UOB says Q2 net profit up 28%, beats forecast

Written by The Edge

United Overseas Bank posted a 28% rise in second-quarter net profit, helped by lower bad-debt charges, which beat market expectations.

UOB, Singapore’s third-biggest bank, posted a net profit of $602 million in April-June, compared to $470 million a year earlier.

That compared with an average forecast of $576 million, according to eight analysts polled by Reuters.

Singapore banks are benefiting from the city-state’s surging economic expansion and reduced bad debt charges, but historically low interest rates are keeping interest rate margins under pressure.

Bigger rival DBS Group last month posted an unexpected loss due to one-time goodwill charge on its Hong Kong business, but excluding the charge, net profit was up 30%.

Oversea-Chinese Banking Corp last week reported an eight% rise in quarterly profit, slightly below forecasts, as staff costs surged.

UOB shares have fallen 0.7% so far this year, less than DBS’s 6% drop and OCBC’s 3% decline.

The banks have underperformed the benchmark Straits Times Index <.FTSTI>, which is up 3.3% in 2010, due to concerns over margins and risk-aversion following the debt crisis in Europe.

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