UOB third-quarter profit tumbles 72% as it hikes credit provisions by $lb

Allowances quadrupled amid sector-specific headwinds, macroeconomic uncertainties

- Timothy Goh

UOB on Nov 6 posted a sharp 72 per cent drop in third-quarter net profit to $443 million from $1.61 billion in the year-ago period on a surge in credit provisions.

Allowances for credit and other losses more than quadrupled to $1.36 billion, from $304 million a year earlier, as the bank said it “took proactive steps to strengthen its provision coverage amid ongoing macroeconomic uncertainties and sector-specific headwinds”.

This lifted general allowance coverage to 1 per cent of performing loans. The general provisions cover all sectors, including smalland medium-sized enterprises as well as multinational corporations.

UOB’s shares took a hit on the news, falling as much as 4.6 per cent to $33.25 in early trading on Nov 6 before paring losses to close 2.78 per cent down at $33.90.

“We proactively set aside general allowances to significantly enhance provision coverage, backed by our strong capital base,” said deputy chairman and chief executive Wee Ee Cheong. UOB noted that its dividend payment would not be affected by the preemptive general allowance. It also remains committed to its $2 billion share buyback programme, with nearly a quarter of it completed as at September. It also remains committed to its $2 billion share buyback programme, with nearly a quarter of it completed as at September.