SINGAPORE: Singapore’s United Overseas Bank (UOB) said on Thursday (Nov 6) it expects 2026 net interest margin to be lower than this year’s projection after its third-quarter profit dropped sharply, hit by a surge in credit provisions.
UOB, Southeast Asia's third-largest bank by assets, said July to September net profit slumped to S$443 million (US$342.30 million) from S$1.61 billion a year earlier.
The slide was mainly due to S$1.36 billion in allowances for credit and other losses, including S$615 million in pre-emptive general provisions.
This missed the mean estimate of almost S$1.35 billion from two analysts polled by LSEG.
"We proactively set aside general allowances to significantly enhance provision coverage, backed by our strong capital base," deputy chairman and CEO Wee Ee Cheong said in a statement, adding that dividend plans remain intact.
UOB expects 2026 full-year NIM at 1.75 per cent to 1.80 per cent, below the projected 1.85 per cent to 1.90 per cent for this year, alongside low single-digit loan growth, high single- to double-digit fee growth, and total credit costs of 25-30 basis points.
Larger peer DBS Group earlier posted a 2 per cent drop in third-quarter earnings that beat forecasts.
Both Singapore banks’ earnings come after mixed results from global counterparts last week.
HSBC reported a 14 per cent fall in pretax profit after a US$1.4 billion litigation charge tied to the Bernard Madoff fraud, while Standard Chartered beat estimates with a 3 per cent rise in profit, helped by record wealth income and strong market activity.
UOB’s net interest margin fell to 1.82 per cent in the third quarter from 2.05 per cent a year earlier, as lower benchmark rates squeezed lending spreads.
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UOB, Southeast Asia's third-largest bank by assets, said July to September net profit slumped to S$443 million (US$342.30 million) from S$1.61 billion a year earlier.
The slide was mainly due to S$1.36 billion in allowances for credit and other losses, including S$615 million in pre-emptive general provisions.
This missed the mean estimate of almost S$1.35 billion from two analysts polled by LSEG.
"We proactively set aside general allowances to significantly enhance provision coverage, backed by our strong capital base," deputy chairman and CEO Wee Ee Cheong said in a statement, adding that dividend plans remain intact.
UOB expects 2026 full-year NIM at 1.75 per cent to 1.80 per cent, below the projected 1.85 per cent to 1.90 per cent for this year, alongside low single-digit loan growth, high single- to double-digit fee growth, and total credit costs of 25-30 basis points.
Larger peer DBS Group earlier posted a 2 per cent drop in third-quarter earnings that beat forecasts.
Both Singapore banks’ earnings come after mixed results from global counterparts last week.
HSBC reported a 14 per cent fall in pretax profit after a US$1.4 billion litigation charge tied to the Bernard Madoff fraud, while Standard Chartered beat estimates with a 3 per cent rise in profit, helped by record wealth income and strong market activity.
UOB’s net interest margin fell to 1.82 per cent in the third quarter from 2.05 per cent a year earlier, as lower benchmark rates squeezed lending spreads.
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