United Overseas Bank

[iam802]

Does that means GE Money has pulled out of SingPost?

[winston]

From Lim & Tan:-

Worth Noting S$8.27-UOBM.SI

Mr Wee Cho Yaw’s purchase of UOB shares on March 10th / 11th, totaling 400,000 shares at $8.42 average (costing $3.37 mln), was for the recently set-up Wee Foundation, ie there should be further purchases, especially should the stock weaken further. It is likely to tempt many to follow his lead.

A refresher of certain past transactions is useful:
- WCY last bought 500,000 shares at $14.30 each in Sept ’05;
- CEO / son Ee Cheong last bought 50,000 UOB shares in Aug ’07 paying $20.45;
- The Bank last bought back 133,000 of its own shares on Feb 29th ’08 at $18.14 each. (Under the mandate to buy up to 76.18 mln shares, UOB bought 18.32 mln shares between June 8 ‘07 and Feb 29 ‘08.)

UOB hit an intra-day low of $8.07 on Tuesday March 10th, the lowest since May 1999! Its latest book
NTA is $6.11, giving price-to-Book NTA of 1.32x. (Revalued NAV is $10.89, putting the stock on 0.74x
RNAV.)

[iam802]

UOB says plans restructuring, to cut operating costs

SINGAPORE, April 9 (Reuters) - United Overseas Bank (UOBH.SI), Singapore's second-biggest lender, is planning a restructuring process in a bid to improve efficiency, the bank said on Thursday.

The bank also said it would reduce operating costs, according to its annual report posted on its website, without giving any details. Banking sources said UOB does not plan to cut jobs as part of the restructuring.

"In this turbulent environment, the group will steer a cautious course," the bank said in the report. "We will focus on reducing operating costs and improving our corporate governance, risk management and service standards."

UOB said the global financial crisis showed no sign of easing in the first quarter of 2009. The bank will report its first quarter earnings next month. (Reporting by Saeed Azhar and Kevin Lim; Editing by Neil Chatterjee)

[millionairemind]

Is a bollinger squeeze breakout on the cards???

[winston]

HI MM,

I cant help you with the charts. However, it looks like it's hitting some resistance after running up from it's low of about 8.07.

The following are some notes that I have:-
1) No Growth
2) Results not so good
3) NPLs to increase

Some Target Price:-
1) CitiGp 17.6 Aug 28 from 26.6 Jul 23 from 22.35 Apr 30 from 17.35 Oct 17
2) CIMB 14.28 Apr16 from 10.46 from 13.7 Feb12 Oct29 from 20.04 Jun27 May7 Mar4 from 19.55 Feb20 from 22.4 from 17.96 Feb19
3) CS 12 Mar2 from 14.75 from 28 May8 from 23.5
4) JPM 13 Mar2 from 15 from 19.6 Oct16
5) MacQ 11.92 Mar16 from 24 Dec4 from 20.9 Apr2 from 21.55 Jan16
6) ABN 20 Oct18
7) GS 19.8 Aug6 from 21 Oct31 from 18.5 Oct18
8) NetRs 17.3 Aug2
9) Keng 14.2 Nov3 from 20.8 Aug29 Aug6 from 20 Jul15 May7 Feb28 from 24.8 Dec13 from 23.8 Oct31
10) Phillips 13.5 Nov4 from 19.3 May7 Feb28 from 22.8 Apr5 from 19.4
11) Merrill 20 Sep11 from 26 Sep6 from 23.7 Mar1
12) OCBC 13.3 Nov4 from 20.6 Aug6 Feb28 from 22.2 Mar1
13) BNP 26.3 May9
14) DBS 16.3 Oct15 from 21 Oct2 Jul16 Jul1 from 21.8 May20 May7 from 27.5 Feb5 Dec3 Oct31 Jun19
15) DB 11.3 Mar2 from 12.4 from 15.4 Oct30 from 23.5 Sep3 from 23.2 Nov29
16) DBS 11.3 Nov3 from 19.3 Apr1 from 27.5 Dec21
17) DMG 14.3 Feb2 from 16 Nov3 from 18.4 Oct14 from 22.3 Sep3 from 23.3 Aug6 Jun19
18) MS 13 Nov3 from 16 Aug6
19) UBS 19.7 Oct17 from 21
20) RBS 17 Oct29

Not vested. I'm playing UOB thru Haw Par, which hopefully would provide me with some margin of safety as Haw Par is trading at a deep discount to RNAV.

