[Kabar-indonesia] BT: UOB's 3Q net profit flat at $463m [Bank Buana's parent]

[Joyo at aol.com]

Business Times [Singapore]
Wednesday, November 1, 2006

UOB's third-quarter net profit flat at $463m

Wong Wei Kong

Higher op costs, lower non-interest income offset net
interest income rise

UNITED Overseas Bank (UOB) yesterday posted a set of third-
quarter earnings that were unchanged from a year ago, as an
increase in operating costs and lower non-interest income
offset higher net interest income.

UOB, Singapore's second biggest bank, reported a net profit
of $463 million for the three months ended September 2006,
slightly below the median market forecast of $469 million.

Total income in Q3 2006 rose 10 per cent to $1.02 billion
from a year ago. Annualised earnings per share fell to
$1.185 in Q3 2006 from $1.204 a year ago. No dividend was
declared for the latest quarter, as was the case last year.

'It's quite a good performance,' said an analyst from a
foreign bank, who added that UOB should be able to sustain
its momentum going forward. Analysts noted that UOB's latest
quarterly earnings matched its record profit a year ago,
which was then boosted by higher-than-expected fee and
commission income from fund management and investment-
related activities.

Related articles: Click here to view UOB's press release
Q306 financial statements

For the first nine months of 2006, UOB's net profit
increased 59.2 per cent to $2.03 billion from the
corresponding period in 2005, boosted mainly by a one-time
gain of $689 million comprising a special dividend from
Overseas Union Enterprise (OUE) and gains from the
divestment of OUE and Hotel Negara. Excluding the one-time
gain, nine-month earnings would have grown 5.3 per cent.

UOB shares fell 10 cents to $17.70 yesterday, but the stock
is still up 21 per cent for the year.

'We saw broad-based growth in key businesses with
improvement in loans and profitability,' UOB deputy chairman
and president Wee Ee Cheong said in a statement.

UOB is the second bank to announce its third-quarter
results, after DBS Bank reported a 32 per cent rise in Q3
2006 net profit to $552 million.

UOB's key performance indicators were positive. Net interest
income rose 18.5 per cent to $684 million in Q3 2006 over Q3
2005. In the first nine months of 2006, net interest income
was 15.8 per cent higher at $2.01 billion. The increase came
from higher loan volumes and margins, with contributions
from Bank Buana Indonesia as well as inter-bank money market
activities. Against Q2 2006, net interest income increased
1.9 per cent in Q3 2006.
Notably, UOB was able to maintain its net interest margin at
1.97 per cent for Q3 2006 compared with Q2 2006. The margin
was also higher than the 1.93 per cent in Q3 2005. DBS
earlier saw its net interest margin fall six basis points to
2.17 per cent in Q3 2006 from Q2 2006, although that was
higher than the 1.92 per cent a year ago.

UOB's net customer loans grew 12.1 per cent to $73.7 billion
in Q3 2006 from Q3 2005, due to higher term loans and
housing loans. 'The increase in loans was seen across most
industries, particularly from non-bank financial
institutions and housing loans,' the bank said.

Against Q3 2005, UOB's non-interest income in Q3 2006
declined 3.6 per cent to $337 million, mainly due to lower
fee and commission income. Non-interest income increased 61
per cent in the first nine months to $1.6 billion from a
year ago, due to one-off contributions from the OUE and
Hotel Negara transactions.

Offshore contributions also increased, with pretax profit
from Asean markets (excluding Singapore) rising to $139
million in Q3 2006 from $126 million in Q2 2006 and $66
million a year ago. 'We are on track for our regionalisation
efforts,' said Mr Wee. 'Although we have yet to realise the
full potential of our investment in the region, it's good to
know that we are beginning to see some results.'

Like DBS, UOB also saw costs rise. Compared to Q305, UOB's
total operating expenses increased 20.2 per cent to $424
million in Q306, partly due to the consolidation of Bank
Buana's operating expenses. Staff costs rose 26.1 per cent
to $213 million largely on increased headcount. Other
operating expenses increased 14.7 per cent to $212 million
because of business promotions and IT. While DBS saw an
improvement in its cost-to-income ratio, UOB's expense-to-
income ratio rose to 41.6 per cent in Q3 2006 from 38.1 per
cent in Q3 2005.

UOB said its asset quality remains healthy. Group non-
performing loans (NPLs) were $3.5 billion as at Sept 30,
2006, representing a decline of 10.2 per cent from NPLs on
Dec 31, 2005, and a drop of 17.7 per cent from NPLs on Sept
30, 2005. The NPL ratio improved to 4.6 per cent in the
latest quarter from 5.6 per cent in December 2005 and 6.2
per cent in September 2005.

UOB also said yesterday it has cut its stake in OUB Centre
Ltd (OUBC) to 10 per cent. Together with United Facilities
Pte Ltd, the bank has sold 11.2 million shares or 4.67 per
cent in OUBC to United Overseas Land for $26.9 million. UOB
also sold 4.8 million shares or 2 per cent of OUBC to
Khattar Holdings Pte Ltd for $11.5 million.

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Joyo Indonesia News Service
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