SINGAPORE (Feb 14): UOB reported 4Q17 earnings of $855 million in 4Q17, 16% higher from a year ago. This brings FY17 earnings to $3.39 billion, 9% higher than a year ago.
UOB said the stronger 4Q17 bottomline was led by healthy growth in net interest income, fee and commission income and net trading income but partly offset by higher operating expenses and allowances.
Net interest income rose 15% to $1.46 billion, contributed by higher net interest margin and loan growth. Net interest margin improved 12 basis points to 1.81%, attributed to active balance sheet management and a rising interest rate environment.
Non-interest income increased 12% to $846 million. Fee and commission income grew 10% to $585 million, as a result of strong growth in the wealth management, fund management and credit card businesses. Trading and investment income increased 18% to $198 million contributed mainly by higher net trading income.
Total expenses increased 15% from a year ago to $1.10 billion due to higher performance-related staff costs, IT-related and revenue-related expenses. The expense-to-income ratio increased to 47.8%.
Specific allowance on loans and other assets increased to $781 million as a result of portfolio and collateral valuation review. With a reversal of $641 million of excess general allowance on loans, total allowances amounted to $140 million for this quarter.
Due to the one-off accelerated recognition of non-performing assets (NPA) on oil and gas and shipping exposures, the group’s NPA increased 26% year-on-year and 12% from the previous quarter to $4.39 billion. Consequently, non-performing loans (NPL) ratio stood at 1.8% as at Dec 31 2017, while NPL coverage remained strong at 91%, or 195% after taking collateral into account.
The group continued to maintain a strong funding position with a healthy loan-to-deposit ratio at 85.1%. Gross loans increased to $236 billion at Dec 31 2017, with a year-on-year increase of 5% that was broad-based across most territories and industries. Customer deposits grew 7% from a year ago to $273 billion, led by growth in US dollar deposits.
As at Dec 31 2017, the group’s Common Equity Tier 1 and Total CAR remained at 15.1% and 18.7% respectively. On a fully-loaded basis, the Common Equity Tier 1 CAR rose to 14.7% from 12.1% a year ago. The group’s leverage ratio was 8.0%, well above Basel’s minimum requirement of 3%.
Wee Ee Cheong, UOB’s Deputy Chairman and CEO, says, “With the improving outlook across the region, our customers are stepping up on their regional expansion plans and expect further growth in their personal wealth. With our strong fundamentals, extensive regional network and expanded capabilities, we are well positioned to help our customers seize such opportunities as we continue to invest for the future to generate sustainable returns for all our stakeholders.”
The board is recommending a final dividend of 45 cents per ordinary share, and a special dividend of 20 cents.
Shares in UOB closed 49 cents higher at $26.84 on Tuesday.