UOB closed FY14 with net earnings of S$3249m, up 8% and also ahead of market consensus of S$3177m (based on Bloomberg). 4Q14 net earnings were S$786m, up 1.7% YoY and down 9.3% QoQ. 4Q14 Net Interest Income showed both YoY and QoQ improvements, which was in line with the other two banks, and its Noninterest Income also fell, albeit at a slower rate QoQ versus its peers.

Net Interest Margin (NIM) fell from 1.74% in 4Q13 and 1.71% in 3Q14 to 1.69% in 4Q14.  Allowances also went up, +19% YoY and +2% QoQ, to S$166m in 4Q14. It declared the same level of dividends as last year, with final dividend of 50 cents and special dividend of 5 cents, bringing total full year payout to 75 cents.

Stock has performed well since the low of S$21.50 in late Oct 2014 to current price of S$23.40, up 9% in less than four months. We will review our existing Buy rating and fair value estimate of S$24.20 after the analysts’ briefing later this morning.

Source: OCBC Research - 13 Feb 2015