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SINGAPORE: Singapore’s United Overseas Bank (UOB) expected a stronger outlook for next year including better loan and fees growth, as it reported on Thursday a weaker-than-expected 1% drop in third-quarter net profit from a year earlier.
UOB, Singapore’s third-largest bank by assets, projected mid single-digit loan growth and double-digit fee growth for its 2024 outlook, versus low-to-mid single-digit loan growth and high single-digit fees growth for this year’s outlook.
The bank, Southeast Asia’s third-biggest, also projected margins to remain at current levels for 2024, but foresaw credit cost at around 25 to 30 basis points for next year versus just around 25 basis points for rest of 2023.
“The macroeconomic environment could remain bumpy,” said Wee Ee Cheong, UOB’s deputy chairman and CEO. “However, we expect the ASEAN region to stay resilient. Consumer sentiments remain strong and rising investment flows into the region will bolster growth.”
UOB said July-September net profit dropped to S$1.38 billion ($1 billion) from S$1.40 billion a year earlier, mainly on the back of higher allowances for credit and other losses, as well as Citigroup integration costs.
The profit was lower than the mean estimate of S$1.46 billion from four analysts polled by LSEG.
Last year, UOB acquired Citigroup’s consumer business in four Southeast Asian markets for about S$5 billion, its biggest deal in two decades. When completed, the move will double its retail customer base in these markets.
“Our Citigroup integration is on track,” Wee said. “Integration for Indonesia, Thailand and Vietnam is progressing as planned after we successfully migrated all Citigroup customers in Malaysia to our platform.”
UOB reported a net interest margin, a key gauge of profitability, of 2.09% for the third quarter, up from 1.95% in the same period a year earlier.
Singapore banks have benefited from strong inflow of wealth drawn by the city-state’s relative political stability, low taxes, and policies favourable for setting up funds.
Nevertheless, UOB’s Wee said global economy remains uncertain and recent geopolitical tensions have added to market volatilities. – Reuters
