UOB deputy chairman and CEO Wee Ee Cheong said at a results briefing that the bank looks to the "resilient" Asean region to continue driving growth. — The Straits Times
SINGAPORE: United Overseas Bank (UOB) on Feb 19 announced a S$3bil package over the next three years to return surplus capital to shareholders, as the bank reported a record profit of S$6bil for 2024.
The package includes special dividends and share buybacks to be delivered over the next three years.
A special dividend of 50 Singapore cents per share is recommended with payment over two tranches in 2025, returning S$0.8bil of surplus capital.
This is also to mark UOB’s 90th anniversary in 2025. A new share buyback programme of S$2bil has also been set up, where shares to be acquired from the open market will be cancelled.
The programme is in addition to the share buybacks designed for the bank’s long-term incentive plans for employees.
The bank has declared a higher final dividend of 92 Singapore cents per share for the second half of its 2024 financial year, up from 85 Singapore cents the previous year.
This brings a full-year dividend to S$1.80 per share, representing a payout ratio of about 50%.
UOB shares briefly hit an all-time high of S$39.20 in the first hour of trading on Feb 19.
The stock had gained 1.8% last week as local bank shares rallied.
Deputy chairman and chief executive Wee Ee Cheong told a results briefing on Feb 19: “Our disciplined approach of pursuing long-term growth visibility has served us well, and we are confident of enhancing shareholders’ value in the years to come.”
For the fourth quarter of financial year 2024, net profit rose 9% year-on-year to S$1.52bil.
The earnings beat the S$1.48bil forecast by analysts in a Bloomberg poll.
They included S$17mil in one-off expenses from the bank’s Citigroup integration costs after taxes, which was 81.9% lower than the S$94mil in the year-ago period.
Net interest income was up 2% to S$2.45bil, supported by loan growth of 5%.
Net fee income and other non-interest income were relatively unchanged at S$567mil and S$443mil, respectively.
Chief financial officer Lee Wai Fai said at the briefing that the bank’s net interest margin (NIM) moderated down to 2% from the effect of interest rate cuts in the fourth quarter.
Wealth and loan-related fees were seasonally softer, and trading and investment normalised to S$367mil after an exceptional third quarter, he added.
For financial year 2024, the group’s net profit grew 6% from a year ago to a record S$6.04bil, driven by strong net fee income and trading and investment income.
Net interest income stayed at S$9.7bil as loan growth of 5% was moderated by the effects of interest rate movements on its NIM, UOB said.
Net fee income grew 7% to S$2.4bil, led by a double-digit growth in wealth fees, stronger credit card fees and higher loan-related fees. High-net-worth assets under management rose 8% year-on-year to S$190bil, said UOB.
On the outlook for interest rates, Lee told the briefing that UOB expects that US Federal Reserve will not be aggressive in cutting rates in 2025 as US inflation shows signs of reigniting.
Higher-for-longer rates have benefited banks in improving profitability by increasing NIM.
Wee said in the results statement: “Our long-term investments in regional platforms and capabilities are paying off, and we expect continued revenue growth this year.
“Despite global uncertainties, we are confident that the Asean region will remain resilient, supported by higher domestic retail spending and stronger influx of foreign direct investment.”
In 2024, the bank completed its integration of Citigroup’s consumer business in Thailand, following the same in Malaysia and Indonesia in 2023.
UOB said the integration for Vietnam is on track to be completed by 2025.
“We will continue to harness cross-sell synergies, manage costs and enhance our products and solutions to better serve our expanded customer base,” said Wee.
UOB’s results follow that of DBS Bank, whose shares soared after it posted strong fourth-quarter earnings and announced on Feb 10 a new capital return dividend on top of a S$3bil share buyback plan unveiled in November.
OCBC is set to post its results on Feb 26. — The Straits Times/ANN