Take care,
Winston

[winston]

From OCBC:-

UOB: Downgrade on valuation grounds

UOB rallied 40% from 2009 trough. Since our last report on 2 March 2009 where we recommended accumulating at less than $9.30, UOB hit a
2009 low of S$8.07, but rallied 40% recently to a high of S$11.32. While the worst appears to be over for the equity market, the same cannot be said about the local economy.

Recently, Singapore's 2009 growth was revised down to a range of -6% to -9%. Over in the US, while equity prices rallied in recent weeks, the economic numbers continued to show weakness, and high unemployment rate remains a concern. Valuations for the STI are also starting to look a bit stretched, especially in view of expected dismal 1Q and 2Q earnings.

Recently, there was also a spate of smaller-cap companies in Singapore issuing profit warnings and all these point to still bearish operating environment. Against this backdrop, we expect provisions for banks to be a key item to watch out for in the upcoming results of the three banks. UOB and OCBC will be releasing 1Q results on 6 May 2009, while DBS will be issuing its 1Q report card on 8 May.

High impairment charges. In 4Q08, UOB posted higher than expected impairment charges of S$381m, more than doubled 3Q08's level of S$158m, and the highest of the three banks. For 1Q09, we expect impairment charges to remain high for the three banks, and project charges of S$280m for UOB, +215% YoY and -26% QoQ. Overall, we are expecting 1Q net earnings of S$316m, down 40% YoY and 5% QoQ.

Maintain fair value of S$9.30, but cutting to SELL. We continue to like UOB for its healthy asset quality and its continual profitability. However, with the global economic recession and the resultant weakness in the Singapore economy, trading activities will decline sharply and hurt earnings for the banks. This will be seen in higher NPLs and high impairment charges.

This will also mean that for the medium term, share price appreciation may be capped until a more convincing return to sustained profitability and a bottoming-out is seen for new NPLs. We are maintaining our earnings estimates and retaining our fair value estimate of S$9.30, but downgrading to SELL purely on valuation as we see limited near term price upside and possible near term weakness at the current level. (Carmen Lee)

[millionairemind]

So much so for one bank analyst knowing her banks..... Sell recommendation with fair value at $9.30 and it closed at $14.88 ytd..

From OCBC:-

UOB: Downgrade on valuation grounds

Maintain fair value of S$9.30, but cutting to SELL. We continue to like UOB for its healthy asset quality and its continual profitability. However, with the global economic recession and the resultant weakness in the Singapore economy, trading activities will decline sharply and hurt earnings for the banks. This will be seen in higher NPLs and high impairment charges.

Published May 7, 2009

BANK EARNINGS
UOB Q1 profit of $409m better than expected

Shares soar 13% to $14.88; NPL only marginally up from Q4 last year

By SIOW LI SEN


UNITED Overseas Bank (UOB) shares soared 13.1 per cent yesterday to $14.88 after it posted better than expected first-quarter net profits.

Mr Wee: Bank benefited from the industry's 'back to basics' move

The non-performing loan ratio was up just marginally from the preceding quarter.

'There are no major signs of deterioration and the group remains comfortable with its overall portfolio,' UOB said in a press statement.

UOB was the top stock performer in the 30-stock Straits Times Index yesterday after it reported net profit of $409 million for the three months ended March 31, down 23.3 per cent from the year-ago comparative period as loan impairment charges quadrupled to $378 million from Q108's $89 million.

