UOB's net profit to rise to $3.83b in 2018

This will be driven by strong loan growth.

DBS Equity Research reported a forecast of UOB’s net profit, rising by 12.98% to $3.83b in 2018.

According to DBS Research, improved loan growth of 5% in 2017 will continue for the year, specifically in Thailand and Greater China.

“UOB has launched a new Financial Institution segment as it attempts to focus on sectors with high trade and connectivity flows as it continues to eye opportunities in the flow business, which will add to both loan and non-loan income,” DBS Research added.

Further, UOB’s oil and gas episode last year have taken an upturn, and the bank expects new NPL formation to range from $300 to $400 a quarter.

“With UOB having accelerated recognition of residual vulnerable exposures in oil & gas and related sectors, we deem that the worst is over for UOB’s oil & gas episode,” DBS Research said.

Singapore Business Review also previously reported that UOB’s profit increased by 9% YoY to $3.39b in 2017.

Here’s more from DBS Research:

Compared to its peers, UOB may require a higher capital buffer as it relies more on asset growth. It remains a possibility for UOB to take on acquisitions in the near term as it seeks to optimise healthy returns on its capital. In our forecasts, we have assumed a sustained 90-Sct DPS in FY18, representing a dividend yield of 3.4% at current share prices. With ample capital buffer, further dividend upside is still possible. Management stated that it will be comfortable with CET1 of >12.5%.

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