United Overseas Bank Limited (SGX:U11), or UOB for short, was the second Singapore-listed bank (the first being DBS on Monday, and you can check out my review on the bank’s latest results here) to release its financial results for the fourth quarter, as well as for the full-year ended 31 December 2021 before market hours yesterday morning (16 February 2022.)

Being a shareholder of the Singapore-listed bank as well (just like DBS, I have invested in UOB since March 2020), I have studied through its latest results and in today’s post, you’ll find my review about its financial performance and ratios, along with its dividend payout declared for the period under review.

Let’s begin…

Financial Performance (2H FY2020 vs. 2H FY2021, Q4 FY2020 vs. Q4 FY2021, and FY2020 vs. FY2021)

In this section on UOB’s financial performance, I will be looking at it from a few angles – first on a half-yearly basis (2H FY2020 vs. 2H FY2021), quarter-on-quarter (q-o-q) basis (i.e. Q4 FY2020 vs. Q4 FY2021), as well as on a year-on-year (y-o-y) basis (i.e. FY2020 vs. FY2021):

2H FY2020 vs. 2H FY2021:

2H FY20202H FY2021% Variance
– Net Interest
Income (S$’mil)
$2,986m$3,282m+9.9%
– Net Fee &
Commission Income
(S$’mil)
$1,037m$1,178m+13.6%
– Other Non-
Interest Income
(S$’mil)
$487m$427m-12.3%
Total Income
(S$’mil)
$4,509m$4,887m+8.4%
Total Expenses
(S$’mil)
$2,058m$2,167m+5.3%
Net Profit
(S$’mil)
$1,356m$2,063m+52.1%

The bank’s total income (which comprises of the sum of its net interest income, net fee and commission income, as well as its other-non-interest income) saw a 8.4% gain compared to the 2nd half of FY2020 due to improvements in its net interest income (which can be attributed by strong loan growth), and in its net fee and commission income (driven by strong growth in loan-related fees from increased trade and investment transactions, along with growth in credit card fees on the back of higher consumer spending), offset by a double-digit percentage decline in its other non-interest income (due to lower investment gains.)

Its net profit soared by 52.1% as a result of a 68.5% decline in its allowances for credit and other losses – from $872m in 2H FY2020 to just $275m in 2H FY2021.

Overall, the bank’s results for the 2nd half of FY2021 in my opinion is a much improved one compared to the same time period last year – mainly due to businesses resuming normal operations, and economies recovering for the current period under review as countries start to open up once again after reaching their vaccination targets.

Q4 FY2020 vs. Q4 FY2021:

Q4 FY2020Q4 FY2021% Variance
– Net Interest
Income (S$’mil)
$1,512m$1,677m+11.0%
– Net Fee &
Commission Income
(S$’mil)
$522m$589m+12.8%
– Other Non-
Interest Income
(S$’mil)
$214m$168m-21.5%
Total Income
(S$’mil)
$2,249m$2,434m+8.2%
Total Expenses
(S$’mil)
$1,049m$1,095m+4.4%
Net Profit
(S$’mil)
$688m$1,017m+47.8%

UOB’s results for the fourth quarter of FY2021, compared against the fourth quarter of FY2020, is very similar to that recorded in the second half of the year (as we have seen earlier) – where the 8.2% q-o-q growth in its total income can be attributed to double-digit percentage improvements in its net interest income (driven by strong loan growth of 10%) and net fee and commission income (driven by growth in loan-related fees and credit card fees), offset by a double-digit percentage decline in its other non-interest income (mainly from lower non-customer treasury income.)

Also, the 47.8% q-o-q jump in its net profit is largely attributed to a 71.6% drop in its allowance for credit and other losses – from $395m in Q4 FY2020 to just $112m in Q4 FY2021.

Just like its results for the second half of FY2021, in my opinion, its latest fourth quarter results as a desirable one as well (personal opinion as a shareholder of the Singapore bank.)

FY2020 vs. FY2021:

FY2020FY2021% Variance
– Net Interest
Income (S$’mil)
$6,035m$6,388m+5.8%
– Net Fee &
Commission Income
(S$’mil)
$1,997m$2,412m+20.8%
– Other Non-
Interest Income
(S$’mil)
$1,114m$990m-11.1%
Total Income
(S$’mil)
$9,176m$9,789m+6.7%
Total Expenses
(S$’mil)
$4,184m$4,313m+3.1%
Net Profit
(S$’mil)
$2,915m$4,075m+39.8%

On a full-year basis, the Singapore-listed bank’s results for the current financial year under review was overall a much better one compared to last year – with the exception of its other non-interest income (a component making up its total income), which fell by 11.1% due to lower non-customer trading income as there were larger gains from bond sales and unrealised gains on hedges last year amid the lower interest environment.

The bank’s 5.8% y-o-y improvement in its net interest income can be attributed to a healthy loan growth. Also, its net fee and commission income, at $2,412m for FY2021, was a record for the bank – which can be attributed to loan fees hitting a new high of $698m as trade and investment transactions picked up momentum, along with its wealth management fees growing to a record of $823m on the back of returning investor confidence.

Finally, a 57.7% decline in its allowance for credit and other losses (from $1,554m in FY2020 to $657m in FY2021) saw the bank’s net profit recording a huge 39.8% improvement to $4,075m (compared to $2,915m in FY2020.)

As a shareholder of the bank, you can say that I am pleased to see a set of results like this – particular where some of the statistics were new records.

