UOB kicked off the 3Q18 results season for the banking sector this morning with 3Q18 net earnings of S$1.04b, up 17% YoY and -4% QoQ.

Net interest income grew 4% QoQ to S$1.60b. Its 3Q18 results were broadly in line with expectations.

The group also shared that it is building up and positioning for further interest rate increases ahead. NPL ratio fell from 1.7% in 2Q18 to 1.6% in 3Q18.

We will provide more details after the briefing, but as the 3Q results are broadly in line with our estimates, we are maintaining our BUY rating.

Based on yesterday’s closing price of S$24.95 and our estimated DPS of S$1, dividend yield is estimated at 4%.

Source: OCBC Research - 26 Oct 2018