United Overseas Bank, Singapore’s second-largest lender by market value, reported a 28% increase in quarterly profit as bad-loan charges fell.

Net income was $602 million  in the three months ended June 30 from $470 million a year earlier, the Singapore-based company said in a statement today. That matched analysts’ estimates, while non-interest income slumped 31%.

 

Swings in stock and bond markets, and signs of economic headwinds in the U.S., Europe and China have deterred clients from trading and making share sales, trimming earnings gains. Singapore’s three-month interbank lending rate, or Sibor, has averaged 0.6% this year, shrinking net interest margins.

 

“UOB’s trading performance might not be as strong this quarter, and it’s likely to take general allowances for investment securities,” Kenneth Ng, a Singapore-based analyst at CIMB Research Pte, said before the results announcement. “Stronger loan growth in Malaysia and Indonesia might help overall margins a little, but the bulk of UOB’s loan is still heavily weighted in Singapore so margins will still be under pressure.”

 

The stock rose 0.4% to $19.60 at the 12:30 p.m. trading break in Singapore before the earnings announcement. The shares have dropped 0.5% this year, compared with a 3.1% increase in the benchmark Straits Times Index.

 

Profit matched the $602.6 million average second-quarter estimate of eight analysts surveyed by Bloomberg.