UOB

UOB: 4Q13 net profit of $773m (+11 y/y) beat street estimates. Net interest income rose 13% to $1.1b. Net customer loans grew 17%, while net interest margin improved 3bp q/q to 1.74%. Non-interest income increased 3% to $657m from higher fee income boosted by stronger demand in lending and wealth management products. Trading and investment income was 2% lower at $144m due to lower gains on sale of securities. Impairment charges fell 7% to $139m, while NPL ratio continued to stay low at 1.1%. Tier 1 CAR slipped y/y (4Q12: 14.7%) but improved q/q (3Q13: 12.9%) to 13.2%, remaining well above MAS’ minimum requirements. Maybank-KE sees little surprises in this set of results, as the bank’s key operating metrics remain steadfast. Going forward, some market watchers expect UOB’s loan growth to moderate to high-single digit/ low double-digit in FY14. Management declared a final dividend of $0.50 plus special dividend of $0.05 declared, bringing full year payout to $0.75 (FY12: $0.70). At the last close at $19.90, UOB trades at 1.3x P/B, offers 3.8% yield. Latest broker ratings: Maybank-KE maintains Buy, with marginally higher TP of $23.60 (from $23.40) Deutsche maintains Hold with TP $22 CLSA maintains Buy with TP $24.70 CIMB maintains Add with TP marginally increased to $24.19 (from $23.49)