Shares of United Overseas Bank (UOB) soared to a record high on Wednesday after the bank reported a 9% rise in its fourth-quarter net profit, which exceeded expectations, and unveiled a significant S$3 billion ($2.24 billion) capital return plan for investors.
The stock rose as much as 1.4% to reach S$39.20 per share during early trading, before slightly retreating by 0.1% to S$38.63. This came despite Singapore’s benchmark stock index showing little movement.
CEO Wee Ee Cheong expressed optimism about the bank’s long-term prospects, noting, “Our long-term investments in the region are paying off with early results, the momentum is picking up, and we expect to see sustained revenue growth this year.”
UOB’s net profit for the October-December period climbed to S$1.52 billion ($1.13 billion), up from S$1.40 billion in the same period a year earlier. This increase was largely driven by higher net interest income, supported by loan growth. The result beat the mean estimate of S$1.46 billion from analysts polled by LSEG.
As Southeast Asia’s third-largest bank by assets, UOB also forecast a cost-to-income ratio of around 42% for 2025, which is at the top end of its previous forecast range of 41% to 42%.
While UOB’s results were strong, analysts cautioned that the global economic uncertainties, exacerbated by U.S. President Donald Trump’s trade policies, might affect growth prospects for 2025.
In line with its robust performance, UOB announced a comprehensive capital return package, which includes a special dividend of 50 Singapore cents per share in 2025, as well as a S$2 billion share buyback program over the next three years. The bank also declared a final dividend of 92 Singapore cents per share for 2024, up from 85 cents for the previous year.
UOB’s net interest margin (NIM), a key indicator of profitability, slightly narrowed to 2.00% in Q4, from 2.02% in the same period the previous year. CFO Lee Wai Fai, who is set to retire in April after two decades in the role, expressed confidence that the bank aims to maintain its NIM around the 2% level. He also indicated that the bank anticipates only a single interest rate cut by the U.S. Federal Reserve in 2025, citing the strength of the U.S. economy and the potential inflationary effects of Trump’s policies.
