UOB’s 2Q25 earnings came in below market expectation with net profit of S$1.34b versus S$1.49b in 1Q25.
Net interest income fell 3% q-o-q (QoQ) and 3% y-o-y (YoY) to S$2.34b. NIM dropped from 2.0% in 1Q25 to 1.91% in 2Q25.
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The non-performing loan (NPL) ratio was flat q-o-q at 1.6%. Allowances amounted to S$279m, bringing 1H25 allowances to S$569m.
Lower interim dividend.
See UOB's dividends – the group has declared an interim dividend of S$0.85, down from S$0.88 in 1H24. The stock will trade ex-dividend on 15 Aug 2025 and the payment will be on 28 Aug 2025.
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S$2b share buyback programme.
UOB also updated that the group has bought back about S$255m shares or a 13% completion of the S$2b programme..
Re-instated its guidance for 2025.
UOB is expecting full year NIM of 1.85% to 1.9%. In terms of loan growth, the expectation is for low single-digit growth. It is more optimistic about the outlook for fee income, projecting high single-digit growth. Cost discipline will continue to be in place as it is expecting flat operating expenses. Net credit costs are projected at 25-30bps.
Despite the still cloudy outlook due to higher trade tariffs, management will continue to focus on its ASEAN franchise and explore opportunities in infrastructure, digital and green projects.
With a wider retail customer base, UOB is seeking to widen its offerings to grow more fee and recurring income.
Price support from share buyback and dividends.
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Above is an excerpt from a report by OCBC Investment Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
