UOB strengthened deposit franchise, saw more bad loans in Q2

Its NPL formation was elevated in Q2, according to UOB Kay Hian.

United Overseas Bank (UOB) strengthened its deposit franchise but saw more bad loans in Q2 2025.

The bank’s current account savings account (CASA) ratio improved to 56.5% or by 5 percentage points (ppt) in Q2. CASA balance grew 14% year-on-year (YoY) as well although fixed deposits dropped 7% over the same period.

However, its asset quality was slightly strained, said UOB Kay Hian analyst Jonathan Koh.

The Singaporean bank’s non-performing loan (NPL) formation was elevated at S$472m in Q2. NPLs for the “others” category also increased by S$110m YoY due to an exposure to commercial real estate in the USA.

NPLs for Greater China rose S$282m in Q2 compared to the same quarter in 2024.

Despite this, NPL ratio was stable at 1.6% on upgrades, recoveries, and write-offs of S$430m, Koh said.

Looking ahead, Koh said that direct impact of reciprocal tariffs “on the first order” will be manageable.

“Management is more concerned about the second-order impact from a slowdown in business investment and domestic consumption,” Koh said.

Corporate customers exporting to the US market (10-25% of sales) accounted for 1.3% of total loans.

“About 80% of UOB’s wholesale business relates to the domestic economy and intra-regional trade. Trade loans accounted for 10% of total loans, of which 20-30% is derived from companies exporting to the US,” Koh noted.

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