United Overseas Bank Ltd (SGX: U11), or UOB, recently reported impressive full-year results, showcasing a robust financial performance and optimism for ASEAN’s economic growth in 2024. Here are 7 key highlights from the bank’s latest achievements and strategic outlook:
- Record-High Core Net Profit: UOB’s core net profit soared to a new high, reaching S$6.1 billion for 2023, marking a 26% increase year-on-year (yoy). This growth was fueled by higher net interest income and robust fee income.
- Increased Dividend with Attractive Yield: In response to its strong performance, UOB increased its final dividend to S$0.85, bringing the total dividend for 2023 to S$1.70, up 26% from the previous year. This translates into an attractive yield of 5.8%.
- Improved Cost Efficiency and Asset Quality: The bank’s cost-to-income ratio improved to 41.5% for 2023, and its non-performing loans ratio dipped to 1.5% in Q4 2023, showcasing operational efficiency and resilient asset quality. Credit cost is expected to trend lower in 2024 while loan exposure in China remains manageable.
- Higher Fee Income from Increased Card Spending: Credit card fees hit a new high, rising 66% yoy, while wealth management fees grew 3.8%.
- Lower Net Interest Margin (NIM) with Flat Loan Growth: Despite higher net interest income, UOB’s NIM faced pressure, sliding quarter-on-quarter.
- Proactive Basel IV Preparation: With Basel IV’s implementation in July 2024, UOB expects a 150 basis points uplift to its CET1 ratio, targeting strategic maintenance of its capital base for organic growth and a steady dividend payout ratio.
- Strategic Focus Amid High-Interest Rates: Anticipating ASEAN’s economic growth, UOB plans to prioritize high-quality credits and lower-risk mortgages. This approach responds to the current high-interest rate environment, aiming to balance asset yield compression.
Is It Still Time for Investors to Buy In?
With UOB’s impressive performance, strategic expansions, and attractive dividend yield, the bank presents a compelling case for investors looking for growth and income. However, as always, investors should consider their own financial goals and market conditions before making investment decisions.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of the company mentioned.
