UOB

UOB: Results above consensus estimates, boosted by sales of investments. Operating income was approx $1.6b +10.2% yoy +14.5% qoq. Net profit was $688.0m +23.3% yoy +12.4% qoq. Net interest margin was higher at $998m (+14.6% yoy +2.1% qoq) driven by higher loans volume and net interest margins. Fee and commission income at $362m (+9.5% yoy +10.8% qoq). Other income at $268m (+21.5% yoy +54.8% qoq) with trading and investments forming the bulk, mainly on sales of investments, at $203m Net profit was also higher qoq due to lower impairment charges. This was due to reduced provision (from 4Q11) on their collective loans book. NPL ratio held steady at 1.4%. Net interest margin continued to improve at 1.98% and loan deposit ratio was approx 86.0% up 2.7% pts higher than 4Q11. Corporate lending spreads are expected to rise and mgmt has guided for momentum in this area. Singapore (58.2% share) and Msia (13.3%) continued to be the highest contributors to rev JP Morgan maintains Neutral with TP$18.10 Deutsche maintains Hold with TP$19.00 Goldman maintains Neutral but raises TP to $20.00 from $19.80 Some of the houses have highlighted concerns on sustainability of co’s NIM and lack of upside catalysts.