SINGAPORE &ndash Singapore&rsquo s third-largest bank&rsquo s on Thursday reported an increase in fourth-quarter earnings as net interest income surged on higher interest rates.

 

UOB&rsquo s net profit for the three months to December 2022 rose 13 per cent to $1.15 billion, up from $1.02 billion a year ago.

 

Its core net profit, however, jumped 37 per cent to $1.4 billion, after excluding one-off expenses related to the acquisition of Citigroup&rsquo s Malaysia and Thailand consumer businesses. 

 

This is higher than the average estimate of $1.2 billion from two analysts polled by Refinitiv.

 

UOB has recommended a final dividend of 75 cents a share. Together with the interim dividend of 60 cents a share, the total dividend for the full year will be $1.35 a share, representing a payout ratio of 49 per cent.

 

Earnings for the full year rose 12 per cent to $4.6 billion, or 18 per cent to $4.8 billion after factoring out the Citi acquisition. Both levels were new records.

 

The bank said its acquisition of Citigroup&rsquo s Malaysia and Thailand consumer businesses was completed in November, and it expects to complete the acquisition of the group&rsquo s consumer units in Indonesia and Vietnam this year.

 

UOB&rsquo s retail customer base has expanded to nearly seven million in the region.

 

Deputy chairman and chief executive Wee Ee Cheong said Asean is vibrant and has immense long-term potential.

 

&ldquo We remain positive on the region despite the global economic gloom in the near term. Looking ahead, we are confident that our strategy of seeking growth while ensuring stability will continue to create value for our customers and other stakeholders,&rdquo he said.

 

UOB forecast mid single-digit loan growth and double-digit fee growth for 2023.

 

The lender&rsquo s fourth-quarter net interest income surged 53 per cent to $2.56 billion. This came as net interest margin &ndash a key gauge of profitability &ndash rose 66 basis points to 2.22 per cent and loans grew 3 per cent.

 

But net fee income dipped 16 per cent to $485 million as robust credit card fees were more than offset by softer wealth management and loan-related fees.

 

Other non-interest income rose 62 per cent to $285 million on higher customer-related treasury income.

 

The bank set aside more provisions for potential bad debt, to the tune of $184 million, from higher specific allowance on &ldquo a few non-systemic accounts&rdquo .

 

Its earnings were flat compared with the third quarter.

UOB on Thursday (Feb 23) posted a 24 per cent gain in net profit as it made S$2.6 billion for the second half of the year ended Dec 31, 2022, from S$2.1 billion for the year-ago period.

 

Annualised earnings per share for H2 2022 stood at S$2.69, from S$2.39 for the corresponding period a year ago. UOB&rsquo s full-year profit was S$4.6 billion, 12 per cent higher than the S$4.1 billion recorded for FY2021.

 

The results were slightly below consensus estimates, where analysts polled by Bloomberg expected S$4.7 billion in net income for the bank for the full year.

 

The lender declared a dividend of S$0.75 per share for the period, up from S$0.60 for H2 2021. It will be paid out in cash on May 12, after books closure on May 3.

 

Net interest income for the second half of the year rose to a record S$4.8 billion &ndash a 46 per cent increase from H2 2021, where net income was S$3.3 billion.

 

This was driven by a 53 basis point uplift in net interest margin to 2.08 per cent, up from 1.55 per cent in the corresponding year-ago period.

 

UOB&rsquo s non-performing loans ratio was 1.6, unchanged from the last second half of the year.

 

Net interest income for the full year stood at S$8.3 billion, up 31 per cent from S$6.4 billion for FY2021, while net interest margin ratio improved to 1.86 from 1.56 in 2021.