UOB posted 2Q13 net earnings of S$783m, better than consensus estimate of S$699.9m. Net Interest Margin improved modestly from 1.70% in 1Q13 to 1.71% in 2Q13. For the Fee and Commission income, the key outperformers were its Investment-related and credit card operations which showed both YoY and QoQ improvements. Management has declared an unchanged 1H dividend of 20 cents. The group is continuing with its strategy of growing its regional franchise. For its Wealth Management business, AUM has grown from S$48b in 2010 to S$71b as of Jun 2013. We have adjusted our FY13 estimates, lowering impairment charges and increasing operating expenses. We are maintaining our HOLD rating and our fair value estimates of S$22.97, but will turn buyer at S$21.40 or lower.
2Q earnings ahead of consensus
UOB posted 2Q13 net earnings of S$783m, up 9.9% YoY and 8.4% QoQ, and better than consensus estimate of S$699.9m. The main variances between actual and our estimates were lower-than-expected impairment charges and higher associate contribution (from the sale of investment securities) in 2Q, and the latter is likely to revert back to the normal level in 3Q. Growth in Net Interest Income and Non-interest Income were largely in line with expectations. Net Interest Margin (NIM) improved modestly from 1.70% in 1Q13 to 1.71% in 2Q13. For the Fee and Commission income, the key outperformers were its Investment-related and credit card operations which showed both YoY and QoQ improvements. Impairment charges fell 29% YoY or 42% QoQ to S$75m. Management has declared an unchanged 1H dividend of 20 cents. This will be paid on 5 Sep 2013.
Growing regional businesses and contributions
The group reported an increase in AUM from S$48b in 2010 to S$71b as of Jun 2013 for its Wealth Management unit. This is on track to achieve its 2015 target of 50% of its wealth management profit from the region versus 31% currently. In terms of customer base, this has grown from 100,000 to 165,000 currently. Its overseas wholesale profit contribution is also on track to grow from 30% in 2010 and 40% in Jun 2013 to 50% by 2015. This is part of its on-going strategy to build its regional customer base and franchise.
Retain HOLD rating
We have made adjustments to our FY13 estimates, and the net impact is a slight increase in net earnings from S$2884.8m to S$2885.2m. While we have lowered impairment charges, we have increased operating expenses. We are maintaining ourHOLD rating and our fair value estimates of S$22.97, but will turn buyer at S$21.40 or lower.
UOB posted 2Q13 net earnings of S$783m, up 9.9% YoY and 8.4% QoQ, and better than consensus estimate of S$699.9m. The main variances between actual and our estimates were lower-than-expected impairment charges and higher associate contribution (from the sale of investment securities) in 2Q, and the latter is likely to revert back to the normal level in 3Q. Growth in Net Interest Income and Non-interest Income were largely in line with expectations. Net Interest Margin (NIM) improved modestly from 1.70% in 1Q13 to 1.71% in 2Q13. For the Fee and Commission income, the key outperformers were its Investment-related and credit card operations which showed both YoY and QoQ improvements. Impairment charges fell 29% YoY or 42% QoQ to S$75m. Management has declared an unchanged 1H dividend of 20 cents. This will be paid on 5 Sep 2013.
Growing regional businesses and contributions
The group reported an increase in AUM from S$48b in 2010 to S$71b as of Jun 2013 for its Wealth Management unit. This is on track to achieve its 2015 target of 50% of its wealth management profit from the region versus 31% currently. In terms of customer base, this has grown from 100,000 to 165,000 currently. Its overseas wholesale profit contribution is also on track to grow from 30% in 2010 and 40% in Jun 2013 to 50% by 2015. This is part of its on-going strategy to build its regional customer base and franchise.
Retain HOLD rating
We have made adjustments to our FY13 estimates, and the net impact is a slight increase in net earnings from S$2884.8m to S$2885.2m. While we have lowered impairment charges, we have increased operating expenses. We are maintaining ourHOLD rating and our fair value estimates of S$22.97, but will turn buyer at S$21.40 or lower.
No comments:
Post a Comment