UOB

UOB: Credit Suisse maintains Neutral with $20.00 TP. House spoke to UOB Thailand CFO, to get an operational and strategic update. UOB Thailand has been an underperformer among UOB’s regional businesses, intermittent macro issues not helping. Core business now appears to be on a strong recovery path, but the approach remains conservative. While UOB Thailand’s topline performance has been strong over the past few qtrs driven by better loan growth and margin recovery, the bottomline has struggled due to one-off items including flood related provisions and deposit protection charges. Near term earnings growth could remain muted. FY12 loan growth of 8-10%, increased deposit competition pressuring NIMs, but non-interest income is likely to grow strongly. The bank’s core ROEs have recovered from 3% in 2010 to 6% levels in 1H12. UOB Thailand’s recovery could be key to the Group’s growth and ROE profile over the medium term. With the bank’s conservative growth targets, reaching respectable 12% ROEs could take another 3-5 years, potentially boosting Group ROEs.