UOB (SGX:U11) largely retained its 2026 outlook (save for some tweaks to fee income), suggesting a modest operating backdrop ahead.
While credit cost should normalise and this may lead to a decent rebound in earnings, there would still be a ~100bps dividend yield gap to the sector-leading yield of 5.5% by its peer. However, we believe valuation remains decent and fairly reflects asset quality risks and the lower provision coverage level vs the sector.
2025 results met estimates.
- Read this at SGinvestors.io -
- Read this at SGinvestors.io -
Results highlights.
The sequential PATMI jump was on the back of credit cost normalising to 20bps in 4Q25 vs 3Q25: 134bps. Otherwise, NII was up 4% q-o-q on a positive +2bps rebound in NIM as earlier efforts to reprice lower deposit rates filtered through, coupled with higher benchmark rates in Hong Kong but this was offset by lower non-II (-17% q-o-q) due to seasonality.
Y-o-y, operating income fell 5% due to a drop in both NII (-4% y-o-y on lower NIM) and other non-II. Loans and deposit growth stood at +4% and +5% but CASA momentum was notably strong at +13% y-o-y.
Balance sheet remains liquid with the LDR at 81.7% (3Q25: 82.5%; 4Q24: 82.7%) while the CASA ratio ticked higher to 58.4% (3Q25: 57%; 4Q24: 54.6%). Non-performing assets (NPA) fell 6% q-o-q (+4% y-o-y) due to lower new NPAs and higher recoveries/writeoffs from the real estate space. NPA coverage was 90%, up from 84% in 2024 thanks to the earlier pre-emptive GP.
Briefing highlights.
Read more at SGinvestors.io.
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/.
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