UOB

UOB: 4Q11 results slightly below to in line, but earnings quality is a positive.
Net profit came in at $558m, +7% qoq, despite a higher than expected loan loss charge resulting from a $68m charge on its 'Rest of World' loan book, and a $53m charge mainly related to contingent liabilities. UOB further took care of potential problem exposures in Europe by paring its EU debt portfolio to $1.6b (of which bank debt $0.6b) and providing for legacy problem loans.

At the same time, and in contrast to other Spore banks, the NPA ratio fell 14bps to 1.79%, a result of lower Singapore NPLs.

Underlying operations showed positives.
Strong NIM rebound stood out, with 4Q11 NIM +6bps qoq and +4bps yoy to 1.95%, beating peers’ stable qoq NIM, and reflecting greater focus on loan margins rather than market share . This was partially a result of higher yields on some of its longer-duration USD loans, and a 7% QoQ fall in the USD book as lower yield loans ran off.

Loan growth (+2.5% qoq; +25.0% yoy) was largely driven by its regional operations, particularly Malaysia (+8.3%; +35.6%) and Indonesia (+5.4%; +45.0%).

The bank declared $0.40 final div, but no scrip was offered.

UOB guides for low-teens loan growth, highlighting that weak US$/trade finance loans were due to repayments, and demand has since picked up.

Goldman says results were mixed, and expects UOB shares to trade sideways. Keeps at In-line,
Citi keeps at Sell, but raises TP to $17.70 from $15.30.
Goldman
Deutsche keeps Hold rating and TP $19.
JPM keeps at Neutral, raises TP to $18.10 from $17.40.
Nomura remains Neutral, keeps TP at $18.40.
HSBC keeps Overweight and TP $22.90.
BNP keeps Buy and TP $19.60.