United Overseas Bank

[millionairemind]

DJ MARKET TALK: UBS Cuts Target Price Of Singapore Banks


0642 GMT [Dow Jones] STOCK CALL: UBS cuts target price for DBS (D05.SG) to S$20.00 from S$22.00, for OCBC (O39.SG) to S$7.10 from S$7.40, for UOB (U11.SG) to S$19.70 from S$21.00. Move follows reduction in FY08-10 earnings forecasts to reflect potentially higher provisions amid Singapore recession; "the key variable for bank earnings over the next two years will be the cost of the recession; that is the level of provisioning." Keeps Buy call on DBS, UOB, Neutral on OCBC but expects more downside for shares; "while we believe valuations are attractive, the stocks remain volatile, given the uncertainty in the markets and it is difficult to ascertain the bottom." DBS +0.1% at S$13.86, OCBC +3.2% at S$6.52, UOB +1.3% at S$15.20. (FKH)

[millionairemind]

UOB Q3 profit drops below forecast as crisis hurts
* Profit down as volatile markets hurt non-interest income
* Impairment on bad debt less than Q2
* Bank says vigilant on risks, crisis will hit real economy

SINGAPORE - Singapore's second-largest lender United Overseas Bank said quarterly profit fell a bigger-than-expected 5 per cent as volatile markets hurt non-interest income and warned the credit crisis will hit the real economy.

Singapore banks, which have so far averted a significant earnings' drop from the global credit crisis because of strong loan growth, are now facing slowing Asian economies.

The city-state itself fell into recession in the third quarter, the country's first economic contraction since 2002, and the central bank has warned growth will be below the potential 4-6 per cent in 2009, raising the spectre of more bad loans.

'We are mindful of the fast changing global banking landscape, the intense liquidity and credit squeeze in the global system,' Wee Ee Cheong, UOB's chief executive, said in a statement. 'The impact of de-leveraging and credit crunch will be increasingly evident in the real economy.'

UOB said on Friday July-September net profit fell to $475 million from $501 million a year ago. Analysts had predicted net profit of $500 million or a drop of 0.2 per cent from a year earlier, according to the average of four forecasts compiled by Reuters.

Singapore's biggest lender, DBS Group Holdings, will report its earnings on Nov 7 and third-ranked Oversea-Chinese Banking Corp on Nov 5.

Loans
Loan growth in the city-state has so far defied expectations because of demand for construction and infrastructure projects, but analysts have warned that the double-digit growth is likely to slow in the months ahead.

UOB, controlled by chairman Wee Cho Yaw and his family, is considered the leader in Singapore's loan market for small- and medium-sized businesses, and has benefited from demand for property and construction.

Net lending grew almost 18 per cent in the third quarter from a year ago, little changed from growth reported in the second quarter.

Net interest income rose 25.1 per cent to $893 million from a year earlier and was up 2.3 per cent from the previous quarter, while non-interest earnings, which include commissions and fees on investment products, fell 18.6 per cent from a year earlier to $319 million as global equity markets tumbled.

UOB posted impairment charges of $158 million in the third quarter, on non-performing loans and writedowns on structured products. The impairment was still below the $180 million taken in the second quarter.

Analysts have raised concerns about credit quality as a regional property boom ends and Asian economies slow.

'Over the last three years Singapore bank earnings have been inflated by above average loan growth, below average loan loss charges and buoyant investment markets,' said Morgan Stanley's Matthew Wilson in a note.

'As the credit cycle develops, we expect bank earnings to contract by around 10 per cent year-on-year - the street still expects growth of 6 per cent,' he said.

But Deutsche Bank analyst Michael Chang said Singapore banks may be in better shape than their regional peers because of higher underwriting standards after the 1997/98 Asian financial crisis.

UOB shares fell 9.8 per cent in July-September, compared to an 11 per cent drop in shares of sector leader DBS and a 12.2 per cent decline in Oversea-Chinese Banking Corp. -- REUTERS

[millionairemind]

Nov 1, 2008, The Straits Times
Retiree sues UOB over high-risk investment losses
He loses $350k, says risks not explained; bank denies his claims
By Selina Lum

A 69-YEAR-OLD retiree, who lost more than $350,000 in high-risk investments, has sued United Overseas Bank (UOB) and his relationship manager for selling him the products. In May, Mr Go Sua Kui, a Privilege Banking customer of UOB, put $2.5 million into equity-linked notes at a 12.8 per cent yield.

But he ended up having to sell the shares at a loss when his investment matured in June.

Mr Go has sued UOB and 28-year-old relationship manager (RM) Yeo Beng Hee for misrepresentation, negligence and breach of duty under the Financial Advisers Act. Both UOB and Mr Yeo deny the allegations.

This is believed to be the first case involving the statutory duty of financial advisers set out in the Act.

Although the investments are not connected to the collapse of Lehman Brothers, this case is expected to be of great interest to investors who stand to lose money from products linked to the bankrupt American investment bank.

Mr Go filed his lawsuit in the High Court on Oct 3; UOB and Mr Yeo filed their defence on Wednesday.

