UOB

UOB: 2Q14 net profit was 3.2% higher at $808m, beating estimates. Net interest income rose 10.7% to $1.1b, while NIM was flattish y/y at 1.71%. Non-interest income rose 21.2% to $628m boosted by lumpy investment income of SGD118m on improving market sentiment and a one-off gain from investments and revaluation. Fee and commission income fell 6% y/y. Impairment charges doubled to $150m. Maybank-KE thinks discouraging trends are surfacing, with flat NIMs, as asset yields compressed by 4bps y/y, NPLs growing to $2.3b (+7% y/y) emanating from Thailand, Indonesia and Singapore, and SGD deposits contracted sequentially to $105.7b (-3.4% q/q) taking SGD loan-deposit ratio to 100.1% (March: 95.4%), reflecting its weaker deposit franchise UOB stands to benefit least from rising interest rates considering its weakest deposit franchise. NAV stood at $16.18, translating to P/B of 1.5x Latest broker ratings: Maybank-KE maintains Hold with TP of $25.70 Deutsche Bank maintains Hold with TP of $22.00