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UOB Q3 profit falls 40% to S$668m

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UOB posted a 40 per cent drop in net profit for its third quarter due to pre-emptive build-up of credit allowances, it said on Wednesday.

UOB posted a 40 per cent drop in net profit for its third quarter due to pre-emptive build-up of credit allowances, it said on Wednesday.

Net profit for the three months ended Sept 30, 2020, stood at S$668 million, compared with S$1.12 billion for the year-ago period.

An additional S$339 million in allowance for non-impaired assets was set aside to strengthen provision coverage, the bank said, bringing total credit costs on loans to 68 basis points this quarter.

Annualised earnings per share stood at S$1.55 for the quarter, down 40.8 per cent from S$2.62 a year ago.

Against the year-ago period, net interest income fell 13 per cent to S$1.47 billion as effects from margin compression offset loan growth of 2 per cent, the bank said. Net interest margin was down 24 basis points.

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From the previous quarter, however, net interest income for the quarter rose 1 per cent, led by an improvement in net interest margin of five basis points to 1.53 per cent, as liquidity buffers eased in line with a stabilising funding environment, the bank said.

Non-interest income was 15 per cent lower, year on year, at S$786 million, as business activities across corporate and retail customers declined.

The bank's non-performing loans ratio was 1.5 per cent, unchanged from the same-period a year ago.

UOB chief executive Wee Ee Cheong said the economic trajectory remains uneven and unclear, despite early signs of recovery across the global economy. "Given the evolving geopolitical and pandemic situation, we remain vigilant, especially in our key regional markets. However, our asset quality is manageable and we are adequately provisioned even with the expiry of moratorium programmes across the region," he said.

UOB shares closed S$19.45 on Tuesday, up 42 cents or 2.21 per cent.

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