Analyst Note| Michael Wu, CAIA |
In line with peers, it was a positive quarter for United Overseas Bank with net profit increasing 18% against the same period last year, to SGD 1 billion. While much of this was driven by a decline in credit cost, or ECL, UOB was able to increase income against last year. Net fee income and trading income were strong at SGD 638 million and more than offset lower net interest income. We increase our fee income assumption to 9% for fiscal 2021 with our fair value estimate rising to SGD 29 per share from SGD 28 per share. The 3-star bank is trading at a 10% discount to our new fair value.