United Overseas Bank Limited

Reported Q2 net profit after tax was $1.5 billion, up 10% year on year, and ROE was 11.8%. For the first half, net profit was $2.9 billion, up 3% year on year; total income was flat versus a year ago, expenses rose 2%, and allowance for credit losses declined 27%. Net interest income eased 3% in the first half as average interest-bearing assets grew 7%, while net interest margin moved from 1.82% in Q1 2026 to 1.74% in Q2 and was 1.71% at the end of July. Fee income was flat overall in Q2, retail income held at $2.6 billion in H1, wealth income rose 16%, trade loans grew about 33%, gross loans expanded 8% year on year, and customer loans were up 5% year on year. Asset quality metrics included an NPL ratio of 1.6%, new NPAs of $902 million, NPA coverage of 88% or 306% including collateral, credit costs of 28 basis points in Q2 and 27 basis points in H1, CET1 of 15.4% (15.0% fully loaded post dividend), LCR of 159%, and NSFR of 114%. Forward guidance: full-year loan growth is expected to be low single digits, full-year NIM about 1.75% to 1.8%, fee income low single-digit growth, operating costs low single-digit growth, and total credit costs 25 to 30 basis points; management also said 2026 earnings outlook is flat to 2025.

The CEO framed ASEAN as UOB’s home-field advantage and said the bank is well positioned to benefit from trade, investment, and supply-chain shifts into the region. He emphasized a “one bank” strategy linking wholesale, retail, and wealth, and said the franchise has 8 million customers and is increasingly turning FDI relationships into broader banking relationships. His tone was confident but disciplined, stressing capital-light growth, selective asset sales, and continued investment in digital, data, cybersecurity, and customer experience.

The CFO highlighted resilient first-half performance despite macro headwinds, pointing to $1.5 billion Q2 profit, $2.9 billion H1 profit, 3% H1 profit growth, and flat H1 income. He explained that margin pressure came from a lower-rate environment, with NIM down to 1.74% in Q2 and 1.71% by end-July, but said SORA appears to be bottoming and should trend higher in H2. He also cited strong capital and liquidity, including CET1 of 15.4%, LCR of 159%, NSFR of 114%, the $0.88 interim dividend, about 40% completion of the $2 billion buyback, and the Allianz Global Investors deal for $535 million, which he said would deliver about a $330 million gain and add around 14 bps to CET1 once completed.

Analysts pressed management on why loan growth guidance stays at low single digits even with healthy Singapore loan data, and management answered that the bank’s own full-year loan outlook remains low single digits despite wholesale loan growth of about 8% and retail loan growth of about 4%. They also asked why fee guidance was cut from prior talk of high single-digit growth; management said some fee deals were pushed into the second half and that weaker card-fee trends, lower interchange, and higher miles redemption and scheme fees justify low-single-digit guidance. Questions on the Allianz sale proceeds were met with a response that the cash will only arrive in 2027 and that allocation is premature, while the Greater China real-estate NPA was clarified as one China client booked in Hong Kong. Management also said it is still assessing China’s outbound investment tax changes, sees no material impact yet, and described AI as deeply embedded across the bank, with more than 30,000 staff using Copilot, over 400,000 prompts per month, and an open architecture that can support different LLMs, including Chinese models.