UOB : U11 0%’s net profit for the fourth quarter rose 21.8 per cent on higher net fee income and other non-interest income, based on its results released on Thursday (Feb 22).

Net profit for the three months ended Dec 31, 2023, stood at S$1.4 billion, compared with S$1.2 billion from the year-ago period.

This included S$94 million in one-off expenses from the lender’s Citigroup integration costs after taxes, which was 35 per cent higher than the S$70 million recorded in the same period the previous year. In Q4 2022, UOB also paid a one-off stamp duty of S$176 million. 

The earnings missed a S$1.5 billion consensus forecast for the fourth quarter in a Bloomberg survey of two analysts. If not for the one-off integration expenses, core net profit would have been in line with the projections.

Net fee income was up 17.3 per cent on the year to S$569 million, from S$485 million. This was due to “strong growth” in credit card fees, which was supported by an enlarged franchise, and a recovery in wealth management fees.

Meanwhile, other non-interest income climbed 53.7 per cent to S$438 million, from S$285 million. UOB attributed the gain to higher customer-related treasury income and strong performance from trading and liquidity management activities.

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The gains in net fee income and other non-interest income were partially offset by a 6.1 per cent drop in net interest income, which stood at S$2.4 billion for the quarter, compared with S$2.6 billion previously.

Net interest margin for the quarter stood at 2.02 per cent, down 20 basis points from 2.22 per cent in the same period a year earlier. This was mainly due to loan margin compression amid competition for high-quality credit.

UOB’s board has recommended a final dividend of S$0.85 per share for the half-year period. This brings the full-year dividend to S$1.70 per share, representing a payout ratio of about 50 per cent.

The dividend will be paid out on May 9, after books closure on Apr 29. UOB said its scrip dividend scheme will not be applied to the final dividend.

For the full year, net profit was up 24.9 per cent to S$5.7 billion – a record high, although it missed a S$6 billion consensus forecast of five analysts surveyed by Bloomberg.

Excluding the one-off Citigroup integration costs, which amounted to S$350 million, core net profit would be S$6.1 billion, rising 25.8 per cent on the year.

UOB deputy chairman and chief executive Wee Ee Cheong said the integration is on track, with the incorporation of Citigroup’s portfolios in Malaysia and Indonesia. Thailand and Vietnam will follow suit in the coming months.

“With our strengthened market position and larger regional franchise, we will focus on enhancing our offerings and capabilities as we serve our expanded customer base,” he said.

Annualised earnings per share stood at S$3.34 for FY2023, up from S$2.69 the year before.

Net interest income for the full year rose 16 per cent to S$9.7 billion. UOB’s net interest margin was up 23 basis points to 2.09 per cent from higher interest rates and a loan growth of 2 per cent, on a constant-currency basis.

Net fee income was up 4.3 per cent to S$2.2 billion on record credit card fees. This was partly offset by softer loan-related fees, UOB said.

Other non-interest income jumped 85.3 per cent to S$2 billion. Customer-related treasury income hit an all-time high of S$766 million. The bank also recorded a strong performance from trading and liquidity management activities.

UOB’s non-performing loans ratio was 1.5 per cent as at Dec 31, 2023, down from 1.6 per cent the same period a year earlier.

Total allowances grew by 52.7 per cent to S$921 million for the full year. This was mainly due to higher specific allowance on a few non-systemic corporate accounts, as well as pre-emptive general allowance set aside during the year, the bank said.

The bank said it will offer 6,000 junior employees, particularly those who are Class II officers and below, a one-off extra month bonus. Out of these 6,000 staff, 600 are in Singapore.

The move is in line with recent recommendations from Singapore’s National Wages Council to help employees cope with the increased costs of living.

Shares of UOB closed 0.9 per cent or S$0.27 lower at S$29.24 on Wednesday.