United Overseas Bank (U11) Q3 2024 TU earnings summary

Executive summary

• Achieved record core net profit of S$1.6 billion in 3Q24, up 11% year-over-year and 10% sequentially, driven by broad-based growth across all business segments and key ASEAN markets, with resilient balance sheet and strong client franchise.

• Net interest income reached S$2.5 billion (+1% YoY), with net fee income at S$630 million (+7% YoY), and customer-related treasury income up 36% YoY, supported by double-digit growth in cards and wealth fees.

• Synergies from Citi acquisition are materializing, boosting customer base and cross-sell opportunities, especially in CASA penetration, with integration in Malaysia, Thailand, Indonesia, and Vietnam progressing.

• Asset quality remains resilient despite a one-off spike in provisions from Thai Citi portfolio integration, with delinquencies now normalizing.

• Strong performance in both wholesale and retail banking, with robust loan demand and positive consumer sentiment following US Fed rate cuts.

Financial highlights

• 3Q24 net profit (including one-off expenses) was S$1.61 billion, up 16% YoY and 13% QoQ; core ROE at 14.3%.

• Net interest margin stable at 2.05%; loans grew 2% QoQ (S$5 billion), mainly from wholesale and mortgages.

• Fee income reached a new high of S$630 million, supported by trade, wealth, and card fees; trading and investment income surged to S$709 million.

• Cost-to-income ratio (core) improved to 41.5%; total expenses rose 5% YoY.

• NPL ratio steady at 1.5%; total credit costs increased to 34 bps, mainly due to Thailand merger issues expected to normalize.

Outlook and guidance

• 2025 outlook projects high single-digit loan growth, double-digit fee growth, and higher total income, led by cards, wealth, and trade-related fees.

• Cost-to-income ratio expected at 41–42%; credit costs guided within 25–30 bps for the full year.

• Strong capital position allows consideration of capital management initiatives, including potential share buybacks or higher dividends.

• Management remains confident in ASEAN's long-term growth potential and aims to intensify efforts in key markets.

• Allowance increases in Thailand retail expected to normalize in the next two quarters.