Singapore's United Overseas Bank (UOB) announced on Thursday that it is reducing its loan growth projections for 2024 to low single-digits, down from mid-single-digits, following a stronger-than-expected 22 per cent increase in net profit for the fourth quarter. UOB CEO, Wee Ee Cheong, stated during an earnings briefing that the bank still expects double-digit fee growth in 2024 and anticipates positive growth in total income. He added that UOB targets high-quality customers for loan growth and expects its retail franchise in cards and wealth to drive the double-digit fee growth. UOB expects credit costs for 2024 to fall at the lower end of the previously guided range of 25 to 30 basis points. Wee described 2023 as a challenging year due to a global demand slowdown, geopolitical tensions, persistent inflation, and rising interest rates, anticipating some of these challenges will continue this year, but he believes their impact will be manageable. He also highlighted Southeast Asia as a region of growth, attributing this to strong domestic demand, a rebound in tourism, and investment in the manufacturing sector as multinational companies diversify their supply chains. UOB shares fell on Thursday by 2.4 per cent in early trading, underperforming the local benchmark index, which declined by 0.5 per cent. Singapore's banks, the biggest in Southeast Asia, are expected to report increased profits for the fourth quarter due to higher interest rates, however, the growth momentum may slow down as global central banks are shifting towards rate cuts and unstable markets are impacting their primary wealth business. Earlier this month, DBS Group, a larger peer, reported a 2 per cent increase in net profit for the fourth quarter, exceeding expectations. However, they predict that the net interest margin for 2024 will be slightly lower than last year as interest rates are likely to decrease. Overseas Chinese Banking Corp. plans to announce its results on Feb. 28. UOB, The third-largest bank in Southeast Asia by assets, reported that its net profit for October–December rose to S$1.40 billion ($1.04 billion), up from S$1.15 billion the previous year, which exceeded the mean estimate of S$1.37 billion from three LSEG-polled analysts. UOB recommended a final dividend payment of 85 Singapore cents per share, making the total dividend for 2023 S$1.70 per share. The bank's net interest margin, a crucial profitability indicator, increased to 2.09 per cent in 2023, up from 1.86 per cent a year earlier. UOB also reported a 14 per cent increase in its wealth assets under management, reaching S$176 billion.
