United Overseas Bank (SGX:U1), or UOB for short, is the first of the trio of Singapore banks to release its business update for the third quarter of the financial year 2022 ended 30 September 2022 early this morning (28 October 2022) – the other 2 banks will be releasing their results next week, with DBS on Thursday morning (03 November), and OCBC on Friday morning (04 November.)

As the Singapore bank have shifted to half yearly reporting of its full financial results, for the current quarter under review, it only provided a summary of the key financial figures, along with key financial statistics, both of which I will be looking at in this post, along with my thoughts about them (as a shareholder of the bank):

Key Financial Performances (Q3 FY2021 vs. Q3 FY2022, and 9M FY2021 vs. 9M FY2022)

In this section, you’ll find UOB’s key financial performances both on a quarter-on-quarter (i.e. Q3 FY2021 vs. Q3 FY2022), and also on a year-on-year (i.e. 9M FY2021 vs. 9M FY2022) basis:

Q3 FY2021 vs. Q3 FY2022:

Q3 FY2021Q3 FY2022% Variance
– Net Interest
Income (S$’mil)
$1,604m$2,234m+39.3%
– Net Fee & Commission
Income (S$’mil)
$576m$519m-9.9%
– Other Non-Interest
Income (S$’mil)
$272m$431m+58.5%
Total Income
(S$’mil)
$2,453m$3,184m+29.8%
Total Expenses
(S$’mil)
$1,072m$1,357m+26.6%
Net Profit
(S$’mil)
$1,046m$1,403m+34.1%

My Observations: I’m sure you’ll agree with me that the latest quarter-on-quarter (q-o-q) results is a very solid one for the bank – particularly, its net profit, at $1,403m for Q3 FY2022, was a record high.

The huge improvements was largely driven by big jumps in its net interest income (by 39.3%, due to a 40bps expansion in its net interest margin from 1.55% in Q3 FY2021 to 1.95% in Q3 FY2022, coupled with a 6% increase in loan growth), as well as in its other non-interest income (by an even bigger percentage at 58.5%, as customer demand for hedging activities accelerated.)

The only slight negative was a 9.9% decline in its net fee and commission income, largely due to lower wealth and fund management fees.

9M FY2021 vs. 9M FY2022:

9M FY20219M FY2022% Variance
– Net Interest
Income (S$’mil)
$4,711m$5,783m+22.8%
– Net Fee & Commission
Income (S$’mil)
$1,776m$1,658m-6.6%
– Other Non-Interest
Income (S$’mil)
$868m$804m-7.4%
Total Income
(S$’mil)
$7,356m$8,245m+12.1%
Total Expenses
(S$’mil)
$3,218m$3,598m+11.8%
Net Profit
(S$’mil)
$3,057m$3,421m+11.9%

My Observations: On a year-on-year (y-o-y) basis, UOB’s 12.1% increase in its total income can be attributed to a 22.8% jump in its net interest income (due to a 18bp rise in net interest margin from 1.56% in 9M FY2021 to 1.74% in 9M FY2022, along with a loan growth of 6%), offset by a 6.6% drop in its net fee & commission income (as a result of muted wealth and fund management fees as investors remained cautious amid market volatility), and a 7.4% decline in other non-interest income (due to impact on hedges and lower valuations on investments in a volatile market.)

With its total expenses increasing in tandem with growth in its total income, and a 23.3% decline in total allowance (from S$546m in 9M FY2021 to S$419m in 9M FY2022), its net profit went up by 11.9% to S$3,421m – pretty decent in my opinion.

Key Financial Ratios (Q2 FY2022 vs. Q3 FY2022)

Whenever I study a bank’s key financial ratios – my focus is always on these four: (i) Net Interest Margin, (ii) Return on Assets, (iii) Return on Equity, as well as its (iv) Non-Performing Loans Ratio.

Also, my tendency is to compare stats reported in the current quarter under review against that reported 3 months ago, to find out whether they have continued to remain resilient.

Remember in the previous quarter (i.e. Q2 FY2022 ended 30 June 2022), its non-performing loans saw a 0.1 percentage point (pp) increase to 1.7% (from 1.6% in Q1 FY2022 ended 31 March 2022) – so has this particular ratio continued to climb this quarter? Let us find out in the table below, where you’ll find a comparison of the key financial ratios recorded for the current quarter under review (i.e. Q3 FY2022 ended 30 September 2022) against that reported in the previous quarter 3 months ago (i.e. Q2 FY2022 ended 30 June 2022):

Q2 FY2022Q3 FY2022Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
1.67%1.95%+0.28pp
Return on
Assets (%)
0.92%1.13%+0.21pp
Return on
Equity (%)
11.0%14.0%+3.0pp
Non-Performing
Loans Ratio (%)
1.7%1.5%-0.2pp

My Observations: Compared to the previous quarter, its key financial ratios was a much improved one.

2 ratios caught my attention – the 0.28pp rise in its net interest margin (as a result of Fed’s interest rate hikes this year), along with its non-performing loans ratio going back down to 1.5%.

Management’s Comments & Outlook

“UOB has achieved a strong quarter of record high net profit, buoyed by higher net interest income and customer-related treasury income. While uncertainties continue to cloud the global economy, we expect the ASEAN economies to show resilient and avoid a recession.

We have recently launched our brand refresh, where we laid out our sharpened purpose – to build the future of ASEAN. We want to be a truly regional bank that grows with our customers and helps them achieve their ambitions.

Across ASEAN, we are making meaningful progress in growing our franchise. Our award-winning digital platform, UOB TMRW, reached a significant milestone in August, achieving 1 million digitally-acquired customers. This platform will also be key in serving our incoming Citibank customers across the region.

Looking ahead, the global economic outlook remains challenging. As a long-term bank, we will stand by our customers to ride through this economic cycle with them. We will uphold our promise to do right by our customers and our stakeholders.”

Closing Thoughts

With the Fed announcing a series of interest rate hikes throughout the year (25bp hike in March 2022, 50bp hike in May 2022, and 75bp hike in June, July and September 2022), banks are key beneficiaries – and you can see how the increase in net interest margins have resulted in improvements in its net interest income (it has climb 39.3% on a q-o-q basis, and 22.8% on a y-o-y basis.)

This have contributed to the bank recording a new high in its net profit in Q3 FY2022 at $1,403m. Looking ahead, with the Fed poised to hike interest rates by another 75bp in November 2022, banks are set to further benefit from this in the coming quarters ahead, and in my personal opinion, UOB quarterly net profit is likely to hit new highs.

In terms of its financial ratios, it has also recorded an all-rounded improvement – with standouts being high jumps in its net interest margin (up by an impressive 0.28pp to 1.95%), and also its non-performing loans ratio coming back down to 1.5%.

As a shareholder of the Singapore-listed bank, I am happy with the bank’s latest ‘report card.’ With that, I have come to the end of my review of UOB’s latest third quarter business update. As always, do note that all the opinions within are solely my own for educational purposes only. They do not constitute any buy or sell calls for the bank’s shares. You are strongly advised to 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.