United Overseas Bank Limited (SGX:U11), or UOB for short, is the first of the trio of Singapore-listed banks to release its business update for the 3rd quarter, as well as for the first 9 months of FY2023 ended 30 September early this morning (26 October) – in case you’re wondering, DBS will be releasing its business update on 06 November (before market hours), while OCBC will be releasing its business update on 10 November (before market hours).

UOB should be one that’s familiar to all fellow Singaporeans, as the bank’s branches and ATM machines can be found all over the country. However, not many know that the bank also has business presences in other countries – currently, it has a global network of around 500 offices in 19 countries and territories in Asia Pacific, Europe, and North America. The bank is also rated as one of the world’s top banks – Aa1 by Moody’s Investors Service, and AA- by both S&P Global Ratings and Fitch Ratings.

In this post, you will find my review of the bank’s key financial figures (where I will be looking at the figures reported for the 3rd quarter, as well as for the first 9 months of the financial year), as well as some of its key financial ratios (where I will be comparing the figures reported for the 3rd quarter of FY2023 against that reported in the 2nd quarter of FY2023).

Let’s begin…

Key Financial Figures (Q3 FY2022 vs. Q3 FY2023, and 9M FY2022 vs. 9M FY2023)

In this section, I will first be reviewing UOB’s key financial figures reported in the 3rd quarter (i.e., Q3 FY2022 vs. Q3 FY2023), and then for the first 9 months of the financial year (i.e., 9M FY2022 vs. 9M FY2023):

Q3 FY2022 vs. Q3 FY2023:

Q3 FY2022Q3 FY2023% Variance
– Net Interest
Income (S$’mil)
$2,234m$2,429m+8.7%
– Net Fee & Commission
Income (S$’mil)
$519m$591m+13.9%
– Other Non-Interest
Income (S$’mil)
$431m$436m+1.2%
Total Income
(S$’mil)
$3,184m$3,457m+8.6%
Total Expenses
(S$’mil)
$1,357m$1,416m+4.3%
Net Profit
(S$’mil)
$1,403m$1,382m-1.5%

My Observations: On the whole, it was a positive set of results reported by the bank. However, compared to the growth recorded (for its total income and net profit) in the previous 2 quarters (where it recorded improvements of +49.4% and +66.8% respectively in Q1, and +31.1% and +27.2% respectively in Q2), the growth in its total income and net profit was the slowest (at +8.6% and -1.5% respectively.)

The 8.7% growth in its net interest income was led by a 14 basis point uplift in its net interest margin (from 1.95% in Q3 FY2022 to 2.09% in Q3 FY2023). Net fee and commission income was up by 13.9% (to $591m, which was near all-time high), largely due to loan-related, credit card (where it hit a new record), and wealth fees.

The 1.5% drop in the bank’s net profit was due to Citi integration cost – excluding it, its net profit would have been up by +5.4%.

9M FY2022 vs. 9M FY2023:

9M FY20229M FY2023% Variance
– Net Interest
Income (S$’mil)
$5,783m$7,275m+25.8%
– Net Fee & Commission
Income (S$’mil)
$1,658m$1,666m+0.5%
– Other Non-Interest
Income (S$’mil)
$804m$1,581m+96.6%
Total Income
(S$’mil)
$8,245m$10,522m+27.6%
Total Expenses
(S$’mil)
$3,598m$4,305m+19.6%
Net Profit
(S$’mil)
$3,421m$4,308m+25.9%

My Observations: Due to a stronger first and second quarter results, UOB’s results for the first 9 months of FY2023 was still able to hold up well – where its total income and net profit grew by 27.6% and 25.9% respectively compared to last year. For its net profit though, do note that this was inclusive of the integration cost of Citibank (amounting to S$255m) – excluding that, its net profit would have grown by 33.4%.

The growth in its total income can be attributed to a 25.8% jump in its net interest income (led by robust net interest margin, which expanded 38 basis points to 2.12% on high interest rates), as well as its non-interest income soaring by 96.6% (driven by an all-time high customer-related treasury income and good performance from trading and liquidity management activities.) Net fee and commission income inched up by 0.5%, as credit card fees rose 64% to a new high of S$257m on the back of an enlarged regional franchise, offset by cautious investor sentiments, leading to softer loan-related and wealth fees.

Key Financial Ratios (Q2 FY2023 vs. Q3 FY2023)

The table below is a comparison of the Singapore-listed bank’s key financial ratios reported for the current quarter under view (i.e., Q3 FY2023 ended 30 September 2023), compared against that reported in the previous quarter 3 months ago (i.e., Q2 FY2023 ended 30 June 2023).

Just like in my reviews for the bank in the previous quarters, I always look at these 3 financial ratios: (i) Net Interest Margin; (ii) Return on Equity; and (iii) Non-Performing Loans Ratio, and they are as follows:

Q2 FY2023Q3 FY2023Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
2.12%2.09%-0.03pp
Return on
Equity (%)
14.1%13.9%-0.2pp
Non-Performing
Loans Ratio (%)
1.6%1.6%

My Observations: Net interest margin weakened by -0.03 percentage points (pp) from lower margin on excess liquidity.

Asset quality remained stable with non-performing loans ratio unchanged at 1.6%.

CEO Mr Wee Ee Cheong’s Comments & Outlook (from the Bank’s Press Release)

“The global economy remains uncertain and recent geopolitical tensions have added to market volatilities. At UOB, we have a resilient portfolio that allows us to ride through market cycles. Our core businesses performed well, with higher net interest income and record credit card fees.

Our Citigroup integration is on track. Integration for Indonesia, Thailand and Vietnam is progressing as planned after we successfully migrated all Citigroup customers in Malaysia to our platform.

The macroeconomic environment could remain bumpy. However, we expect the ASEAN region to stay resilient. Consumer sentiments remain strong and rising investment flows into the region will bolster growth.

For UOB, our strong balance sheet, backed by diversified revenue drivers, will help smoothen the ride ahead and we stand ready to support our customers in these uncertain times.”

Closing Thoughts

No doubt the growth in its total income and net profit for the 3rd quarter (compared to the previous year) was the slowest in 3 quarters, but on the whole, I consider its latest numbers to be stable.

Looking at the bank’s key financial ratios, no doubt both its net interest margin and return on equity dipped slightly compared to the previous quarter, but it is still at healthy levels in my opinion.

With that, I have come to the end of my review of UOB’s 3rd quarter business update. Do note that all the opinions above are purely for educational purposes only, and they do not represent any buy or sell calls for the Singapore-listed 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.

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