UOB

UOB posted 4Q net profit of $706m (vs $688m in 3Q), well above conensus est of $570m but core lending biz was unimpressive as net interest income (-2.1%) was hit by compression in net interest margins (-16bps to 1.91% from 2.07% in 3Q. The outperformance was attributed to strong fee & commission income (+9%) & higher investment income (+30%) arising from sale of securities (incl 10% stake in UIC).

Loans grew 5% qoq while deposit climbed 7.4% resulting in a drop in LDR to 79% (DBS: 79%, OCBC: 85%). Asset quality remained healthy with NPL ratio of 1.8% NAV rose 2.6% to $12.51 giving a p?B valuation of 1.48x, vs historical mean of 1.53x. Tier 1 CAR at 15.3% was sound. Proposed final & special DPS of 50¢ taking full yr DPS to 70¢ vs 60¢ in FY09. Overall, nice headline numbers but difficult to repeat.