UOB delivered its strongest quarterly earnings with 3Q17 net earnings of S$883m, up 12% YoY and 5% QoQ. This was above consensus of S$842m based on a Bloomberg poll. The outperformance came from broad-based improvement in both Net Interest and Noninterest Income. Fee Income enjoyed strong growth, up 12% YoY and 7% QoQ.

From this, Wealth Management led with a 40% YoY jump in contribution to S$143m, while Fund Management rose 15% YoY and Credit Cards improved 11%. Net Interest Margin improved from 1.69% in 3Q16 and 1.75% in 2Q17 to 1.79% in 3Q17. NPL ratio stayed stable at 1.6%.

The stock has done well so far this year, up 21.5% YTD. Pending the analysts’ briefing later, we put our fair value estimate and rating under review.

Source: OCBC Research - 3 Nov 2017