Yahoo Finance UOB posts record high earnings of $1.4 bil in 3QFY2022, up 34% y-o-y
During the 9MFY2022, net profit surged by 12% y-o-y to $3.42 billion.
UOB Group has reported net profit after tax (NPAT) or net earnings of $1.40 billion for the 3QFY2022 ended Sept 30.
The quarter’s earnings, which improved by 34% y-o-y and 26% q-o-q, is a record high for the bank. The improvement was driven by strong net interest income (NII), higher customer-related treasury income and lower credit allowance, says the group in its business update.
It adds that the group’s performance during the 3QFY2022 was “propelled by diversified growth across the wholesale and retail businesses. Cross-border income grew steadily while credit card fees were higher and the mortgage business remained resilient.”
During the 3QFY2022, UOB’s NII increased by 39% y-o-y to a new high of $2.23 billion. This was mainly due to the uplift in net interest margin (NIM) of 1.95%, which was up by 40 basis points (bps) y-o-y, and the loan growth of 6%.
Net fee and commission income, however, fell 10% y-o-y to $519 million, largely due to lower wealth and fund management fees.
Other non-interest income surged by 58% y-o-y to $431 million, which was mainly attributable to the higher customer-related treasury income.
As a result, total income for the 3QFY2022 increased by 30% y-o-y to $3.18 billion.
Total operating expenses stood 27% higher y-o-y at $1.36 billion, in line with the higher income. Total allowances fell 36% y-o-y on lower specific allowances.
Accordingly, the bank’s 3QFY2022 operating profit increased by 32% y-o-y to $1.83 billion.
Loan-related fees in the 3QFY2022 moderated to $255 million, which was down 9.89% q-o-q, after a stellar 2QFY2022. Wealth fees remained soft at $123 million amid subdued market sentiments
During the quarter, the bank’s cost-to-income ratio stood at 42.6%, down by 1.1 percentage points y-o-y and 1.2 percentage points q-o-q.
During the 9MFY2022, net profit surged by 12% y-o-y to $3.42 billion on strong NII and lower credit allowance.
9MFY2022 NII increased by 23% y-o-y to $5.78 billion thanks to the robust NIM expansion of 18 bps to 1.74% on the rising interest rates, as well as loan growth of 6%.
Net fee income for the period fell by 7% y-o-y to $1.66 billion from the muted wealth and fund management fees as investors remained cautious amid market volatility.
However, loan-related fees were at a record high of $565 million, due to the growth in trade and investment.
Credit card fees were also higher as customer spends rebounded following the reopening of borders.
In the nine-month period, customer-related treasury income grew 17% driven by hedging demands and investment opportunities.
However, the group’s non-interest income for the 9MFY2022 fell by 7% y-o-y to $804 million due to the impact on hedges and lower valuation on investments in a volatile market.
Total operating expenses increased 12% y-o-y to $3.60 billion in tandem with higher income.
Total allowance declined 23% y-o-y to $419 million mainly on lower general allowance, with total credit costs on loans improving to 19 basis points.
Total income for the 9MFY2022 increased by 12% y-o-y to $8.25 billion. Operating profit for the period also rose 12% y-o-y to $4.65 billion.
As at Sept 30, UOB’s non-performing loan (NPL) ratio stood at 1.5%, unchanged y-o-y but down by 0.2 percentage points q-o-q.
Customer loans for the period increased by 6% y-o-y and 1% q-o-q to $323 billion.
Credit costs stood at 17 bps, down by 3 bps y-o-y and 5 bps q-o-q as at Sept 30.
UOB’s current account savings account (CASA) ratio fell by 6.0 percentage points y-o-y and 4.9 percentage points q-o-q to 49.8% due to the higher number of fixed deposits opened.
As at Sept, the group’s loan-to-deposit ratio (LDR) increased by 0.1 percentage points y-o-y but fell 3.5 percentage points q-o-q to 85.2%.
The group’s Common Equity Tier 1 (CET1) ratio stood at 12.8%, down by 0.7 percentage points q-o-q and 0.3 percentage points q-o-q, but remaining above the minimum regulatory requirement of 6.5%. The lower CET1 ratio was due to the interim dividends paid for 2022.
The group’s leverage ratio stood at 6.4%, down 0.7 percentage points y-o-y and 0.2 percentage q-o-q, but above the minimum regulatory requirement of 3%.
On the results, UOB’s deputy chairman and CEO, Wee Ee Cheong says he expects the Asean economies to “show resilience and avoid a recession” even amid the global economic uncertainties.
“Looking ahead, the global economic outlook remains challenging. As a long-term bank, we will stand by our customers to ride through this economic cycle with them,” he adds.
Shares in UOB closed 6 cents lower or 0.23% down at $26.02 on Oct 27.
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