KUALA LUMPUR: United Overseas Bank (M) Bhd (UOB Malaysia) posted a 3.7% year-on-year increase in total operating income to RM3.21bil in 2020.
The banking group’s net profit, however, was 16.8% lower at RM1.02bil as it was proactive in making pre-emptive provisioning on its assets given the uncertainties arising from the economic impact of the Covid-19 pandemic.
In a statement Monday, UOB Malaysia said its higher operating income was attributed to the 5.7% growth in net interest income to RM2.20bil, driven by proactive balance sheet management.
However, the increase in net interest income was partially offset by the effects of the reductions in the overnight policy rate to a historical low of 1.75% between Jan 22 and July 7, 2020.
While trading and investment income for the year grew, lower fee income and net foreign exchange gains led to a 3.5% drop in non-interest income to RM938.8mil, it said.
UOB Malaysia’s profitability was also impacted as its operating income growth was partially offset by an increase in allowances from the pre-emptive provisioning made for expected credit losses for both impaired and non-impaired assets.
The allowances were RM356.1mil more than the previous year, largely for expected losses categorised as Stage 1 (within the next 12 months) and Stage 2 (indefinitely) on its loans, advances and financing portfolio.
Nonetheless, the bank maintained its sound asset quality with the net non-performing loan ratio sustained at 1.4%.
Its gross loans, advances and financing rose 1.5% to RM87.5bil and non-bank deposits increased by 5% to RM93.6bil.
The bank continued to maintain its strong capital base with its common equity tier 1 and total capital ratios at 17.6% and 20.5% respectively.
“UOB Malaysia’s 2020 financial performance saw the effects of the severe economic impact brought about by the travel restrictions and physical distancing requirements to curb the spread of the pandemic.
“Nevertheless, we maintained our strong balance sheet and effective resource management, with our sound asset quality underscoring our robust corporate governance, risk management and business practices,” CEO Wong Kim Choong said.
He said in addition to Covid-19 relief measures, including loan moratoria for business and individual customers, UOB Malaysia actively assisted customers in managing their financial well-being.
“Beyond the moratorium period that ended Sept 30, 2020, we extended targeted repayment relief assistance until June 30, 2021 to help customers emerge stronger from the crisis,” he added.