UOB profits jumped 21% to $978m in Q1

Its record high earnings were boosted by higher incomes from interest and fees and commissions.

United Overseas Bank's (UOB) earnings jumped 21% YoY to $978m, achieving a record for the company, it said in its financial statement.

Total income jumped 9% to $2.23b due to strong growth in both net interest income and net fee and commission income. It also noted that total expected credit loss (ECL) decreased due to "a benign credit environment and reduced residual risks from the oil and gas and shipping sectors."

Net interest income rose 13% to $1.47b, thanks to a higher net interest margin coupled with loan growth of 5%. "Loan growth was broad-based across most territories and industries on the back of the improved operating environment over the year before. Net interest margin (NIM) increased 11 basis points to 1.84%, mainly attributable to higher loan margin and interbank yields amid a rising interest rate environment and the Group's proactive balance sheet management," UOB said.

Meanwhile, fee and commission income climbed 18% to $517m. "Strong momentum in wealth management and fund management continued to support the uplift in fee income. Loan-related fee income increased 24% whilst credit card fees rose 11% year on year. Other non-interest income decreased 22% to $244 million mainly from lower net trading income due to fair value changes on hedges of structural positions," the bank added.

UOB's retail segment reported income growth of 6% to $963m mainly from wealth management and fee-based products. Wholesale banking income grew 4% to $928m thanks to higher cash management, trade and investment banking activities. Its global markets segment's income jumped by 20% to $142m, largely driven by "favourable foreign exchange movements."

UOB CEO and deputy chairman Wee Ee Cheong commented, “With the more benign environment and issues in the oil and gas segment largely addressed, our NPL ratio and credit costs improved. Our balance sheet remained strong, backed by healthy capital and liquidity positions. Our recent maiden issuances of a covered bond in sterling, onshore Chinese yuan financial bond – both firsts by a Singapore bank – and US dollar-denominated senior notes were well-received and reflected investor confidence in the Bank.

“We continue to invest in our core franchise, riding on the growing digital connectivity in the region to enhance the customer experience for consumers and businesses. For example, we are the first regional bank to establish a joint venture to provide a next-generation digital credit assessment solution to make it smarter and faster for companies to extend credit to underserved customers across ASEAN," he added.