Why are UOB shares rising?

• United Overseas Bank Ltd (SGX: U11) shares have rallied to a six-month high
• The bank has completed its acquisition of Citigroup’s consumer banking businesses in Malaysia and Thailand
• It also posted ‘record high’ earnings in its third quarter business update
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UOB stock price target: what’s the latest?

United Overseas Bank (UOB) shares have soared over 10% since the release of its third quarter (Q3) business update at the end of October 2022.

The banking stock is up 8% this year.

Shares of Singapore’s third largest bank have a consensus rating of ‘outperform’ along with an average price target of S$33.01, based on the latest SGX StockFacts data.

The price target implies a 13% price upside potential in the next 12 months. UOB shares closed trading at S$29.21 on Thursday (9 November 2022).

Following UOB’s latest results, CIMB analysts lowered their price target from S$35.60 to S$34.80 a share, while keeping their ‘add’ call.

DBS researchers also kept their rating of ‘buy’ and left their share price target unchanged at S$34.20.

UOB posts ‘record high’ net profit; acquires Citigroup’s consumer banking arms

The group posted a ‘record high’ net profit of S$1.4 billion in Q3 2022, up 34% year-on-year (YoY).

This was driven by stronger net interest income (up 39% YoY), higher customer-related treasury income (resulting in a 58% growth in other non-interest income) and lower credit allowance (down 36%).

UOB said its balance sheet remained ‘robust’, with liquidity and Common Equity Tier 1 (CET1) ratio coming in at 12.8% for Q3 2022. This is down slightly from 13.1% in Q2 2022 and 13.5% in Q3 2021.

Looking ahead, the group’s CEO and Deputy Chairman, Wee Ee Cheong, says the global economic outlook ‘remains challenging’.

UOB also announced that it has completed its acquisition of Citigroup’s consumer banking businesses in Malaysia and Thailand. It is planning to complete the acquisition of Citigroup’s consumer businesses in Indonesia and Vietnam by 2023.

The acquired consumer businesses include Citigroup’s unsecured and secured lending portfolios, wealth management and retail deposit businesses.

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