UOB's full-year profit down 3.5% to $3.1b

Blame the lower gains from the sale of investment securities.

UOB Group, one of Singapore's banking giants, reported a 3.5% lower net profit for 2016 to $3.1b, a slightly lower amount compared to $3.21b in 2015.

This is despite the stable income at $8.06b. This is, however, was badgered by the 1.6% decline in non-interest income to $3.07b. The group's trading investment income also fell, recording an 8.1% decline to $877m due to lower gains from the sale of investment securities. This is partially offset by higher trading income. On the opposite end, fee and commission income increased 2.5% to $1.93b, driven by higher credit card and fund management fees.

Meanwhile, total expenses rose 2.8% to $3.70b from a year ago, largely from higher revenue and IT-related expenses.

"The Group was disciplined in managing total headcount and it continues to invest in technology and infrastructure to sharpen its capabilities. The expense-to-income ratio for the year was 45.9%," the group said in a statement.

UOB also noted that its total credit costs on loans were maintained at 32 basis points for the year. Specific allowance on loans increased $577m to $969m, primarily from NPL in oil and gas and shipping industries.

"Total allowance decreased 11.6% to S$594 million, due to the lower specific allowance on other assets and a release in general allowance. The Group’s general allowance remained strong at $2.7b at the end of the year. The ratio of general allowance to gross loans stood at 1.2%," the bank said.

For their 4Q16 performance, here's what UOB has to say:

The Group reported net earnings of S$739 million in 4Q16, 6.2% lower than 4Q15.

Net interest income remained stable at S$1.28 billion as the strong loan growth was offset by a 10 basis point decrease in net interest margin to 1.69%.

Non-interest income decreased 6.3% to S$753 million in 4Q16, driven by lower trading and investment income. However, fee and commission income grew 10.6% to S$531 million, contributed by higher credit card and wealth management fees.

Total expenses for 4Q16 were S$957 million, largely flat compared with a year ago.

Specific allowance on loans increased S$313 million to S$428 million due to NPL in the oil and gas and shipping industries. Total allowance decreased 31.4% to S$131 million in 4Q16, due to lower specific allowance on other assets and a release in general allowance.