UOB faces margin pressure in Q1 as fees ease

Wealth management fees may grow at around 3.3% YoY during the quarter, said CGSI.

United Overseas Bank (UOB) is expected to see its net interest margin (NIM) compress in Q1 2026 whilst loan-related fees may soften.

UOB’s NIM is likely to compress by 2 basis points (bp) compared to its January NIM of 1.82%, said CGS International (CGSI) analysts Tay Wee Kuang and Lim Siew Khee.

The two analysts noted that key benchmark rates such as the Singapore Overnight Rate Average (SORA) and the Hong Kong Interbank Offered Rate (HIBOR) have logged quarterly declines.

“As such, we see continued margin pressure from loan repricing, albeit partially mitigated by interest rate cuts by UOB on its flagship UOB One deposit account,” Tay and Lim wrote about the Singapore-headquartered bank.

Loan-related fees are also expected to soften during the quarter on a high-base effect. Credit card fees should also moderate compared to Q4 2025 due to seasonal factors.

Wealth management fees may grow around 3.3% year-on-year (YoY) and 8.4% quarter-on-quarter (QoQ), mimicking its wealth assets under management growth of 5.8% as of end-FY2025.

“Other non-interest income should be bolstered by higher markets trading income due to the seasonally weaker trading activity in 4Q25, although the Middle East conflict in Mar 26 could have dampened trading volumes YoY,” Tay and Lim said.

Costs could be “swing factors,” Tay and Lim noted.

“UOB previously guided for a gradual increase in operating expenses (opex) YoY in FY26F. Nevertheless, we believe UOB could limit opex to essential services amid macroeconomic uncertainties,” they said.

Credit costs are expected to be at 28bp for Q1 2026 in anticipation of a decline linked to macroeconomic variables, they added.