We raise UOB's target price to S$38.86. However, with limited capital management catalysts in the near-term, maintain HOLD.
UOB (SGX:U11)'s FY25 core-earnings were in-line with MIBG/Street expectations. While big pre-emptive provisioning seems to be behind them, we are cautious given continued stresses in commercial real estate as well as increases in NPLs in manufacturing and construction.
- Read this at SGinvestors.io -
Kitchen sinking done? We remain cautious.
Credit costs dropped to 19bps in 4Q from 134bps in 3Q. However, we note overall provisions to NPLs have fallen to 97% from 100% in 3Q and still lag peers (DBS 130% in 4Q). NPL upgrades/write-offs increased +108% q-o-q, with around 50% classified as write-offs. This is mostly in the real estate sector. GP coverage of CRE hotspots – Greater China and US – have been boosted, but the sector remains a known risk.
- Read this at SGinvestors.io -
Operational momentum positive.
Read more at SGinvestors.io.
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/.
