UOB Q4 Result

SINGAPORE, Feb 27 (Reuters) - United Overseas Bank (UOB) <UOBH.SI>, Singapore's second-largest lender, reported a bigger-than-expected 34 percent drop in fourth-quarter profit as writedowns for bad debts trebled and fees from capital markets fell.

The results, UOB's worst since the second quarter of 2003, reflect the growing risks for Singapore banks' earnings as weakening Asian economies threaten to hurt asset quality, slow loan growth and boost credit costs.

UOB, controlled by chairman Wee Cho Yaw and his family, is considered the leader in Singapore's loan market for small- and medium-sized businesses, which have been hit hardest by a global economic slowdown and a downturn in the property market. Singapore's biggest bank is DBS Group <DBSM.SI>

"That was a bit of shocker," said David Lum, an analyst at Daiwa Institute of Research, referring to the S$381 million in writedowns for bad debts. "Clearly impairments are based on an outlook that conditions will continue to deteriorate."

UOB Chief Executive Wee Ee Cheong, also the son of the chairman, said the bank is not immune from the impact of the global financial crisis and will be prudent in managing its business.

"UOB will inevitably be affected but will not be paralysed by uncertainties," said Wee. "The current capital level is able to withstand near-term potential shocks and portfolio deterioration."

The bank said it was confident on its capital in the next three to six months and comfortable with its current Tier 1 ratio of 10.9 percent, which compares to local rival DBS Group's 12.2 percent and Oversea-Chinese Banking Corp's (OCBC) <OCBC.SI> 14.9 percent.

Net profit for October-December fell to S$332 million ($216 million) from S$506 million a year ago. Analysts had estimated, on average, a net profit of S$468 million, according to six forecasts compiled by Reuters.

Its shares ended down 3.6 percent, underperforming a 1.4 percent fall in the broader Singapore index <.FTSTI>.

BAD DEBT

UOB wrote down S$381 million in the fourth quarter in bad debt, up from S$128 million a year earlier, mainly due to loans that turned sour and on losses on investment securities.

The market had begun to pare down their expectations after DBS, Southeast Asia's biggest bank, earlier this month reported a bigger-than-expected 40 percent drop in quarterly profit, its worst result in three years. [ID:nSIN431227]

Third-ranked OCBC last week posted a 30 percent drop in quarterly net profit. [ID:nSIN358018]

UOB said net lending grew 7.7 percent from a year earlier, slowing from an 18 percent expansion in the third quarter.

Net interest income rose 29 percent to S$957 million from a year earlier, helped by a jump in net interest margins to 2.45 percent in the fourth quarter as the global credit crisis jacked up borrowing costs. The margin was 2.21 percent in the third quarter and 1.94 percent a year ago.

Non-interest earnings, such as commissions and fees on investment products, fell 27 percent to S$391 million as capital markets tumbled.

UOB's shares have underperformed its Singapore rivals this year, falling around 23 percent, more than the 9.5 percent decline in the benchmark Straits Times Index.

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UOB

SINGAPORE, March 02 (Reuters) - Shares of United Overseas 
Bank <UOBH.SI>, Singapore's second-largest lender, fell six 
percent to a six-year low on Monday after brokers cut their price 
targets for the bank following last week's poor earnings result. 
    Credit Suisse downgraded its rating on the bank to "neutral" 
from its previous "outperform" and cut its target price to 
S$12.00 from S$14.75. 
    "The analyst briefing gave us the impression that UOB is 
taking a more bearish view among the three (Singapore) banks, 
recognising NPLs (non-performing loans) faster, providing 
conservatively and acting to avoid a dilution," Credit Suisse 
analysts said. 
    JP Morgan cut its price target to S$13.00 from S$15.00, 
largely citing UOB's lower book value due to mark-to-market 
losses on its portfolio of securities. The broker said it prefers 
DBS <DBSM.SI>, Southeast Asia's biggest bank, over UOB. 
    JP Morgan maintained its "neutral" rating for UOB in a report 
on Monday and forecast a 42 percent year-on-year decline in the 
bank's 2009 net profit. 
 UOB's fourth quarter net profit fell a larger-than-expected 
34 percent due to higher writedowns for bad debt and lower fees 
from capital markets [ID:nSIN241964]. 
    Deutsche Bank also slashed UOB's target price to S$11.30 from 
S$12.40 due to the bank's lower return-on-equity. 
    UOB shares fell about 6 percent to S$9.38, their lowest in 
almost six years, while DBS shares dropped 4.2 percent and 
Overseas-Chinese Banking Corp slipped 3.6 percent. 
    The benchmark Straits Times Index <.FTSTI> fell 2.7 percent. 

