UOB

UOB: Reported 2Q13 net profit of $783m, (+10% y/y, +8% q/q) ahead of consensus estimates by ~13%. The bank’s bottom-line was however boosted by one-offs from associates, baring which results would have been largely in-line. Overall, the strong results was on back of steady loan growths, strong fee income and higher associates’ profits Operationally, net interest income increased 5% QoQ as NIMs increased by +1bps and loan growth grew 3% q/q, but thus was offset by weak non-interest income as fee income and trading income fell 4% and 39% q/q respectively. Asset quality improved, with the NPL ratio decreasing from 1.3% to 1.2% q/q and impairment charges were stable at 30bps. Coverage ratios remain healthy. Going forward, Management has raised its loan growth guidance from high-single digits to low- to mid-teen digits on the back of a YTD loan growth of 11%. The LDR was at 91%, a level which management intends to maintain. Management intends to grow its business outside Singapore to maintain its margins. The bank has adjusted to make itself neutral to interest rates; 91% of its loan portfolio is currently floating, which enables management to react quickly to interest rate movements. Latest brokers ratings as follows: Maybank-KE maintains Sell with $20.50 TP CS maintains neutral with $21.00 TP Nomura maintains Buy with $24.90 TP