($1.1 billion) from S$1.11 billion a year earlier, mainly on higher net interest income.
This compares with the mean estimate of S$1.43 billion from three analysts polled by Refinitiv.
“While the global outlook remains uncertain, we expect the Asean region to stay relatively resilient,” said Wee Ee Cheong, CEO of UOB.
Singapore banks have been benefiting from strong inflow of wealth amid global uncertaintiy due to the city-state’s status as a financial safe haven. Larger peers DBS Group and Oversea-Chinese Banking Corp are due to announce their quarterly earnings results next week.
Last year, UOB acquired Citigroup’s consumer business in four Southeast Asian markets for about S$5 billion, marking its biggest deal in two decades. When completed, the move will double its retail customer base in these markets.
“Our Citigroup acquisition is progressing well,” Wee said.
UOB expects low to mid-single digit percentage loan growth for this year, high single-digit fees growth, credit costs at around 25 basis points, and margins to remain stable at current levels.
Meanwhile, Lee said UOB was confident of recovering some of the allowance it made on a corporate account in Thailand in the manufacturing sector, which led to a rise in UOB’s allowance in the first half from a year earlier.
($1 = 1.3253 Singapore dollars)
(Reporting by Yantoultra Ngui; Editing by Tom Hogue and Stephen Coates)
