πππUOB $UOB(U11.SI)$ is the 3rd largest bank in Singapore as well as in South East Asia with SGD 54.64 billion in market capitalisation. Among the 3 local banks, UOB has positioned itself as a dominant force in the ASEAN region with its SGD 4.9 billion acquisition of Citibank 's consumer banking business in Thailand, Malaysia, Indonesia and Vietnam in 2022.
With the acquisition of Citibank' s consumer banking business in these 4 countries, UOB expects contribution from these 4 ASEAN countries to increase to 30% of the total income by 2026 compared to 1H 24 which was 25%. At the same time UOB intends to maintain at least 50% of total income in Singapore.
UOB expects contribution from non interest income to increase to 37% of total income compared to 32% achieved in 1H 24. This will be driven by growth from wealth management, trade finance and customer flow for treasury products.
For 1H 24, UOB reported core net profit of SGD 3.1 billion, supported by double digit fee income growth and lower credit allowances. Including the one off Citigroup integration expenses, net profit was SGD 2.9 billion.
Core net profit for Q2 24 remained steady at around SGD 1.5 billion compared with a year ago. Net interest income for Q2 24 eased 1% year on year from lower net interest margin but grew 2% from previous year quarter due to broad based loan growth and improved margins. Net fee income for Q2 24 grew 18% year on year to a near historical high of SGD 618 million, driven by a rebound in loan related and Wealth management fees and double digit growth in credit card fees.
Asset quality remained resilient with non performing loan ratio stable at 1.5% and total credit costs at 24 basis points.
Group Retail's wealth management income for Q2 24 grew 40% year on year led by improved sales on structured notes, bonds and unit trusts. UOB continues to see positive net new money inflows, bringing total assets under management from affluent customers to SGD 182 billion, 10% higher than a year ago.
UOB's CET 1 ratio eased to 13.4% for the quarter due to 2023 final dividend payout. Liquidity remained ample with the average all currency liquidity coverage ratio at 149% and net stable funding ratio at 118%, both well above required liquidity ratio set by MAS.
The Board of Directors declared an interim dividend of 88 cents per share, representing a payout of 51%. That is a Dividend yield of 5 3%.
Performance wise, UOB reached an all time high on 23 September 2024 at SGD 33.38 but has since pullbacked. However UOB is up 13% year to date and in 2023, UOB has risen 17%.
Financial analysts are bullish on UOB with a Buy rating, Target price ranging from SGD 32.00 to SGD 35.62.
UOB has the most comprehensive network of more than 500 branches within ASEAN. ASEAN is an economic powerhouse with a combined population of 672 million people. It is now the world's 5th largest economy.
I am bullish on UOB as it has a laser focus on ASEAN which has grown in stature as a manufacturing hub and has a fast growing population. I also like UOB's nice juicy dividends which is much better than putting money in my savings accounts while waiting for capital growth.
Go Long Go Strong Go UOB! ππππππππππ°π°π°πΈπ¬πΈπ¬πΈπ¬
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