Bloomberg said that six analysts had a mean estimate net profit of $384 million.

UOB shares are now up 84 per cent from its year-low of $8.07 recorded in March.

OCBC Bank, which reported a 12 per cent fall in first-quarter net profit to $545 million, saw its stock rise 4.6 per cent to $6.80. DBS Group Holdings, which releases results tomorrow, gained 8.1 per cent to $11.74.

More significant, against the preceding quarter, UOB's net profit was up 23.3 per cent, mainly due to higher investment income and fee and commission income.

Closely watched non-performing loans (NPL) rose marginally, to 2.1 per cent from 2 per cent at end-2008. UOB had worried investors when its NPL ratio rose the fastest among the three local banks in the preceding quarter when it went to 2 per cent from 1.5 per cent.

The NPL ratio at both DBS and OCBC in Q4 rose to 1.5 per cent, from 1.3 per cent previously. In the fourth quarter of last year, all three local banks reported more bad loans and warned that the situation would get worse.

UOB chief executive Wee Ee Cheong said that the bank 'achieved a decent set of results for the first quarter, benefiting from the industry's move towards 'back to basics'.'

'The bank will stay disciplined and ensure our balance sheet and core franchise remains strong.'

UOB said that Q1 net interest income fell slightly from Q4 to $949 million due to a shorter quarter. It was up 11.4 per cent year-on-year on the back of loan growth and lower funding costs.

Net interest margin fell four basis points from Q4 to 2.41 per cent due to lower average loan spread from some overseas centres. From a year ago, net interest margin was up 21 basis points, largely due to lower funding costs.

'Singapore margins remain strong,' said a bank spokeswoman, adding that the bank still expects to see 'good net interest margin performance for 2009'.

Net customer loans came to $99.7 billion, marginally down from Q4 and up 5.6 per cent from Q1 2008, largely from higher housing loans and loans to professionals and individuals.

Non-interest income was up 11.1 per cent at $434 million from the preceding quarter.

UOB said that Q1 total expenses fell 7.7 per cent to $491 million from Q4 due to lower headcount and a grant from the Jobs Credit Scheme.

'The core trends were very good in the first quarter,' JPMorgan & Chase Co analyst Harsh Wardhan Modi said in a Bloomberg report.

'The fact that credit quality didn't deteriorate significantly during the quarter bodes well for 2009 credit cost and restores a degree of confidence in underwriting standards at the bank.'

[winston]

So much so for one bank analyst knowing her banks..... Sell recommendation with fair value at $9.30 and it closed at $14.88 ytd..

If the experts are groping in the dark, what chance do we have ?

Or is the blind leading the blind ?

[winston]

UPDATE 1-UOB Q2 profit drops 22 pct on bad debt; outlook rosy

* UOB net profit S$470 mln vs forecast S$441 mln
* Says outlook upbeat on global recovery
* Shares have underperformed peers this year (Recasts lead, adds outlook, analysts comment)

By Saeed Azhar SINGAPORE, Aug 5 (Reuters) - United Overseas Bank , (UOB) Southeast Asia's second-biggest lender, said it was upbeat on prospects due to an improving global economy after posting a 22 percent drop in quarterly profit on higher bad debt charges.

The outlook for Singapore banks, like their Asian peers, is improving as they take advantage of strong capital markets to boost trading income and as bad debts have generally risen at a slower-than-expected pace.

Signs are also emerging that loan growth may revive due to a recovery in residential property, making analysts more bullish on Singapore banks on hopes that a more benign economic outlook could boost earnings in 2010.

"Looking ahead we are certainly more upbeat about prospects as global sentiment improve," said UOB CEO Wee Ee Cheong said in a statement " April-June net profit fell to S$470 million sin ($328.7 million) from S$601 million a year ago, UOB said on Wednesday.

The result beat analyst forecasts for a profit of S$441 million due to lower taxes.

