UOB has reported a net profit of $906 million for the 1QFY2022 ended March, 10% lower than the $1.01 billion in the corresponding period the year before.

On a q-o-q basis, 1QFY2022’s net profit stood 11% lower than the $1.02 billion posted in the 4QFY2021.

The bank attributed the lower q-o-q net profit to the geopolitical uncertainties, which led to lower non-customer-related trading and investment income, with lower general allowance write-back. On a y-o-y basis, the lower net profit was said to be due to the decline in net fee and commission income.

Total income for the 1QFY2022 fell 5% y-o-y to $2.4 billion.

Net interest income stood 10% higher y-o-y at $1.69 billion, led by 9% y-o-y higher loan growth. Net interest margin (NIM) for the quarter improved by 0.1 percentage points thanks to healthy loan growth and rising interest rates.

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Net fee income fell 8% y-o-y to $572 million. During the quarter, loan fees grew by 7.8% y-o-y to a new high of $276 million due to the strong demand in lending and advisory business. The higher loan fees were, however, offset by the lower wealth and fund management fees on the back of a more subdued market outlook this year. Credit card fees were also seasonally lower during the quarter.

Other income plunged 70% y-o-y to $101 million as customer-related treasury income dipped 0.6% y-o-y to $161 million. Income for others fell into the red at a negative $117 million from the $102 million in the 1QFY2021. The decline was due to the impact on hedges, which led to lower customer-related trading and investment income.

Operating profit fell 7% y-o-y to $1.30 billion, in line with the lower income.

The group’s cost-to-income ratio inched up 1 percentage point y-o-y to 44.8%.

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During the quarter, the group’s non-performing assets (NPA) increased by 16.4% y-o-y to $5.30 billion with new NPAs increasing 3.2 times to $462 million from the $145 million in the same period the year before.

The non-performing loan (NPL) ratio stood 0.1 percentage point higher y-o-y at 1.6%.

Total credit costs on loans fell 10 basis points y-o-y to 19 basis points, in line with the bank’s expectations. On a q-o-q basis, total credit costs increased by seven basis points due to the higher general allowance write-back in the previous quarter.

In the 1QFY2022, UOB’s NPA coverage remained adequate at 94% or 216% including collateral.

During the quarter, gross loans increased by 9% y-o-y mainly due to higher corporate loans in Singapore, Greater China and the west.

Liquidity ratios fell 10 percentage points to 129%. The net stable funding ratio (NSFR) fell eight percentage points to 113%. Both remain well above regulatory requirements.

Loan-to-deposit ratio stood 0.3 percentage points up y-o-y at 87.3%.

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Current account savings account (CASA) ratio increased by 2.4 percentage points y-o-y to 55.9% as deposits grew in tandem with loans.

As at end-March, the group’s Common Equity Tier 1 capital adequacy ratio (CET-1) fell 1.2 percentage points to 13.1%, largely from asset growth.

In his comments, Wee Ee Cheong, deputy chairman and CEO of UOB says the bank is making “good progress” in its Citi integration and on its digital initiatives.

He added that the group’s green efforts and support for its customers to make positive impact are seeing results. “We aim to announce our net zero plans by the end of this year,” he says.

He continues: “We remain optimistic of the recovery of our region and the longer-term potential of Southeast Asia. With our strong balance sheet, backed by healthy capital and liquidity positions, we are well-positioned to navigate these uncertain times together with our customers and the community.”

Shares in UOB closed 42 cents lower or 1.37% down at $30.14 on April 28.

UOB reports 1QFY2022 net profit of $906 mil, down 10% y-o-y

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