Singapore's UOB maintains 2024 guidance even as Q2 profit misses forecasts

By Yantoultra Ngui

SINGAPORE (Reuters) -Singapore's United Overseas Bank (UOB) maintained earnings guidance for 2024 after posting on Thursday a 1% year-on-year rise in second quarter net profit that slightly missed expectations.

"Global growth continues to be weighed down by geopolitical tensions and higher interest rates. However, we expect ASEAN to stay relatively resilient," said UOB Deputy Chairman and CEO Wee Ee Cheong in a statement.

UOB maintained its 2024 projections of low single-digit loan growth, double-digit fee growth and positive growth in total income, according to Wee's presentation slides accompanying the earnings results.

The bank, which is Southeast Asia's third-largest by assets, also maintained expectations of core cost-to-income ratio at 41% to 42% and credit costs at lower end of 25 to 30 basis points, the slides showed.

UOB said its April-June net profit rose to S$1.43 billion ($1.07 billion) from S$1.42 billion a year earlier on the back of higher net fee income, a rebound in loan-related fees and wealth management fees, and double-digit growth in credit card fees.

This was however lower than the mean estimate of S$1.44 billion from four analysts polled by LSEG.

Net interest margin, a key gauge of profitability, declined to 2.04% in the first half of this year from 2.13% in the same period a year earlier.

UOB's results kick start the current earnings season for Singaporean banks, which have benefited from strong inflows of wealth into Asia due to its political stability, low taxes, and policies favourable towards family offices and trusts. Larger peers DBS and Oversea-Chinese Banking Corp (OCBC) are due to announce their quarterly results on August 7 and Friday respectively.

UOB's second quarter result showed a 40% year-on-year jump in wealth management income and 10% year-on-year increase in total asset under management to S$182 billion, the company's presentation slides showed.

The bank announced an interim dividend of 88 Singapore cents per ordinary share.

($1 = 1.3365 Singapore dollars)

(Reporting by Yantoultra Ngui; Editing by Himani Sarkar and Shri Navaratnam)