Shaky mort­gages ex­ac­er­bate UOB's sur­pris­ingly weak Q2 re­sults

The Pak Banker - - FRONT PAGE -

SIN­GA­PORE: Lower trad­ing in­come is the con­spic­u­ous cul­prit be­hind UOB's un­ex­pect­edly weak Q2 re­sults, but an­a­lysts are also rais­ing the alarm over the bank's shaky hous­ing loans. CIMB noted that UOB booked higher spe­cific pro­vi­sions (SPs) dur­ing the quar­ter due to weak­ness in its mort­gage book, par­tic­u­larly Sin­ga­pore hous­ing loans.

"UOB had a sig­nif­i­cant jump in SPs this quar­ter on the back of Sin­ga­pore mort­gage NPLs (now 38bp of loans vs. 27bp pre­vi­ously), Malaysia, and In­done­sia's com­mod­ity and SMEs NPLs," CIMB said.

How­ever, over­all non-per­form­ing loan (NPL) ra­tio re­mained sta­ble be­cause of a gen­eral pro­vi­sion (GP) write-back.

"To­tal pro­vi­sion­ing (32bp) held sta­ble only be­cause it trimmed GP this quar­ter. UOB guides that SPs were pre-emp­tive and should re­cede in 3Q, but we raise our FY15 LLP as­sump­tions to 33bp of loans," CIMB said.

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