United Overseas Bank (SGX:U11), or UOB for short, is one of the leading banks in Asia with a global network of around 500 offices in 19 countries and territories in Asia Pacific, Europe, and North America.
The Singapore-listed bank is the first to release its results for the first half of the financial year ended 30 June 2022 (i.e. 1H FY2022) early this morning (29 July) – with OCBC releasing its results next Wednesday (03 August) morning, and DBS releasing its results next Thursday (04 August) morning.
In this post, you’ll find my review of the bank’s key financial results and ratios, as well as its dividend payout declared for the period under review.
Let’s get started:
Key Financial Results (1H FY2021 vs. 1H FY2022, and Q2 FY2021 vs. Q2 FY2022)
In this section, you’ll find a review of the Singapore bank’s results both on a year-on-year (y-o-y) basis (i.e. 1H FY2021 vs. 1H FY2022), as well as on a quarter-on-quarter (q-o-q) basis:
1H FY2021 vs. 1H FY2022:
| 1H FY2021 | 1H FY2022 | Variance (%) | |
| – Net Interest Income (S$’mil) | $3,107m | $3,549m | +14.2% |
| – Net Fee & Commission Income (S$’mil) | $1,200m | $1,139m | -5.1% |
| – Other Non-Interest Income (S$’mil) | $596m | $374m | -37.2% |
| Total Income (S$’mil) | $4,903m | $5,061m | +3.2% |
| Total Expenses (S$’mil) | $2,146m | $2,241m | +4.4% |
| Net Profit Attributable to Shareholders (S$’mil) | $2,011m | $2,018m | +0.3% |
UOB’s results for the first half of the current financial year, compared to a year ago, was exactly what I forecasted (when I was asked about it by fellow retail investors) – where improvements in the net interest income was offset by declines in its net fee and commission income, as well as in its other non-interest income. I also opined that, on account of the economic headwinds faced by the bank in the period under review, if its net profit could equal to that recorded last year, it will be considered as good result – looking at the statistic above, it was just what I expected.
The increase in the bank’s net interest income can be attributed to a 7-basis point increase in net interest margin, along with a healthy loan growth of 8% (mainly from an increase in working capital loan and mortgages.)
Net fee and commission income fell by 5.1%, due to a decline in the bank’s wealth and fund management fees as investors were cautious amid macroeconomic uncertainties. This was offset by loan and trade-related income (which hit new highs, spurred by a pick-up in business demand for trade and investment opportunities), along with credit card fees (which were also at record levels, as consumer spending rose with borders reopening and travelling resumed.)
Finally, the 37.2% drop in its other non-interest income was due to the absence of large gains from bond sales a year ago, and from lower valuation on investments in a bearish market.
Q2 FY2021 vs. Q2 FY2022:
| Q2 FY2021 | Q2 FY2022 | Variance (%) | |
| – Net Interest Income (S$’mil) | $1,578m | $1,863m | +18.1% |
| – Net Fee & Commission Income (S$’mil) | $581m | $567m | -2.4% |
| – Other Non-Interest Income (S$’mil) | $257m | $273m | +6.2% |
| Total Income (S$’mil) | $2,417m | $2,702m | +11.8% |
| Total Expenses (S$’mil) | $1,057m | $1,184m | +12.0% |
| Net Profit Attributable to Shareholders (S$’mil) | $1,003m | $1,113m | +11.0% |
On a q-o-q basis, in my opinion, the bank’s results was a pretty decent one – with the double-digit percentage growth in its net interest income due to a 11 basis point increase in its net interest margin, along with loans growing at a healthy pace at 8%, along with a mid-single digit percentage gain in its other non-interest income due to higher customer-related treasury income; however, this was offset by a 2.4% dip in its net fee and commission income as new high for credit card and loan-related fees were more than offset by lower wealth and fund management fees.
Key Financial Ratios (Q1 FY2022 vs. Q2 FY2022)
Moving on, let us take a look at some of the key financial ratios reported by UOB for the current quarter under review (i.e. Q2 FY2022 ended 30 June 2022), where I will be comparing them against that reported in the previous quarter three months ago (i.e. Q1 FY2022 ended 31 March 2022) to find out how whether they have improved or weakened:
| Q1 FY2022 | Q2 FY2022 | Difference (in Percentage Points – pp) | |
| Net Interest Margin (%) | 1.58% | 1.63% | +0.05pp |
| Return on Assets (%) | 0.77% | 0.85% | +0.08pp |
| Return on Equity (%) | 8.8% | 9.9% | +1.1pp |
| Non-Performing Loans Ratio (%) | 1.6% | 1.7% | -0.1pp |
My Observations: Key financial ratios that I always focus on whenever I study a bank’s results were largely positive (which is encouraging to note) – with a slight negative being a -0.1pp dip in its non-performing loans ratio.
