PhillipCapital is revising UOB’s FY2020F earnings down 5% to reflect business disruptions from Covid-19, as the bank posted 2Q2020 earnings 18% below previous estimates last week. PhillipCapital analyst Tay Wee Kuang is maintaining “accumulate” on the bank with a reduced target price of $20.40 from $20.70.

“2Q2020 earnings of $703 million was 18% below our previous estimates of $857 million due weaker-than-expected fees income amidst Circuit Breaker period in the quarter,” says Tay in an August 11 note.

Net interest margin (NIM) fell 33 bps y-o-y to a historical low of 1.48% in 2Q2020 from 1.81% in 2Q2019 on low interest rates and huge inflow of deposits. Net interest income fell 12% in 2Q2020 on full impact interest rate cuts on NIM.

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