UOB - RHB Invest 2024-05-09: A Very Decent Start To The Year

• Given the shift in rate expectations and efforts to manage funding costs, United Overseas Bank (UOB) was slightly more optimistic on the near-term outlook for NIM. However, its preference to retain capital for growth may dampen hopes for an improved UOB's dividend payout.
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UOB's 1Q24 results in line.

• UOB's 1Q24 reported net profit of S$1.5bn (+6% q-o-q, -2% y-o-y) made up 25% of our and consensus’ FY24F.
• Annualised ROE was 12.7% (FY23: 12.5%) while CET-1 improved 50bps q-o-q to 13.9%.
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Results highlights.

• 1Q24 operating income was flat y-o-y (+3% q-o-q) with stronger non-II (+4% y-o-y, +15% q-o-q) offset by lower NII (-2% y-o-y and q-o-q).
• Fees rose 5% y-o-y (+2% q-o-q) while other non-II was up 3% y-o-y (+33% q-o-q), but NIM slipped 12bps y-o-y (flat q-o-q).
• Operating expenses was tightly controlled (+3% y-o-y; -2% q-o-q) with CIR at 44.6% vs 43.3% in 1Q23 (4Q23: 46.8%), while credit cost ticked slightly lower to 23bps (1Q23: 24bps; 4Q23: 25bps) on lower non-performing loans formation.
• Loans rose 2% y-o-y (flat q-o-q) with North Asia and Rest of the World driving y-o-y growth.
• UOB remains selective in growing quality credits while short-term trade loans picked up. Deposit growth (+4% y-o-y, +1% q-o-q) outpaced that of loans, with CASA rising 10% y-o-y (+4% q-o-q), which UOB attributed to retail CASA and continued wholesale CASA traction thanks to its cash management platform.

Optimistic on NIM and fee income outlook, at least in the near term.

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-05-09 SGinvestors.io

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