UOB (SGX:U11)'s 4Q25 earnings of S$1,410mil were slightly below our estimates from lower-than-expected NII and other non-interest income. FY25 PATMI was 98% of our FY25e forecast.
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NII fell 4% y-o-y from NIM compression of 16bps, while fee income rose 10% y-o-y. Allowances fell 50% from lower SPs and credit costs normalised to 19bps (4Q24: 25bps).
UOB has maintained its FY26e guidance of NIM at 1.75-1.80%, low-single-digit loan growth, and credit costs at around 25-30bps but lowered fee income growth to high single (from high single to double-digit). We expect FY26e earnings to increase by ~18%, mainly driven by a recovery in fee income and a decline in allowances.
The Positive
Fee income recovers.
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Fee income is 19% of total income (4Q24: 16%). However, this was offset by lower other non-interest income (-28% y-o-y) from lower trading and investment income. As a result, total non-interest income fell by 7% y-o-y.
Allowances halve from lower SPs.
Read more at SGinvestors.io.
Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
