- UOB (SGX:U11)'s 4Q22 revenue of S$3.3bn improved 37%/5% y-o-y/q-o-q, in line with the consensus, while net profit of S$1.2bn was +13% y-o-y/-18% q-o-q, dragged by Citi’s integration costs (net of tax) of S$70m and stamp duty of S$176m, without which, net profit would be S$1,398m for 4Q22.
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- Operating expenses increased by 29% y-o-y/4% q-o-q, which included the Citi integration costs.
- Cost-to-income ratio (CIR) was stable at 42.6%. CET1 ratio improved to 13.3% (3Q22: 12.8%). Loan book declined 1% q-o-q/+3% y-o-y.
Weaker non-interest income during the quarter.
- UOB's 4Q22 net fee income declined 7% q-o-q/16% y-o-y due to slower wealth management and loan-related fees, while card fees was at a record high. Other non-interest income declined 34% q-o-q/improved 62% y-o-y as 3Q22 was an exceptional trading quarter.
Higher specific allowances, higher new NPA formation.
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- Total loan allowances of S$173m, 21bps (3Q22: S$135m, 17bps) includes a general allowances writeback of S$80m, -10bps (3Q22: S$8m, 1bps), and specific allowances of S$253m, 31bps (3Q22: S$127m, 16bps).
- There was higher new NPA formation at S$395m (3Q22: S$214m, average of S$502m for last four quarters) and these NPAs are well-secured corporate accounts; NPL was higher at 1.6% (3Q22: 1.5%) as Citi’s consolidation added S$165m to NPAs.
Takeaways from analyst briefing by UOB's management
NIM outlook.
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