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UOB’s 2Q2012 Net Profit Beats Forecast, Up 12 Per cent

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by Ernie B. Calucag

United Overseas Bank (UOB), the smallest of Singapore’s three banking groups, reported a 12-per cent year-on-year jump in net profit for the second quarter, driven by strong fee and commission income.

The bank booked earnings of S$713.0 million in the three months ended June, up from S$636.0 million a year earlier.

This compared to the S$622-million average estimate of six analysts polled by Thomson Reuters.

UOB’s fee and commission income in April-June hit a new quarterly high of S$386.0 million, driven by strong loans processing and corporate finance activities.

Loans grew 1.4 per cent during the quarter, in-line with moderating economic growth. The increase was broad based across Singapore and the regional countries. Singapore loans expanded 1.3 per cent while the regional countries loans rose faster at 3.0 per cent.

“We delivered record core earnings, with our key regional markets contributing strongly in both loans and fee income. In pursuing risk-adjusted returns, we will continue to seek fee income growth to drive overall profitability through further institutionalising cross-selling initiatives and building capability,” said Wee Ee Cheong, the UOB Group’s Deputy Chairman and Chief Executive Officer.

UOB’s rivals DBS Group and Oversea-Chinese Banking Corp last week reported better-than-expected earnings but warned of pressure on interest margins amid a regional slowdown as Asia feels the chills from Europe and North America.

UOB Chairman to Step Down Next Year

The bank’s CEO also announced that his father, Wee Cho Yaw, will step down as chairman in April 2013 after nearly four decades at the helm.

Hsieh Fu Hua, a former CEO of Singapore Exchange (SGX), will become the non-executive chairman of Singapore’s third-biggest bank.

Wee, who is 82, became chairman and chief executive of UOB in 1974 but relinquished his CEO position to his son in April 2007, according to the bank’s website.

“He is perfectly healthy. This is part of succession planning” said CEO Wee.

Wee’s family controls UOB.