Before trading hours last Wednesday (03 November 2021), United Overseas Bank Limited (SGX:U11), or UOB for short, released its business updates for the third quarter of the financial year 2021 ended 30 September 2021.
As the Singapore bank has switched to reporting its full financial statements on a half-yearly basis, for the current quarter under review, the bank only reported some of the key statistics.
In this post, I’ll be highlighting some of them (which I personally look at whenever I review the quarterly performance of banks) – where you’ll find some of the key financial performance figures, as well as key financial ratios reported by the bank, along with my thoughts about the bank’s latest performance and outlook ahead:
Key Financial Performance Figures (Q3 FY2020 vs. Q3 FY2021, and 9M FY2020 vs. 9M FY2021)
In this section, you’ll find a comparison of the bank’s key financial performance figures both on a quarter-on-quarter (q-o-q) basis, as well as on a year-on-year (y-o-y) basis:
Q3 FY2020 vs. Q3 FY2021:
| Q3 FY2020 | Q3 FY2021 | % Variance | |
| – Net Interest Income (S$’mil) | $1,474m | $1,604m | +8.8% |
| – Net Fee & Commissions Income (S$’mil) | $514m | $589m | +14.6% |
| – Other Non-Interest Income (S$’mil) | $272m | $259m | -4.8% |
| Total Income (S$’mil) | $2,261m | $2,453m | +8.5% |
| Total Expenses (S$’mil) | $1,009m | $1,072m | +6.2% |
| Net Profit (S$’mil) | $668m | $1,046m | +56.6% |
On a q-o-q basis, its a pretty decent set of results reported by the Singapore bank – the 8.5% growth in its total income can be attributed to improvements recorded in its net interest income (due to a healthy loan growth, along with a 2-basis point increase in its net interest margin to 1.55%, from 1.53% in Q3 FY2020), net fee and commission income (as a result of strong growths in its loan-related, wealth and fund management, as well as in its credit card fees), offset by a slight decline in its other non-interest income (mainly from lower investment gains.)
Coupled with growth in its total income, along with a 65.8% q-o-q decline in its allowances for credit and other losses (from S$477m in Q3 FY2020 to just $163m in Q3 FY2021), the bank’s net profit surged by 56.6% to $1,046m.
9M FY2020 vs. 9M FY2021:
| 9M FY2020 | 9M FY2021 | % Variance | |
| – Net Interest Income (S$’mil) | $4,524m | $4,711m | +4.1% |
| – Net Fee & Commissions Income (S$’mil) | $1,475m | $1,823m | +23.6% |
| – Other Non-Interest Income (S$’mil) | $929m | $822m | -11.5% |
| Total Income (S$’mil) | $6,927m | $7,356m | +6.2% |
| Total Expenses (S$’mil) | $3,135m | $3,218m | +2.6% |
| Net Profit (S$’mil) | $2,226m | $3,057m | +37.3% |
Looking at the bank’s performance for the first 9 months of the current financial year, and compare it against the same time period last year, it was largely an improved set of results – the only slight negative was its 11.5% y-o-y decline in its other non-interest income.
Key Financial Ratios (Q2 FY2021 vs. Q3 FY2021)
Moving on, let us have a look at some of the key financial ratios recorded by the bank for the quarter under review (i.e. Q3 FY2021 ended 30 September 2021), where I’ll be comparing them against ratios recorded for the previous quarter 3 months ago (i.e. Q2 FY2021 ended 30 June 2021):
| Q2 FY2021 | Q3 FY2021 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 1.56% | 1.55% | -0.01pp |
| Return on Assets (%) | 0.92% | 0.93% | +0.01pp |
| Return on Equity (%) | 10.1% | 10.4% | +0.03pp |
| Loan/Deposit Ratio (%) | 86.9% | 85.1% | -1.8pp |
| Non-Performing Loans Ratio (%) | 1.5% | 1.5% | – |
My Observations: Personally, I felt that the key financial ratios reported by the Singapore bank compared against the previous quarter have more or less remained stable – which is good to note.
Closing Thoughts
Personally, I felt that the latest set of q-o-q, as well as y-o-y financial results reported by the bank was a resilient one – with improvements recorded in its net interest income, net fee and commissions income, along with a decline in its credit allowances. In terms of its key financial ratios, they have remained stable compared to the previous quarter.
Looking at the quarters ahead, I am of the opinion that as countries in ASEAN region (where UOB’s main focus is) slowly open up after reaching their vaccination targets, and business activities should once again resume, UOB’s performances should record further improvements.
Finally, in case you’re wondering, there are no dividend payouts declared by the bank for the current quarter under review, as the management declares one on a half-yearly basis (once when they report its second quarter results, and once when they report its fourth quarter results.)
With that, I have come to the end of my review of UOB’s latest business updates. As usual, do take note that everything you’ve just read in this post is purely for educational purposes only, and they do not represent any buy or sell calls for the bank’s shares. You should always do your own due diligence before making any investment decisions.
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Disclaimer: At the time of writing, I am a shareholder of United Overseas Bank Limited.
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