UOB’s 1Q25 appears to be tracking below estimates due to a jump in credit cost as it made pre-emptive allowances to beef up LLC.
Also noteworthy was UOB’s decision to pause its 2025 guidance pending further clarity on the US tariff policy, but remains committed to its earlier announced S$3bn capital distribution plan and 50% ordinary dividend payout. This dividend commitment plus mean valuation should aid downside support.
A slow start,
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Results highlights.
1Q25 PIOP rose by a robust 11% q-o-q and 7% y-o-y, on the back of a healthy +6% q-o-q/+4% y-o-y rise in operating income while opex was down 1% q-o-q and y-o-y. NIM held up well at 2.0%, i.e. flat q-o-q and -2bps y-o-y, as higher interbank and securities margin helped offset lower loans margin.
Also, we believe deposit and liquidity management helped as well with the LDR rising to 84% (vs 82-83% in 4Q24 and 1Q24) with annualised loans and deposits growth at 4%/-3%.
Meanwhile, non-II rose 24% q-o-q (+7% y-o-y) thanks to both fees (+22% q-o-q/+20% y-o-y) and other non-II (+25% q-o-q/- 5% y-o-y).
Flipside, NPA rose 3% q-o-q (+6% y-o-y) due to one Hong Kong property account, which led to a marginal 10bps q-o-q and y-o-y uptick in the NPL ratio to 1.6%. While this account has been fully provided and there was no impact to credit cost, UOB took the opportunity from the healthy PIOP to beef up and sustain NPA coverage at ~ 83% (4Q24: 84%; 1Q24: 91%).
Briefing highlights.
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Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
