UOB net profits down 40% to $668m in Q3

The group’s $339m hit on profits year-on-year, but results registered an improvement from Q2.

United Overseas Bank (UOB) Group reported a $668m net profit after tax for Q3, 40% YoY lower compared to the same period in 2019 and 5% QoQ lower than in Q2, the bank’s latest SGX filing revealed. Net profit was hit by the pre-emptive build-up of credit allowance amounting to $339m this quarter.

The group said that it took in $339m in allowance during the quarter in order to further strengthen its non-performing assets (NPA) coverage to 111%, or 264% after taking collateral into account.

Operating profit improved to $1.25b in Q3, 3% QoQ higher than in Q2 thanks to an improvement in margins and fees. However, it is still 14% YoY lower than the same period a year ago.

Net interest income also marginally improved by 1% QoQ compared to the previous quarter, totaling $1.47b in Q3, although this is 13% YoY lower than the $1.67b reported in Q3 2019.

Meanwhile, UOB’s non-performing loan (NPL) ratio registered a slight upturn to 1.5% in Q3 from 1.6% in the previous quarter. UOB said that NPL formation stayed low during the quarter, and that there were more recoveries.

For the first nine months of the year, net earnings stood at $2.23b, 33% YoY lower than in 9M 2019. UOB said that the softer performance was due to declining margins, slower customer activities and pre-emptive credit provisioning in view of the uncertainties from the COVID-19 pandemic.

“Whilst there are early signs of recovery across the global economy, thetrajectory remains uneven and unclear. Given the evolving geopolitical andpandemic situation, we remain vigilant, especially in our key regional markets,” said Wee Ee Cheong, deputy chairman and CEO, UOB.

He added that UOB’s asset quality is manageable and assured that they are adequately provisioned even with the expiry of moratorium programmes across the region.