UOB Shares Tumble After It Cuts Margin Guidance — Update

By Amanda Lee and P.R. Venkat

Shares of United Overseas Bank are headed toward their steepest one-day fall since 2020 after the Singapore bank lowered its full-year guidance for net interest margins and reported third-quarter profit fell from the previous quarter.

Singapore's banks stocks been pressured lower over the past month following a rash of new record highs as investors have turned cautious about the sector's outlook.

Although banks are likely to benefit from higher interest rates globally, which lifts their loan rates, analysts have cautioned that interest rates on deposits and other funding could be pushed up as well, and hurt margins.

That view seems to have been vindicated with UOB's results on Wednesday.

Chief Financial Officer Leong Yung Chee said the bank now expects its net interest margin to come in below the lower end of its earlier guidance range of 1.75% to 1.80%.

The bank's net interest margin was 1.68% in the third quarter, down six basis points from the previous quarter.

Higher costs of funding in U.S. dollars accounted for three basis points of the decline, Leong said, adding that a smaller gap between what it earns on Singapore dollar loans and pays on deposits took off another two basis points.

That helped drive UOB shares as much as 7.0% lower to 37.63 Singapore dollars, before they pared their losses to be down 6.5% at midday.

Sentiment was also dampened because net profit fell 15% from the previous quarter to S$1.25 billion, equivalent to US$975.5 million. Total income fell 6% to S$3.38 billion, while trading and investment income dropped 15% to S$322 million amid less favorable market conditions.

For 2027, the bank expects mid-single-digit loan growth, net interest income above 2026 levels and mid- to high-single-digit fee income growth.

Citi analyst Tan Yong Hong said UOB's 2027 guidance is likely to drive downgrades to market earnings-per-share estimates.

Write to Amanda Lee at amanda.lee@wsj.com and P.R. Venkat at venkat.pr@wsj.com

(END) Dow Jones Newswires

November 04, 2026 00:21 ET (05:21 GMT)