Oversea-Chinese Banking Corp , Singapore's smallest listed bank, surprised the market on Monday with a 10 percent rise in quarterly profit on higher trading income and strong loan margins. [ID:nSP404279] DBS , the region's biggest bank, reports earnings on Friday. [ID:nSIN468766]

BAD DEBT

UOB wrote down S$465 million in the second quarter to account for bad debt -- largely comprising loans that have gone sour -- more than double from a year earlier.

( Sin$465m is not a small amount )

Brian Hunsaker, an analyst at Fox-Pitt Kelton, said UOB's provisions were "general" rather than "specific", indicating the bank was still cautious.

UOB said net lending grew 0.4 percent from a year earlier and net interest income rose 3.9 percent to S$908 million from a year earlier, helped by a 12 basis point jump in net interest margins to 2.35 percent from a year ago.

Non-interest earnings, such as commissions and fees on investment products, was relatively flat at S$551 million as capital markets revived.

"We think investors should be overweight the Singapore banks, and within the sector our preference remains DBS given attractive relative valuation," said Andrew Hill, a banking analyst at Deutsche Bank before the result. "However, we have also upgraded UOB to 'buy' given valuation upside." But other analysts such as those at HSBC are sanguine about earnings prospects because weak external demand may cap loan growth to the manufacturing and business services.

UOB's shares have underperformed its Singapore rivals this year, rising around 37 percent so far this year, below the benchmark Straits Times Index's <.FTSTI> which has risen about 50 percent.

[millionairemind]

United Overseas Bank
Aug 6 close: $16.34
CIMB-GK Securities, Aug 6

Q2 2009 net profit of $470 million was above our expectations ($437 million) and above consensus ($426 million) due to strong trading gains and tax write-backs. H1 2009 profit makes up 54 per cent of our full-year forecast and 53 per cent of consensus.

However, earnings quality appeared low initially, since earnings were propped up by large investment gains and tax write-backs. Apparently, UOB took the chance to pad up provisions while it can afford it. Q2 2009 return-on-equity was 12.1 per cent, matching OCBC's, but provisions were much higher. An interim dividend of 20 cents was maintained.

Net interest income (NII) was slightly short as loans fell 2 per cent q-o-q and margins contracted 6 basis points. There was also no broad-based growth in fee income, unlike at OCBC. Both made us wonder if UOB's revenue suffered from over-conservatism in H1 2009, missing out on the recovery. Core revenue only looked good with the help of a large $141 million investment gain (Q1: $29 million). Management guided that the gains were due to currency hedges and might not be sustainable.

The big trading gains, though, gave management the leeway to kitchen-sink provisions. Specific provisions (SP) was 60 basis points of loans (Q1: 66 basis points), SP plus general provisions (GP) rose to 90 basis points of loans (Q1: 84 basis points) despite guidance that non-performing loans (NPLs) 'will not peak at levels much higher' than here (Q2 NPL ratio: 2.4 per cent).

When queried on why GPs were kept high when it already had the highest provisioning among peers, UOB answered that it 'can afford it' this quarter. High LLPs offset the trading gains, but tax write-backs steered profitability slightly ahead of our expectations.

Available-for-sale (AFS) recoveries amounted to $1.2 billion or 7 per cent of book value. While core earnings were not particularly exciting, the AFS gains that we were anticipating materialised.

The quantum was larger than at OCBC and helped to boost book value.

We raise FY2009 forecast by 6 per cent, primarily on higher trading gains, partly offset by lower NII and fee income.

Target price raised to $18.36 from $16.18, based on 1.8 times CY2009 price-to-book (P/BV) under Gordon-growth model (GGM) (from 1.7 times). The AFS recovery accounts for about two-thirds of our target price upgrade, the remainder comes from higher FY2009 earnings.

The bout of profit-taking yesterday leaves enough upside for an Outperform rating.
OUTPERFORM