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 Q2 at S$1.5 billion; net profit including one-off Citi integration expenses was S$2.9 billion.

• Net interest income in 2Q24 rose 2% sequentially to S$2.4 billion, with net interest margin improving to 2.05%.

• Fee income reached near-record levels in 2Q24 at S$618 million, up 7% quarter-on-quarter and 18% year-on-year, with double-digit growth in H1.

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

• Interim dividend of 88 cents per share declared, up from 85 cents last year, with a payout ratio of 51%.

Financial highlights

• Net interest income for 1H24 was S$4.8 billion, down 2% year-on-year; net interest margin moderated to 2.04%.

• Net fee income grew 11% year-on-year to S$1.2 billion, driven by lending, capital market activities, and higher wealth and card fees.

• Wealth management AUM reached S$182 billion, up 10% year-on-year, with digital sales in Singapore up 250% year-on-year.

• CASA ratio increased to 51.5%, with liquidity coverage ratio at 149% and net stable funding ratio at 118%.

• CET1 capital ratio at 13.4% post-dividend; leverage ratio at 7.1%.

Outlook and guidance

• Guidance for 2024: low single-digit loan growth, double-digit fee growth, and positive total income growth.

• Cost-to-income ratio expected at 41%-42%, with total credit costs at the lower end of 25–30 basis points.

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

• Cautiously optimistic outlook amid global uncertainties, including US elections, China and Thailand economic challenges, and higher interest rates.

• Focus on extracting synergies from Citi integration, with one-time costs to reduce as Vietnam integration completes in 2025.