Bumper harvest for Singapore banks UOB and DBS for Q1
Albeit the good results for the first quarter, UOB’s deputy chairman and chief executive Wee Ee Cheong said that focusing on fundamentals and having prudence are key disciplines to maintain in an uncertain macroeconomic landscape.
Singapore’s third-largest bank United Overseas Bank (UOB) posted an 8% increase in its net profit for the first quarter of this year, it announced today, reporting stronger growth in line with the robust earnings results made by rival and largest local bank DBS Holdings earlier this week.
UOB’s first quarter net profit was at S$1.05 billion, up from the S$978 million earnings in the same period a year ago. Earnings per share stood at S$2.47 for the first quarter, compared to S$2.28 a year ago.
Total income gained 8% to S$2.41 billion from S$2.23 billion previously, supported by a recovery in trading and investment income, and a healthy loan growth reflected by a stabalization in macroeconomic conditions.
UOB’s net interest income was up by 8% to S$1.59 billion, helped by broad-based loan growth.
UOB’s rival DBS beat market estimates with a record quarterly profit for the first quarter, it announced on Monday, with a net profit of S$1.65 billion, a 9% increase compared to a year ago. Meanwhile, total income was higher by 6% at S$3.55 billion.
In the earnings statement posted by DBS on Monday, the bank said a healthy business momentum and a higher net interest margin more than offset the impact of a high base for wealth management, brokerage and investment banking fee income as well as a property gain a year ago.
As of 11am, Singapore time, UOB shares dipped 1.04% or S$0.29, at S$27.56, while DBS' shares traded lower at 0.18% or S$0.05 at S$27.55 as some investors took their earnings of the table on the last trading day of the week.
A good start to 2019 for UOB and DBS
In the previous quarter’s results announcement, Singapore’s top banks had warned of challenges ahead for 2019, and had said that they will resolve to staying disciplined, practise cost-controls, and being prudent as strategies to manage this year.
A part of the message behind the muted overview made earlier was related to the global trade tensions and a weaker Chinese economy. Trade tensions between the United States and China in the later part of last year had affected markets, driving uncertainty into trade-dependent nations including Singapore.
In the earlier earnings statement for the fourth quarter results released in February, DBS’ chief executive Piyush Gupta had said that the bank’s shift towards higher-returns businesses, deeper customer relationships and more nimble execution will support the bank 'to navigate the challenges this coming year'.
In his latest comments on the first quarter earnings results on Monday, Mr Gupta said that the bank has had a good start to the year as business momentum was sustained and non-interest income recovered from the recent weakness.
‘The record earnings and return-of-equity progression demonstrates the strengthened profitability of our franchise from digitalisation, a shift towards higher-returns businesses and more nimble execution,’ Mr Gupta said, adding that the bank is ‘well-placed to continue capturing growth opportunities across the region and delivering healthy shareholder returns’.
UOB’s deputy chairman and chief executive Wee Ee Cheong clanged a more muted tune in the bank’s earnings release today, stating that the bank started 2019 with strong quarter earnings, underpinned by its continued focus on ‘fundamentals and prudence in managing (the) business’.
Mr Wee added that having those disciplines are key factors especially when the macro environment remains uncertain due to the slowing global economy and ongoing trade tensions. ‘Our steadfast approach to ensuring continued sustainable growth has seen strong investor support.’
OCBC results due next week
OCBC, Singapore’s second-largest bank by total assets, will be revealing its first quarter earnings results on May 10.
In the last quarter, OCBC’s insurance arm Great Eastern Holding’s weak earnings had plagued the performance for the bank, as it fell by 11% in net profit for the quarter. On Friday, Great Eastern said it recovered in the first quarter with a net profit that more-than-doubled at S$342.7 million, from S$152.9 million a year ago, on the back of higher valuations of its investments resulting from favourable market conditions.
Speaking to investors in a shareholder meeting earlier this week, OCBC’s chief executive Samuel Tsien had said that its bancassurance business remains a core part of the bank’s business.
Responding to a shareholder who asked if the bank would consider outsourcing its insurance business to another partner just as its local peers have done, Mr Tsien responded by saying that its insurance arm remains ‘part and parcel’ of the bank’s offerings in various markets, The Business Times reported.
OCBC’s insurance pillar has a higher penetration record within the bancassurance market and is cohesive in its operations with other segments of the business, such as wealth management and corporate banking, Mr Tsien shared.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.