United Overseas Bank (U11) H1 2025 earnings summary

Executive summary

• Operating profit for 1H25 rose 3% year-over-year to S$4.0 billion, driven by double-digit fee income growth and a resilient balance sheet, while net profit declined 3% to S$2.8 billion due to higher pre-emptive general allowances amid macroeconomic uncertainties.

• ASEAN fundamentals remain robust, supporting resilience despite global uncertainties and geopolitical tensions, with a focus on scaling up retail post-Citi acquisition and strengthening fee-based income.

• The Citi acquisition is fully integrated across four ASEAN markets, expanding the customer base to over 8.4 million and driving growth in cards, wealth AUM, and deposits.

• Interim dividend of 85 cents per share declared, with a 50% payout ratio and additional special dividend tranche.

Financial highlights

• Net profit for Q2 2025 was S$1.3 billion, down 10% quarter-on-quarter and 6% year-on-year.

• Net interest income for 1H25 was stable at S$4.7 billion, as loan growth offset margin compression from lower rates; net fee income grew 11% year-over-year, led by wealth management, loan-related, and credit card fees.

• Cost-to-income ratio improved to 43.5% for 1H25.

• Gross loans grew 4% year-over-year and 1% quarter-on-quarter, mainly from corporates and mortgages in Singapore.

• Customer deposits rose 4% to S$405.1 billion; total assets reached S$537.8 billion.

Outlook and guidance

• Full-year NIM guidance reinstated at 1.85%-1.9%, factoring in expected rate cuts in H2.

• Low single-digit loan growth and high single-digit fee growth expected for FY2025.

• Operating costs projected to remain flat; net credit costs expected at 25-30 bps, with further top-up to general provision buffer anticipated.

• Management remains confident in ASEAN's long-term prospects, citing regional integration, trade diversification, and rising FDI.

• Capital distribution plan of S$3 billion remains on track.