市场见解

8 Key Takeaways from UOB’s Second-Quarter Results

Here’s how big Singapore bank UOB performed in its most recent earnings. – Bank letters in gold

United Overseas Bank (SGX: U11), or UOB, is one of Singapore’s three largest banks. The group provides a wide range of banking services to individuals and corporations, with a particularly strong presence in Southeast Asia.

UOB announced its second-quarter earnings for 2020 on 6 August. Let’s see how it performed in eight key takeaways for investors.

  1. Total income for the group came in at S$2.26 billion, down 12% year-on-year.
  2. Net interest income declined 12%, versus the same quarter in the prior year, to S$1.46 billion.
  3. Total non-interest income came in at S$804 million down from S$930 million a year ago.
  4. The net interest margin stood at 1.48%, down compared to 1.81% in the same period last year.
  5. Net profits were down 40% to S$703 million year-on-year. The decrease was on the back of higher impairment charges, which stood at S$396 million, up from S$51 million year-on-year.
  6. Non-performing loans came in at 1.6%, inching up slightly from 1.5% year-on-year.
  7. The loan-to-deposit ratio improved to 85.8% compared to 88.5% for the second quarter of 2019. This indicated prudence on administering new loans in this uncertain environment.
  8. UOB CEO Mr Wee Ee Cheong commented that:

“UOB entered this crisis from a position of strength, having built our resilience through weathering past storms, be they economic, man-made or natural disasters.

We maintain prudence and discipline in our risk management and will continue to strengthen our provision coverage.”

Foolish summary

UOB announced a lower net profit figure on the back of a challenging business environment. This saw UOB’s NPL increase slightly and saw the bank recognised higher allowances.

On the liquidity front, UOB has been more prudent with its loans. This is seen from its lower loan-to-deposit ratio for the quarter.

Lastly, UOB mentioned that its investment in technology has reaped many benefits. It reported increased usage on its UOB Mighty App, Online banking transactions, digital payments and transfer services and API call services.

Overall, UOB seems to be managing the current crisis well and should come out stronger in the longer term.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Saket Jhajharia doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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