Dividend Payout to Shareholders (1H FY2021 vs. 1H FY2022)
The management of UOB declares a dividend payout on a half-yearly basis – once when it reports its results for the first half of the financial year (which is now), and once when it reports its results for the second half of the financial year (usually it’ll be between end-January to early-February.)
For the first half of FY2022, the management have declared a dividend payout of 60.0 cents/share – which is the same as its dividend payout declared a year ago (i.e. 1H FY2021.)
If you are a shareholder of the Singapore-listed bank, do take note of the following dates on its dividend payout:
Ex-Date: 08 August 2022
Record Date: 10 August 2022
Payout Date: 22 August 2022
Closing Thoughts
Personally, I felt the bank’s latest financial results (both on a y-o-y, as well as on a q-o-q basis) met my expectations – on a y-o-y basis, growth in its net interest income was offset by declines in its net fee and commission income, as well as in its other non-interest income. Its net profit was also able to match the amount recorded in the same time period last year (I also opined above that if the bank was able to record such results, it would be considered as a good one.) Another thing I like about the bank’s latest set of results was its record breaking loan and trade related income, as well as its credit card fees (on a y-o-y basis.)
Also, as far as the key financial ratios I have looked at are concerned, I was encouraged by the improvements made compared to the previous quarter 3 months ago. No doubt its non-performing loans ratio inched up slightly, but at this point in time, I am not concerned.
Finally, the bank continued to pay out an interim dividend payout of 60.0 cents/share, and this represents a payout ratio of 50.0% – this is the same as that paid out last year, and I’m satisfied with this.
With that, I have come to the end of my review of UOB’s results for the first half of the financial year 2022. Hope you’ve found the contents presented above useful, and do take note that all the opinions within are solely my own which I’m sharing for educational purposes only. They do not represent any buy or sell calls for the bank’s shares. You’re strongly encouraged to do your own due diligence before engaging in any investment decisions.
Related Documents
Disclaimer: At the time of writing, I am a shareholder of United Overseas Bank Limited.
Catch Me "Live" at the REITs Symposium 2024 - the Largest REIT Event in Singapore!
I am absolutely honoured to be invited to contribute to not just 1, but 2 segments in this year's REITs Symposium (held on Saturday, 11 May 2024 at Suntec Convention Centre Level 3, Summit 1 & 2 between 9am and 5pm), with the schedule as follows:
- From 2.00 to 2.30pm, I'll be at the Engagement Stage presenting "REITs 101: Winning in an Investing Marathon."
- Then, from 4.05 to 4.50pm, I'll join forces with REIT specialist Kenny Loh and Thomas Chua from Steady Compounding in a panel session on the Main Stage to delve into "Can You Retire Early and How?"
Take advantage of these special discount codes for exclusive savings:
- Use REITS24 for a 50% discount on individual tickets, now only $5 (Regular Price: $10)
- Use RBUDDY for a 60% discount on tickets for two, priced at just $8 (Regular Price: $20)
You can find out more about the event and secure your seat here.
Many thanks for your support and advance, and I hope to see you at the event! :)
Get Your Daily Dose of the Latest on US & SG-listed Companies (Updated Every Weekday)
Stay updated on the latest trends and developments for companies listed on the Singapore and US stock markets by visiting The Singaporean Investor's Substack page for daily updates. Check it out here...
Are You Worried about Not Having Enough Money for Retirement?
You're not alone. According to the OCBC Financial Wellness Index, only 62% of people in their 20s and 56% of people in their 30s are confident that they will have enough money to retire.
But there is still time to take action. One way to ensure that you have a comfortable retirement is to invest in real estate investment trusts (REITs).
In 'Building Your REIT-irement Portfolio' which I've authored, you will learn everything you need to know to build a successful REIT investment portfolio, including a list of 9 things to look at to determine whether a REIT is worthy of your investment, 1 simple method to help you maximise your returns from your REIT investment, 4 signs of 'red flags' to look out for and what you can do as a shareholder, and more!
You can find out more about the book, and grab your copy (ebook or physical book) here...
Comments (0)