United Overseas Bank - A Booster Shot From Citigroup’s Franchise
- We think that the acquisition of Citigroup’s consumer businesses is not cheap but strategic to boost UOB (SGX:U11)’s retail banking market share in Indonesia, Malaysia and Thailand.
- Fed rate hikes should provide ROE uplift until earnings contribution from the acquisition kicks in. We raise UOB's FY22-23F NIMs by ~2-5bp to ~1.57-1.67%.
- We factor in one-off transaction costs and earnings uplift from the acquisition of Citi’s 4 consumer businesses.
- We incorporate 3 expected Fed rate hikes in FY22F and 3 in FY23F. We cut UOB's FY22F earnings per share forecast by ~6% and raise FY23F earnings per share forecast by ~2%.
- Reiterate ADD call on UOB with higher target price of S$33.50.
- We view the roadmap towards ~13% ROE by 2026 positively. A faster pace of rate hikes is a key catalyst.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Andrea CHOONG CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2022-01-17 2022-01-17
Read also CGS-CIMB's most recent report:
2022-11-16 United Overseas Bank - Still Positive On Growth In ASEAN
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