UOB’s Q2 profit up 11% to $1.11 billion amid higher interest rates

SINGAPORE — UOB on Friday (July 29th) reported solid second-quarter profit growth amid rising interest rates that boosted its margins.

Net profit for Singapore’s third-largest local bank was $1.11 billion for the three months to June, up 11% from a year ago and ahead of $1.095 billion dollars predicted by analysts in a Bloomberg poll.

The latest earnings reversed a 10% decline in the first quarter that was due to lower commission income.

UOB declared an interim dividend of 60 cents per common share, representing a payout ratio of approximately 50%.

Chief executive Wee Ee Cheong said the bank posted stable profits, supported by higher-than-expected net interest income thanks to rising interest rates and active balance sheet management.

“This rising interest rate environment should further increase our margins for the year,” he said.

Net interest income rose 18% year-on-year to $1.9 billion amid the bank’s strong margin improvement and healthy loan growth, UOB said.

Net interest margin – a key indicator of banks’ profitability – rose 11 basis points to 1.67% and loans rose 8%.

However, net fee and commission income fell 3% to $567 million as record credit card and lending fees were offset by lower wealth and fund management fees due to weaker market sentiment.

Other non-interest income increased by 6% due to higher customer treasury income.

Total provisions fell to $137 million, largely due to lower general provisions set aside for bad debts, the UOB said.

The bank’s net profit rose 23% from the $906 million in the first quarter. Its profits for the first half of the year were flat at $2.02 billion compared to the same period last year.

UOB results kick off earnings season for local lenders. OCBC will release its earnings on August 3 and DBS on August 4.

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