SINGAPORE (Aug 3): UOB Group reported 2Q18 earnings rose to a new high of $1.08 billion, 28% higher compared to the same quarter last year and higher than the average estimate of $993.9 million from two analysts, according to Thomson Reuters.

This also brings earnings for 1H18 to a new high of $2.05 billion, up 24% from a year ago.

In 2Q18 ended June, net interest income grew 14% to $1.54 billion, supported by loan growth of 10% and an improvement in net interest margin by 8 basis points to 1.83%.

Net fee and commission income for 2Q18 rose 11% to $498 million, contributed by broad-based growth in loan-related, fund management, credit card and trade-related fees. Other non-interest income decreased by 3% to $302 million mainly due to lower net gain from investment securities.

Total expenses for the quarter increased 10% from a year ago to $1.02 billion, primarily from staff expenses and planned IT-related investments. The cost-to-income ratio for the quarter stood at 43.6%.

Total allowances in 2Q18 halved to $90 million in 2Q18 as the prior year’s higher allowances were mainly driven by specific allowance set aside for NPLs from the oil and gas and shipping sectors.

As at June 30, UOB’s Common Equity Tier 1 CAR increased to 14.5% from 13.8% a year ago primarily due to higher retained earnings. The group’s leverage ratio of 7.7% was more than double the regulatory minimum requirement of 3%.

UOB has declared an interim dividend of 50 cents per share.

Wee Ee Cheong, UOB’s Deputy Chairman and CEO, says, “Testament to our focus on generating sustainable growth, our second quarter results are built on the healthy growth momentum in the first quarter. Such discipline supports our ability to reward shareholders with an increase in interim dividend per ordinary share to 50 cents.

“In the face of rising uncertainty globally, our stable asset quality, robust capitalisation and diversified funding base put us in a strong position to drive future growth. We will remain vigilant, nimble and continue to invest in capabilities to serve our customers’ evolving needs. As a long-term player, we remain steadfast in augmenting our regional footprint to extend our reach to a wider group of customers and to tap the region’s connectivity potential.”

In a separate filing, UOB announced that it is introducing a digital bank for Asean’s massive and increasing base of “mobile first” and “mobile only” customers.

UOB’s digital bank will be deployed in its key Southeast Asian markets as the group accelerates and broadens the growth of its regional customer franchise.

UOB’s digital bank customers across the region will enjoy a fully digital experience which is intuitive, transparent and engaging – from the moment they apply to open an account through to their everyday lifestyle needs.

“Every interaction will be designed to deepen the customer relationship through meaningful conversations and personalised engagement,” it says.

Shares in UOB closed 56 cents lower at $26.70 on Thursday.