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 at 2.05%.

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

• 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 51% payout ratio.

Financial highlights

• 1H24 net interest income was S$4.8 billion, down 2% year-on-year; net fee income grew 11% to S$1.2 billion.

• Loans grew 2% quarter-on-quarter and 3% year-on-year, with strong momentum in both retail and wholesale segments.

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

• Cost-to-income ratio improved to 41.8% for Q2; absolute operating expenses down 2% quarter-on-quarter.

• CET1 capital ratio stood at 13.4% post-dividend; liquidity coverage ratio at 149%; net stable funding ratio at 118%.

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 around 41%-42%; total credit costs guided 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, with ASEAN expected to remain resilient.

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