UOB released its 1Q14 results after the market close last Wed, with net earnings up 9.2% at S$788m. This is ahead of our quarterly earnings projection of S$724m (consensus: S$742m). The improved performance was driven by strong net interest income (+15.2% YoY) and lower taxes from the write-back of prior years‟ income tax. This more than offset the slack in its fee and commission income (-8.6%) and other non-interest income (-10.6%). Net interest margin for the quarter improved 3bps YoY to 1.73% (4Q13: 1.74%). Management said that its asset quality continued to remain strong, with the nonperforming loan ratio stabilizing at 1.1% from 4Q13 and better than 1Q13 ratio of 1.3%. We maintain our HOLD rating and S$22.40 fair value estimate on UOB.

Source: OCBC Research - 2 May 2014