SINGAPORE (May 3):  UOB Group reported earnings of $1.05 billion for the 1Q ended March, up 8% from a year ago on higher net interest income.  

Total income grew 8% to $2.5 billion on-year from $2.2 billion in 1Q18, led by growth in interest income for the quarter, which more than offset a decline in fee and commission income.

Net interest income rose 8% to $1.6 billion based on a broad-based growth of 12%, which was partially offset by net interest margin (NIM) compression of five basis points to 1.79%.

Meanwhile, net fee and commission income fell 7% to $479 million due to lower wealth management and fund management fees, which the group attributes to more subdued market sentiment compared to a year ago.

This was partially offset by higher loan-related and credit cards fees, which grew 9% and 7% respectively.

Other non-interest income rose 40% to S$340 million on improved customer-related income and higher trading income.

Total expenses grew 9% to $1.07 billion due to higher performance-related staff costs and IT-related expenses. Cost-to-income ratio increased slightly to 44.6%.

Total allowances increased 17% to $93 million, as expected credit losses for non-impaired assets rose with loan growth in 1Q19. Total credit costs on impaired loans was stable at 13 basis points.

UOB says its funding position remains strong with a healthy loan-to-deposit ratio at 86.6%, with gross loans and deposits having grown q-o-q by 3% and 5%, respectively, to $270 billion and $308 billion.

The average SGD and all-currency liquidity coverage ratios for 1Q19 were 251% and 146% respectively, well above the regulatory requirements of 100%.

As at end-march, net stable funding ratio was 109% with total allowances for non-impaired assets remaining adequate at $2 billion.

The non-performing loan ratio stayed at 1.5% with coverage for non-performing assets stable at 89%, or 203% after taking collateral into account.

The group says it remains well capitalised to navigate the macro uncertainties ahead as its Common Equity Tier 1 CAR remained strong at 13.9%, with a leverage ratio of 7.6% more than double the regulatory minimum requirement of 3%.

“Our steadfast approach to ensuring continued sustainable growth has seen strong investor support, which was also recently reflected in their response to our debut Panda Bond and US dollar-denominated subordinated notes issuances,” says Wee Ee Cheong, deputy chairman and CEO of the group.

“Placing our customers at the heart of all that we do, we will continue to harness technology and to tap our partner ecosystems to enhance the customer experience and to drive performance. In investing in and strengthening our omni-channel and connectivity capabilities, we will offer more solutions at scale and with speed to market to more consumers and businesses across our regional network,” he adds.

Shares in UOB closed 2 cents higher at $27.85 on Thursday.