Singapore's UOB misses on Q3 profit, margin pressures loom; shares slide

SINGAPORE: United Overseas Bank (UOB) said on Wednesday its third-quarter net profit missed expectations and flagged further margin pressures ahead, sending its shares sliding.

The Singapore lender lowered the full-year outlook for its net interest margin (NIM), a key profitability gauge, as it expects funding costs will remain elevated.

UOB's net profit for the third quarter came in at S$1.25 billion (US$975.72 million), underperforming the mean estimate of S$1.35 billion from two analysts, according to LSEG data.

The profit was more than double that of a year earlier, but the year-ago quarter was a low base due to a surge in credit provisions by the bank.

UOB's shares sank more than 5.0 per cent to reach a nearly five-month low of S$38.15.

UOB Chief Financial Officer Leong Yung Chee said NIM for the full year is likely to fall below 1.75 per cent, down from the previous quarter's guidance of 1.75 per cent to 1.80 per cent.

For the third quarter, the bank's NIM narrowed 6 basis points quarter-on-quarter to 1.68 per cent due to higher funding costs.

Leong said this was due to "intense competition amongst banks for deposits being raised".

"Even though an external environment of firming interest rates, the pricing of asset yields versus the pricing up of cost of deposits were acting in different directions," he added.

The bank's trading and investment income slid 33 per cent from a year earlier to S$322 million, which it attributed to less favourable market conditions. That weighed on other non-interest income, which fell 29 per cent from a year earlier to S$370 million.

Growth in its wealth management franchise continued to cushion its bottom line. Net fee income jumped 19 per cent from a year earlier to a record S$733 million, helped by strong growth in wealth, cards and loan-related activities.

Wealth management fees reached a record S$258 million in the third quarter, with net new money totalling S$5 billion in the first nine months of 2026.

For its 2027 outlook, the lender said it expects loan growth to come in at a mid-single-digit range, while it forecasts net interest income to be above 2026's levels. Meanwhile, it expects fee income to reach mid- to high-single-digit growth.

UOB has kicked off the third-quarter earnings season for Singapore banks, with larger peers DBS and OCBC due to report results on Thursday and Friday, respectively.