United Overseas Bank - OCBC Investment 2024-05-08: 1Q24 Results Above Expectations

• UOB (SGX:U11) delivered 1Q24 net earnings of S$1.6b, +5% q-o-q or -1% y-o-y. Delving into the financials revealed that NII fell 2% y-o-y and -2% q-o-q to S$2.4b, but net fee income rose 5% y-o-y and +2% q-o-q to S$580m.

UOB's 1Q24 earnings came in better than consensus expectations.

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• On the non-interest income front, the key drivers were its wealth management business (+5% y-o-y and +9% q-o-q to S$164m for 1Q24) and credit card fees (+11% y-o-y, but down 28% q-o-q to S$90m due to seasonal high in 4Q23).

Strong contribution from wealth, credit card and trading income.

• As a recap, UOB's credit card fees were one of the key drivers in FY23, enjoying a strong 50% y-o-y growth to S$940m.
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Total AUM rose 11% y-o-y to S$179b.

• This was an improvement from S$176b as at the end of 2023. Allowances of S$163m in 1Q24 was down 4% y-o-y, but up 7% q-o-q. Cost-to-income ratio came off from 43.2% in 4Q23 to 41.9% in 1Q24 (FY23: 41.5%).
• Non-performing loans ratio was stable at 1.5%. New non-performing asset (NPA) formation also came off sharply from S$301m in 1Q23 to S$249m in 1Q24. NPA coverage was healthy at 99%.
• Loan-to-deposit ratio was also stable at 82%.
• Return-on-equity (ROE) was 14.0%.

No change in management guidance for 2024

• Read more at SGinvestors.io.

Carmen Lee OCBC Investment Research | https://www.iocbc.com/ 2024-05-08 SGinvestors.io

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