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UOB

UOB falls on poor results, rights fears

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SINGAPORE - Shares of United Overseas Bank (UOB), Singapore's second-largest lender, fell as much as 2.9 per cent on Friday on concerns the bank may make a rights offer following disappointing fourth quarter results.

UOB's October-December net profit fell a larger-than-expected 34 per cent to $332 million due to higher writedowns for bad debt and lower fees from capital markets.

The bank also cut its dividend to 40 cents from 45 cents a year ago.

A dealer attributed the selling to UOB's poor results, although he added the dividend was 'not too bad'.

JPMorgan, which maintained its 'neutral' rating on UOB, said the shares will remain under pressure due to concerns about a possible rights issue.

'Tier 1 ratio below peers may lead to renewed concerns on capital raising,' the US bank said in a report.

By 0751 GMT, UOB was down 2.9 per cent, underperforming the 1.5 per cent fall in the benchmark Straits Times Index.

UOB shares were up around 1.5 per cent before the midday break when UOB announced its results. -- REUTERS

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UOB Q4 Result

Update: UOB Q4 profit falls 34% as bad debt charges rise

* Worst quarterly results since Q2 2003
* Q4 bad debt charges almost trebled to $381m
* Shares down 1%, reversing earlier gains

SINGAPORE - United Overseas Bank (UOB), Singapore's second-ranked lender, reported a bigger-than-expected 34 per cent drop in fourth-quarter profit as writedowns for bad debts trebled and fees from capital markets fell.

The results, UOB's worst since the second quarter of 2003, reflect the growing risks for Singapore banks' earnings as weakening Asian economies threaten to hurt asset quality, slow loan growth and boost credit costs.

UOB, controlled by chairman Wee Cho Yaw and his family, is considered the leader in Singapore's loan market for small- and medium-sized businesses, which have been hit hardest by a global economic slowdown and a downturn in the property market.

'That was a bit of shocker,' said David Lum, an analyst at Daiwa Institute of Research, referring to the $381 million in writedowns for bad debts. 'Clearly impairments are based on outlook that conditions will continue to deteriorate.'

Related articles: Click here for UOB's news release Click here for Group financial report

UOB chief executive Wee Ee Cheong, the son of the chairman, said the bank is not immune from the impact of the global financial crisis and will be prudent in managing its business.

Net profit for October-December fell to $332 million (US$216 million) from $506 million a year ago. Analysts had estimated, on average, a net profit of $468 million, according to six forecasts compiled by Reuters.

UOB wrote down $381 million in the fourth quarter in bad debt, up from $128 million a year earlier, mainly due to loans that turned sour and on losses on investment securities.

The market had begun to pare down their expectations after DBS Group, Southeast Asia's biggest bank, earlier this month reported a bigger-than-expected 40 per cent drop in quarterly profit, its worst result in three years.

Third-ranked Oversea-Chinese Banking Corp (OCBC) last week posted a 30 per cent drop in quarterly net profit.

UOB said net lending grew 7.7 per cent from a year earlier, slowing from an 18 per cent expansion in the third quarter.

Net interest income rose 29 per cent to $957 million from a year earlier, helped by a jump in net interest margins to 2.45 per cent in the fourth quarter as the global credit crisis jacked up borrowing costs. The margin was 2.21 per cent in the third quarter and 1.94 per cent a year ago.

Non-interest earnings, such as commissions and fees on investment products, fell 27 per cent to $391 million as capital markets tumbled.

UOB shares fell 1 per cent to US$10.26 in afternoon trade after the results, erasing gains of 1.5 per cent at the midday break.

The shares have underperformed its Singapore rivals this year, falling around 20 per cent, more than the 8 per cent decline in the benchmark Straits Times Index. -- REUTERS

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