UOB suffers slowdown in Malaysian business

But it has seen loan growth in Thailand.

UOB has posted a steady growth in net profit for the past quarter ending in March, up 5.4% to $807m. Whilst it may seem that it performed well above expectations, UOB KayHian revealed how the bank performed in terms of overseas operations.

In Malaysia, the bank saw a slowdown, although asset quality held up well.

"Being cautious in customer and project selection enables the bank to weather the slower growth," the brokerage firm said.

Meanwhile, the bank's current low cost-to-income ratio of 35.8%, as UOB KayHian pointed out, is probably not sustainable as UOB continues to invest in technology.

Management will review its network of branches, which could provide room for cost reduction. Cost-to-income ratio could edge higher towards 40% over the longer term," UOB KayHian said.

In Thailand, UOB reported growth in mortgages, which boosted loans to a 3.4% growth QoQ.

The bank indicated that they will put in the infrastructure and invest in technology in Indonesia. At the same time, the bank is focusing on rebuilding its franchise.

However, its net interest margin in Indonesia continued to be under pressure, with it falling 26bp QoQ to 4.08% due to competition from local banks.