Mr Go said that Mr Yeo made an appointment to meet him in April to introduce himself as his new RM.

At the meeting, a risk profile was done that put him in the conservative category. But he claimed Mr Yeo recommended that he invest in equity-linked notes without explaining the risks.

Mr Go first invested $250,000 in equity-linked notes that have since matured. He is still holding those shares.

Within a month, he put in another $2.5 million in a second product.

Mr Go said the RM told him that the second product was a safe investment, that his principal would be protected, and that he would not suffer a loss.

He now wants both transactions to be revoked and to get back the loss from the second investment.

But the defendants painted Mr Go, who used to be a property developer, as an experienced investor who bought stocks and had previously put $600,000 into funds in the medium- to high-risk class.

Mr Yeo claimed that it was Mr Go himself who had expressed interest in equity-linked notes. He maintained that he had explained the workings of the product and denied making the representations.

[winston]

Morgan Stanley on Sunday cut the price target for United Overseas Bank to S$13.00 from S$14.00 and reduced its earnings estimates by 7 percent in 2009 and 10 percent in 2010 for the Singapore bank.

UOB reported a 5 percent drop in third-quarter profit on Friday, as it wrote down bad debt and volatile markets hurt non-interest income.

[LenaHuat]

I consider UOB to be the leader amongst the pack of 3 local banks. Watch out and collect this ticker in your portfolio.

[millionairemind]

I consider UOB to be the leader amongst the pack of 3 local banks. Watch out and collect this ticker in your portfolio.

Lena - haha.. you and I have the same ticker on our WL... I also considers UOB the leader

[millionairemind]

UOB seeks loan repayment from Zhonghui
Bank demands payment for two outstanding sums of S$1.02m and US$12.5m
By LYNETTE KHOO

ANOTHER Chinese company listed in Singapore has a credit line snapped after it defaulted on payment. Zhonghui Holdings said that it has received a letter of demand from United Overseas Bank (UOB) on Wednesday to repay two outstanding sums - S$1.02 million and US$12.5 million - within seven days. UOB is also seeking payment of interest accrued on the outstanding sums.


'The company is in the process of responding to the bank accordingly,' Zhonghui said in an announcement. It also said that the company is trying to divest its investment in an associated company to help to repay the bank debt and will keep investors informed.

Last year, Zhonghui entered into agreement with UOB for a short-term loan facility and a term loan facility for an aggregate amount of up to US$13.2 million and an overdraft facility of up to S$1 million to finance an acquisition by its wholly owned subsidiary.

The subsidiary, Shaanxi Zhonghui Environmental Conservation Corporation, acquired a 42.06 per cent stake in Baoji ZhongCheng Machine Tooling Co from Shaanxi Guangtai Industry (Guangtai) in June 2007 for 218.89 million yuan (S$48.5 million).

But UOB had to revise its repayment schedule for Zhonghui in July this year, with US$9.56 million to be progressively paid between August and November and US$2.2 million by Jan 3, 2009. Zhonghui had planned to partially divest its stake in Baoji to repay the loan.

Last month, Zhonghui appointed PricewaterhouseCoopers as special accountants to assess its financial position.

PwC's scope of review also included Zhonghui's investment in Baoji and the status of a proposed acquisition relating to management right to operate a solid waste treatment plant in Xi'an.

These were issues raised by former independent director Lim Lian Soon, who had resigned a month earlier, citing unsatisfactory information flow from the executive directors on these matters.

Zhonghui's financial controller Emily Ang also resigned in May and was replaced by Cui Chengji as finance manager in June. Horwath First Trust notified the company in July of their wish to resign as auditors of the company.

For fiscal 2007 and the first nine months of 2008, Zhonghui would have been in the red had it not recognised profits from its stake in Baoji. Its third quarter ended Sept 30 results, which did not include results from Baoji, saw net losses widen to 9.92 million yuan from 5.34 million yuan as it recorded zero turnover, but incurred operating expenses.

As at Sept 30, its short-term bank loan and bank overdraft amounted to 85.5 million yuan and was in net current liabilities of 103 million yuan. Its investment in Baoji was valued at 252 million yuan.

The group had said in its Q3 financial statement: 'In the event the company is unable to divest off, or it has to divest its associated company at a significantly lower value, the company may not be able to meet its obligations to the bank. This may raise doubts as to whether the company would continue as a going concern.'

[LenaHuat]

DJ MARKET TALK: China CSRC OKs UOB Asset Mgmt QFII License

[winston]

UOB down 4% today ? Why the weakness ? Following the European banks and HSBC downwards ?

A bit funny if that is the reason..

[LenaHuat]

Yesterday I went to UOB to dump a batch of gold coins, bought @S$744 in 1990 and only realized a miserable return of @S$1344 in 2009. Got really upset when I learnt that the mammoth banking hall has no public toilet. The greedy bank ripped off all the toilets in Plaza 2!

Told to try Plaza 1. Got there and was shocked to find 1 Jap-sized public toilet.
The banks have been spoilt and overly greedy. They had treated customers shabbily for the last 5 mad years.
Gonna blast the banks but wonder how