United Overseas Bank (U11) H1 2025 earnings summary

Executive summary

• Operating profit for 1H25 rose 3% year-over-year to S$4.0 billion, driven by double-digit fee income growth and a resilient balance sheet, while net profit declined 3% to S$2.8 billion due to higher pre-emptive general allowances amid macroeconomic uncertainties.

• Net interest income remained stable at S$4.7 billion as loan growth offset lower net interest margin; net fee income increased 11% year-over-year, led by wealth management, loan-related, and credit card fees.

• Net profit for Q2 2025 was S$1.3 billion, down 10% quarter-on-quarter and 6% year-over-year, with net interest margin narrowing to 1.91%.

• Interim dividend of 85 cents per share declared, with a 50% payout ratio and additional special dividend tranche; total interim and special dividends for 1H25 amount to S$1.10 per share.

• Board completed 13% of a S$2 billion share buyback program and paid a second tranche of special dividend for the 90th anniversary.

Financial highlights

• Net interest income was flat year-over-year at S$4.7 billion as loan growth offset declining rates; margin compressed due to external environment.

• Net fee income grew 11% year-over-year to S$1.33 billion, led by wealth management, loan-related, and credit card fees.

• Cost-to-income ratio improved to 43.5% for 1H25, reflecting disciplined cost management.

• Gross loans grew 4% year-over-year and 1% quarter-on-quarter, mainly from corporates and mortgages in Singapore.

• CASA deposits exceeded S$200 billion, with CASA ratio at 56.5%.

Outlook and guidance

• Full-year NIM guidance reinstated at 1.85%-1.9%, factoring in expected Fed rate cuts in H2.

• Loan growth expected to be low single-digit, focusing on quality assets; high single-digit fee growth targeted.

• Net credit costs guided at 25-30 basis points, with further top-up to general provision buffer anticipated.

• Operating costs expected to remain flat.

• Management remains confident in ASEAN's long-term prospects, citing regional integration, trade diversification, and rising FDI.