UOB - CGS-CIMB Research 2022-02-16: NIM Expansion & Lower Credit Cost; A Resilient Showing

UOB - NIM Expansion & Lower Credit Cost; A Resilient Showing

  • UOB (SGX:U11)’s net profit of S$1.02bn was in line with our/consensus estimates.
  • NIM expansion of 1bp q-o-q to 1.57% and lower credit costs of 12bp in 4Q21 offset weaker treasury income due to softer trading conditions at year-end.
  • Stronger fee income, ~S$200m-300m profit from integration of Citigroup’s consumer franchise and ~23 bp NIM expansion to drive UOB's FY22-24F earnings.
  • Credit costs guided to be stable, with specific provisions from residual risks smoothened by general provision reversals. UOB is likely to retain sizeable part of ~S$1bn mgmt. overlays. UOB lowered loan growth guidance to mid-single-digit in FY22F and we deem credit cost commentary to be slightly negative.
  • Reiterate ADD call on UOB with a higher target price.
  • UOB's share price trades at ~1.2x FY22F P/BV, still below its 1.4x valuation as NIM peaked in Apr 18 during the last rate hike cycle.

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 2022-02-16
SGX Stock Analyst Report ADD MAINTAIN ADD 35.40 UP 33.500

Read also CGS-CIMB's most recent report:
2022-11-16 United Overseas Bank - Still Positive On Growth In ASEAN

Target prices by 3 other brokers at UOB Target Prices.
Listing of broker reports at UOB Analyst Report.

Relevant links:
UOB Share Price History,
UOB Announcements,
UOB Dividends & Corp Actions,
UOB News Articles


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