UOB, OCBC report strong Q2 profit on higher lending income and fees

SINGAPORE — The first two of Singapore’s Big Three banks to release their quarterly results have turned in solid report cards for the second quarter, with earnings boosted by their lending businesses as well as fees and other income.

United Overseas Bank (UOB) reported on Friday (July 28) that for the three months ended June 30, net profit rose 5.5 per cent from the corresponding period a year earlier to S$845 million. Net interest income increased 12 per cent to S$1.36 billion, driven by gross loan growth of 7.3 per cent and an improvement in the net interest margin (NIM) of seven basis points to 1.75 per cent.

Non-interest income increased 1.8 per cent to S$828 million. Fee and commission income grew 9 per cent to S$517 million on higher credit card, fund and wealth management fees. Other non-interest income declined 8.3 per cent, mainly due to lower net trading income.

UOB Deputy Chairman and Chief Executive Wee Ee Cheong said: “Amid the moderate environment, we have achieved a healthy performance with broad-based growth in revenue streams. Our asset quality was stable and core capitalisation remained high, reflecting our discipline in keeping a strong balance sheet through economic cycles.”

“Asia continues to hold much promise and UOB’s presence and expertise enable us to connect our customers with the opportunities across the region arising from burgeoning consumer affluence and growing intra-regional trade and investment. The recent signing of two Memoranda of Understanding in China are further examples of how we facilitate cross-border activities between China and Southeast Asia,” he added.

The second-quarter result of UOB, the smallest of the three listed banks, came a day after larger rival Oversea-Chinese Banking Corp (OCBC) reported net profit after tax of S$1.08 billion, an increase of 22 per cent from the corresponding period a year ago.

OCBC’s net interest income rose 7 per cent to S$1.35 billion from the year-ago period, largely driven by strong lending growth across the group’s corporate and consumer businesses. Customer loans growth was broad-based and rose 11 per cent. However, NIM dipped 3 basis points to 1.65 per cent from a year ago, mainly from a fall in loan yields.

Non-interest income rose 34 per cent to S$1.05 billion from the year-ago period, boosted by strong gains in fees and commissions from trade-related activities, wealth and fund management, as well as its credit card and brokerage businesses.

In particular, wealth management fee income surged 45 per cent, helped by the inclusion of the former wealth and investment management business of Barclays Bank in Singapore and Hong Kong that OCBC acquired in November last year. The Barclays deal helped OCBC’s private banking unit, Bank of Singapore, climb four places to rank seventh among Asia’s largest private banks in terms of assets under management last year, according to data compiled by Asian Private Banker, Bloomberg reported.

Profit from life assurance more than doubled to S$240 million from S$108 million in the preceding year, driven by higher operating profit and positive performance from Great Eastern Holdings’ investment portfolio as a result of narrowing of credit spreads and gains from favourable interest rate movements.

DBS, the largest of the three banks, is expected to report its second-quarter results next Friday.