UOB Group Q2 net profit rises 10% to $1.5b despite margin pressure

Net interest income eased 2% YoY in a lower interest rate environment.

UOB Group’s net profit rose 10% year-on-year (YoY) to $1.5b in the second quarter of the year (Q2).

The bank said net interest income eased 2% from the previous year due to lower interest rates pressuring margins, despite a 5% increase in loans and active balance sheet management.

Meanwhile, net fee income rose 5% to $665m, led by record wealth management fees, partially offset by weaker loan-related fees from capital market activities.

The group’s non-performing loan ratio stood at 1.6%, whilst credit costs for the quarter were 28 basis points.

For the first half (H1), net profit increased 3% from a year earlier.

Transaction banking accounted for close to half of total wholesale banking income in H1. Trade loans rose 33% YoY, whilst current and savings account balances increased 9%.

Across Malaysia, Indonesia, Thailand, and Vietnam, trade loans grew 14%, and CASA balances rose 9% from a year earlier. Cross-border income accounted for 28% of total wholesale banking income during the period.

Wealth management income for the first half also increased 16%, supported by growth in assets under management and a higher conversion of customer deposits into invested assets.

UOB Deputy Chairman and CEO Wee Ee Cheong said the bank sees opportunities to expand its wealth business and capture more cross-border trade and investment flows across ASEAN.

The group declared an interim dividend of 88 cents per ordinary share, representing a payout ratio of about 50%.

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