SINGAPORE (Feb 22): UOB Group reported record earnings of $4.01 billion for the full year of 2018, up 18% from a year ago.
Total income rose 6% to S$9.12 billion, led by strong growth in both net interest and fee and commission income.
For 4Q18, earnings of $916 million was 7% higher than a year ago, but was 12% lower than 3Q18 as market uncertainties took hold.
Net interest income rose 10% to $1.61 billion led by 11% growth in loans while net interest margin dipped slightly to 1.80%.
Net fee and commission income declined 8% to $467 million as higher fees from credit cards were offset by lower wealth management and loan-related fees amid market uncertainties.
Other non-interest income fell 46% to $140 million mainly due to unrealised mark-to-market on investment securities arising from market volatility.
Total expenses fell 4% to $984 million driven by lower revenue-related and staff costs. The cost-to-income ratio improved to 44.4% as compared with 46.0% a year ago.
Total allowances declined 9% to $128 million as the provision for higher allowances on the oil and gas and shipping sectors was made in the same quarter last year. The credit costs on impaired loans stood at 22 basis points for the quarter.
Despite market volatility, the group’s funding position and capital base stayed strong, said UOB.
Gross loans and deposits grew 11% and 7% year on year to $262 billion and $293 billion respectively, with a loan-to-deposit ratio of 88.2% as at Dec 31 2018.
The group’s Common Equity Tier 1 capital adequacy ratio (CAR) remained robust at 13.9%. Record earnings underpinned the improvement in return on risk-weighted assets to 1.93% from 1.63% a year ago as well as return on equity to 11.3% from 10.2% last year.
The board has recommended a final dividend of 50 cents each, and a special dividend of 20 cents. Together with the interim dividend of 50 cents, the total dividend for the financial year ended Dec 31 2018 amounts to $1.20 cents per ordinary share, an increase of 20% over last year. Inclusive of the special dividend, this represents a payout ratio of approximately 50%.
Wee Ee Cheong, UOB’s Deputy Chairman and Chief Executive Officer, says, “As global uncertainties persist in 2019, we will stay disciplined in pursuing sustainable growth, while maintaining a risk-focused approach and equipping our people for the future. As a long-term player with deep knowledge of and an extensive presence that connects Southeast Asia, we are best positioned to ride on the region’s immense growth potential.”
Shares in UOB closed flat at $25.98 on Thursday. A year ago, the stock was trading at $27.52.