UOB FY2016

UOB produces another stable quarter. FY 16 profit is S$3.1 bn, which is slightly lower YoY. The higher net interest income and fee income offset by lower investment income. Net interest income up 1.3% to S$5bn, led by healthy loan growth. Loans are up 8.8% YoY, with selective targeting of quality credits. The NIM is -6 bps to 1.71%, although it has stablised over last 2 quarters. Non-interest income remains flat at S$3.1 bn. Higher fee income rises 2.5% YoY which is offset by lower trading and investment income which is reduced by 8.1% YoY.

Portfolio quality is broadly stable. NPL ratio is up slightly at 1.5% with high general allowances-to-loans ratio of 1.2%.

Bottom line is dampened by higher allowances from offshore and marine sector. We heard about the Ezra's impairment issue.

Wealth management did pretty well, focusing on growth on mass affluent and high net worth segments. It increases by 8% YoY, profit increases 16% YoY, at $93bn AUM as at end 2016.