UOB’s 1H25 core-earnings were behind MIBG and Street expectations. Sharply falling policy rates, weak regional loan growth, an under-invested wealth platform are driving negative growth momentum across pillars.
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Weaker sequential delivery across pillars.
UOB's 2Q25 NII fell -3% q-o-q, Fees -8% and Other NoII -11% showing broad pressure across all operating segments.
NIMs fell -9bps q-o-q from sharp SORA and HIBOR contraction. Management is guiding for 1.85%-1.95% NIMs for 2025E, which means more downside risks from current levels. This is also predicated on SORA levelling off at current level. MIBG forecasts a further -43bps fall in SORA from current levels, which could raise further NIM downgrade risks.
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While Citibank acquisition integration is now fully completed, synergies are yet to fully show through in terms of boosting wealth and card fees, in our view. Management claims this is an area of focus with increasing investments to capture AUM and cross-selling. However, this may take time to ramp-up.
Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