Financial Ratios (Q3 FY2021 vs. Q4 FY2021, and FY2020 vs. FY2021)

Moving on, let us take a look at some of the key financial ratios reported by the bank – I will first be comparing the ratios reported for the quarter ended 31 December 2021 (i.e. Q4 FY2021) against that reported in the previous quarter ended 30 September 2021 (i.e. Q3 FY2021), followed by comparing the ratios reported for the current financial year (i.e. FY2021 ended 31 December 2021) against that reported a year ago (i.e. FY2020 ended 31 December 2020) to find out whether or not they have continued to remain resilient:

Q3 FY2021 vs. Q4 FY2021:

Q3 FY2021Q4 FY2021Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
1.55%1.56%+0.1pp
Return on
Assets (%)
0.93%0.91%-0.02pp
Return on
Equity (%)
10.4%10.2%-0.02pp
Non-Performing
Loans Ratio (%)
1.5%1.6%+0.01pp

My Observations: Personally, I felt that the bank’s financial ratios have continued to remain resilient – particularly, I note that that its net interest margin, compared to the previous quarter, have saw a slight improvement. And looking ahead, with the Federal Reserve announcing a hike in interest rates in its meeting next month (i.e. March 2022), the bank’s net interest margin should start to see some improvements in the coming quarters ahead.

If there’s a slight negative as far as the bank’s key financial ratios for the current quarter compared to the previous one is concerned, it would be its non-performing ratios as it edged up slightly, due to a higher non-performing assets formation in the current quarter under review from several secured corporate accounts though no concentration risk is observed.

FY2020 vs. FY2021:

FY2020FY2021Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
1.57%1.56%-0.01pp
Return on
Assets (%)
0.69%0.92%+0.23pp
Return on
Equity (%)
7.1%10.2%+3.1pp
Non-Performing
Loans Ratio (%)
1.6%1.6%+0.0pp

My Observations: On a y-o-y basis, its key financial ratios have starkly improved – particularly, its return on equity saw a rather good growth where it went up by 2.8pp to 10.2%.

Another thing to note is that, the bank’s net interest margin have also remained stable compared to last year – and just as I’ve mentioned in the paragraph above, this statistic is poised to improve in the coming financial year ahead as the Federal Reserve hikes the interest rates in the coming months ahead (from my understanding at the time of writing, they have planned for 3 hikes in 2022, and another 3 hikes in 2023 – should the Federal Reserve were to increase the number of hike the interest rates, the bank’s net interest margin should see even better improvements.)

Dividend Payouts to Shareholders

The management of UOB declares a dividend payout to its shareholders on a half-yearly basis – once when it releases its results for the first half of the financial year (known as interim dividend), and once when it releases its results for the second half of the financial year (known as final dividend.)

For the second half of the financial year 2021 (period between 01 July and 31 December 2021), the bank’s management have declared a payout of 60.00 cents/share – a 53.8% increase compared to its payout of 39.0 cents/share for the same time period last year (i.e. second half of the financial year 2020 between 01 July and 31 December 2020.) That said, do take note that the bank’s dividend payout for the financial year 2020 had to be capped to 60.0% of what was paid out in FY2019 as advised by the Monetary Authority of Singapore (MAS) for prudence in light of headwinds posed by the Covid-19 pandemic.

Together with the bank’s dividend payout of 60.0 cents/share for the first half of the current financial year under review, its dividend payout for the full year amounts to 120.00 cents, a 53.8% jump from 78.0 cents/share declared the previous financial year (again, do take note that the bank had to cap its dividend payout for the year to 60.0% of what was paid out in FY2019, following the advise issued by the MAS.) However, if you compare its dividend payout against that in FY2019 (at 130.0 cents/share), it’s still a 7.7% drop – this was due to a special dividend payout of 20.0 cents/share given out; however, if you strip out the special dividends for FY2019, then comparatively, the bank’s dividend payout would have grown by 9.1% (from 110.0 cents/share in FY2019 to 120.0 cents/share in FY2021.)

With regard to its dividend payout this time round, only the cash option was offered – unlike in FY2020 where shareholders have the choice to choose between receiving their dividend payout in cash or in shares of the bank.

Finally, if you are a shareholder of the Singapore bank, do take note of the following dates regarding the payout of its dividends declared this time round:

Ex-Date: 28 April 2022
Record Date: 29 April 2022
Payout Date: 13 May 2022

Closing Thoughts

As a shareholder of the Singapore-listed bank, I am encouraged with its latest set of results – particular with its record breaking net fee and commission income for the financial year – which can be attributed to its loan fees and wealth management fees also hitting new records.

Another thing to note is that the decline as far as its net interest margin is concerned have stabilised – and looking ahead, with the Federal Reserve on the verge of announcing an increase in its interest rates in its next meeting (in March 2022), and also another 3 more hikes in the coming months of 2022 ahead (that’s my understanding at the time of writing of this post), the bank is poised to see an improvement in its net interest margin – and in turn, an increase in its net interest income in the coming quarters ahead.

Apart from any unforeseen circumstances, I am confident of the bank’s ability to continue to record growth in the coming financial year ahead.

With that, I have come to the end of my review of UOB’s latest set of results. Finally, do note that everything you’ve just read about above is purely for educational purposes only, and they do not represent any buy or sell calls for the bank’s shares. You’re strongly advised to do your own due diligence before you make 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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