+ Resilient interest margins
NIM improved 4bps QoQ from 1.53% to 1.57%, contributing to a 3% increase in NII. Better management of liquidity and funding costs lifted NIM. NIM is expected to be stable as the bank targets loan growth to improve NII. Room for further funding-costs adjustments and improving LDR can help manage NIM compression pressures.
+ Robust growth in fees and commissions
Fee and commission income grew 10% YoY and 2% QoQ. Fund-management and wealth-management fees improved, particularly as UOB’s wealth-management franchise gained traction. Credit-card fees also grew by double digits for a second consecutive quarter to S$109mn, mirroring a recovery in consumer spending.
– Weak trading income
Volatile market conditions caused its trading income to decline. This reduced its non-interest income by 33% YoY and 21% QoQ. The QoQ decline was also due to more investment gains booked during the previous quarter. As volatility subsides, we expect trading income to stabilise in FY21e.