UOB in Singapore indicates reduced margins for 2026 after a decline in Q3 profit due to provisions

SINGAPORE – UOB Reports Drop in Third-Quarter Profit

United Overseas Bank (UOB), the third-largest bank in Southeast Asia by assets, announced on Thursday a significant decline in its net profit for the third quarter. The profit dropped by 72% to S$443 million, a stark contrast to the S$1.61 billion earned during the same period last year.

This decline is largely attributed to a rise in credit provisions, totaling S$1.36 billion. Among these, S$615 million was set aside as a general allowance in advance. Surprisingly, while the situation seems dire, it fell slightly short of analyst expectations, which averaged around S$1.35 billion.

“We’re really focusing on building our general provisions to enhance our coverage,” said Vice Chairman and CEO Wee Yi Chong, who reassured that the bank plans to stick to its dividend strategy despite these profits.

Looking ahead, UOB projects a net interest margin (NIM) of 1.75-1.80% for the full year in 2026, which is a dip from this year’s projections of 1.85% to 1.90%. However, the bank still anticipates low single-digit growth for loans and a range of fee growth from low single digits to high double digits, along with a cost of credit of 25 to 30 basis points.

Interestingly, on a relative scale, larger rival DBS Group recently reported only a 2% fall in its own profits, which still managed to beat expectations.

The results of UOB come amidst a varied performance landscape for global banks. For instance, HSBC and Standard Chartered recently reported drops in profits, with Standard Chartered facing a 14% decline due to substantial legal costs related to the Madoff fraud case. However, it seems that UOB’s financial environment may not be as dire as suggested by the numbers.

In the broader context, UOB’s net interest margin fell to 1.82% from 2.05% last year, a change that reflects reduced loan spreads due to the impact of lower benchmark interest rates.