United Overseas Bank (U11) H1 2024 earnings summary

Executive summary

• Core net profit for 1H24 was S$3.1 billion, stable year-on-year, with net profit after one-off Citi integration expenses at S$2.9 billion; Q2 core profit was S$1.5 billion, down 5% sequentially and 1% year-on-year, reflecting resilient performance amid margin pressures and diversified growth engines.

• Interim dividend of 88 cents per share declared, up from 85 cents last year, with a payout ratio of 51%, to be paid in August 2024.

• Fee income reached near-record levels, up 11% year-on-year to S$1.2 billion in 1H24, supported by strong loan and wealth management fees.

• Asset quality remained resilient with NPL ratio at 1.5% and total credit costs at 24 basis points.

• Wealth management AUM reached S$182 billion, up 10% year-on-year, with 40% year-on-year growth in 2Q24 wealth management income.

Financial highlights

• Net interest income for 1H24 was S$4.8 billion, down 2% year-on-year; net interest margin moderated to 2.04% due to deposit repricing outpacing asset yield growth.

• Net fee income grew 11% year-on-year to S$1.2 billion, with credit card fees up 35% year-on-year and 8% quarter-on-quarter.

• Other non-interest income declined 9% to S$1.0 billion, though customer-related treasury income rose 13%.

• Operating expenses increased 1% year-on-year to S$2.9 billion, with a core cost-to-income ratio of 41.8%.

• Gross customer loans grew 3% year-on-year to S$328 billion; customer deposits rose 3% to S$389 billion.

Outlook and guidance

• Guidance for 2024 remains: low single-digit loan growth, double-digit fee growth, and positive total income growth from 2023, with core cost-to-income ratio targeted at 41–42%.

• NIM expected to stabilize around 2.05% for the remainder of 2024.

• One-time costs from Citigroup acquisition expected to substantially roll off as Vietnam integration completes in 2025.

• Management expects ASEAN to remain resilient despite global uncertainties, with optimism for long-term regional growth.