Singapore's United Overseas Bank (UOB) saw its shares reach a record high on Wednesday following a 9% increase in fourth-quarter net profit that exceeded expectations. The bank also unveiled a S$3 billion ($2.24 billion) plan to distribute excess capital to investors.
Initially surging 1.4% to S$39.20 per share, the stock later dipped slightly to S$38.63 amidst a stable performance in Singapore's main stock index.
UOB's CEO, Wee Ee Cheong, expressed optimism during an earnings briefing, noting the positive returns from their regional investments and anticipating sustained revenue growth for the year.
The bank's October-December net profit rose to S$1.52 billion ($1.13 billion) from S$1.40 billion a year earlier, driven by increased net interest income fueled by loan growth. This exceeded the average estimate of nearly S$1.46 billion from four analysts surveyed by LSEG.
Anticipating a 2025 return on equity of around 42%, UOB maintained its previous outlook. Additionally, it announced plans for a special dividend in 2025 and a S$2 billion share buyback program as part of its capital return strategy.
UOB's net interest margin declined slightly to 2.00% in the fourth quarter from 2.02% a year ago. The Group Chief Financial Officer, Lee Wai Fai, aimed to sustain this margin at the current level and anticipated one interest rate cut by the U.S. Federal Reserve in light of the robust U.S. economy and potential inflationary impacts of Trump's policies.
In a broader context, analysts suggested a positive fourth-quarter for Singaporean banks, yet cautioned on the impact of global uncertainties such as U.S. trade tariffs. Simultaneously, UOB's larger peer, DBS Group, reported a 10% year-on-year profit increase and initiated a dividend return plan, which saw its shares hit a record high.
Looking forward, Oversea-Chinese Banking Corporation is set to release its financial results on February 26.