2 November 2015 APAC Equities
Rating
Company
Date
Hold
United Overseas Bank Alert
30 October 2015
Asia
Results
Singapore Banking / Finance
Banks
Reuters UOBH.SI
Bloomberg UOB SP
ADR Ticker UOVEY
ISIN US9112713022
Exchange Ticker SES UOBH
3Q15: Better, helped by non-core; Key mgt briefing takeaways Headline higher than DBe on higher non-core gains UOB reported a better stated net profit of SGD858m (+13% QoQ/-1% YoY), higher than DBe (+7%), due to investment disposal gain of SGD148m. Normalizing disposal gain, net profit came in 4% below DBe. To commemorate 71$oU VJ CPPKXGTUCT[ KV FGENCTGF C QPG-off dividend of 20 cents/share, moving FY15e yield to 5% (from 4%). Key highlights (QoQ): Stable net interest income (+2% QoQ, +7% YoY): Margin steady QoQ at 1.77% with loan spread (+2bp), offset by interbank/securities spread (-2bp) Improved non-interest income (+19% QoQ, +4% YoY): Fees (+4%) s loan related (+23%), WM (-4%), trade (-3%). Trading income (+42%) and disposal of investment securities (+252%) Bad debt provisions driven by GP: NPL % edged up marginally to 1.3% (2Q: 1.2%), with stable credit costs at ann. 32bp (2Q: 31bp) Loans and deposits: Loans were flat QoQ s constant currency (+6% YoY). Industry wise s building (+7%), housing (-1%), P&P (-1%), trade (+7%), FIs (-11%), manufacturing (-9%). By market s SG (-1% QoQ), MY (-7%), TH (+1%), ID (flat), GC (+5%). Deposits grew 1% QoQ, mostly in SGD. Other ratios: CTI ratio at 43% (2Q: 46%), LDR: 83%, Fully-loaded CET1: 12% (2Q: 12.5), Leverage ratio: 7%, LCR: All currency: 134%, SGD: 186% Key takeaways from analyst briefing Commodity exposure: represented <8% of group loan, while O&G sector related <5%, mainly focused on traders and downstream sectors. It remains comfortable with asset quality.
NIM - The bank hopes to hold margin steady as upward re-pricing of loan will be challenging and not significant in near-term. Regional NIMs: many markets have hold up in 3Q (MY, ID, HK, TH) while CN came down.
Loan growth & asset quality s Overall, loan growth is still a challenge (likely achieving 5% in constant currencies, lower if factoring currency effect). But recently, internal loan approval process has increased and hope can help loan momentum in later quarters. For regional markets, there is still loan demand in ID, but remains selective while the worst should be over for asset quality. MY loan momentum expects to slow down as economy continues to be soft while it remains comfortable with asset quality.
Price at 29 Oct 2015 (SGD)
20.04
Price target - 12mth (SGD) 52-week range (SGD)
24.00 25.05 - 18.28
Straits Times Index
3,002
Franco Lam Research Analyst (+852) 2203 6226
[email protected] Stock data Market cap (SGDm)
33,147
Market cap (USDm)
23,602
Shares outstanding (m)
1,622.4
Major shareholders
Wee Family (21%)
Free float (%)
79
Avg daily value traded (USDm)
54.2
Source: Deutsche Bank
Key data FYE 12/31 Provisioning (SGDm) Pre-prov profit (SGDm) EPS (SGD) PER (x) Yield (net) (%)
2014A 636.0
2015E 618.8
2016E 703.7
4,313
4,385
4,690
2.02
1.96
2.02
11.0
10.2
9.9
3.4
3.8
3.9
Source: Deutsche Bank
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Deutsche Bank AG/Hong Kong
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