UOB

UOB: Announced 1Q13 results which were above estimates, fueled largely by stronger contributions from non-interest income. Overall net profit at $722m, +5% y/y and +4% q/q, while total income at $1.67b, +3% y/y and +5% q/q. Net Interest income at $964m (-4% y/y , -0.3% q/q) was weighed by net interest margins (NIMs) which declined to 1.70% versus 1.76% q/q, although customers loans grew to $164.3b (+13% y/y , +8% q/q) resulting in UOB’s loan / deposit ratio rising to 87% (86% y/y , 84% q/q). The group saw better asset quality as non-performing loans (NPL) ratio improved further at 1.3% versus 1.4% y/y A stronger non-interest income helped in offsetting the muted performance in net interest income, at $708m, +12% y/y and +13% q/q, driven largely by the sterling performance in fee income, underpinned by strong growth in lending, fund management, capital market and wealth management businesses. Trading and investment income however decreased on back of lower gains on sale of securities. Going forward, UOB expects overall growth to be moderate this year, and expects to see ample liquidity and intense competition. Overall, the bank remains well capitalized with Tier 1 ratio at 14.3% and total Car at 18%. At current price, UOB trades at 1.44x P/B versus DBS’s 1.31 and OCBC’s 1.44x. Ratings as follows: Nomura maintains Buy with $22.60 TP CIMB maintains Neutral with $21.24 TP Mizuho securities maintains Neutral with $23.00 TP HSBC downgrades to U/w with $21.60 TP