OCBC is maintaining its “buy” recommendation on UOB but cutting its fair value to $20.15 on concerns over its exposure to the upstream Oil & Gas industry.
In a Tuesday report, lead analyst Carmen Lee says UOB management is concerned about its exposure to the upstream industries in the Oil & Gas sector which amounts to $5 billion.
UOB has estimated that about $2 billion may be vulnerable if oil prices stay low, but as clients are still servicing their loans, these have not been re-classified.
However, management says they are comfortable with its exposure in China as it deals mainly with top-tier domestic banks and state-owned enterprises.
Its exposure to China amounts to $21.1 billion or about 6.6% of total assets.
Of the $11 billion bank exposure to China, 65% is trade-related with bank counter-parties and around 75% is with the top five domestic banks and policy banks.
Meanwhile, commodities exposure amounts to $21 billion or about 10.3% of total loans or 6.6% of total assets.
In 4Q15, UOB posted earnings of $788 million, in line with Bloomberg consensus, but slightly above OCBC’s projection by $20 million.
Net Interest Margin (NIM) improved from 1.77% in 3Q15 to 1.79% this quarter.
But there was an increase in allowances for credit and other losses which rose 15% to $190 million.
Management has guided for single-digit loans growth and for NIM to hold at current level.
A final dividend of 35 cents was declared and together with the interim dividend and special dividend, the full year’s payout amounted to 90 cents.
As at 9.40am, UOB is down 2.58% at $17.35.
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In a Tuesday report, lead analyst Carmen Lee says UOB management is concerned about its exposure to the upstream industries in the Oil & Gas sector which amounts to $5 billion.
UOB has estimated that about $2 billion may be vulnerable if oil prices stay low, but as clients are still servicing their loans, these have not been re-classified.
However, management says they are comfortable with its exposure in China as it deals mainly with top-tier domestic banks and state-owned enterprises.
Its exposure to China amounts to $21.1 billion or about 6.6% of total assets.
Of the $11 billion bank exposure to China, 65% is trade-related with bank counter-parties and around 75% is with the top five domestic banks and policy banks.
Meanwhile, commodities exposure amounts to $21 billion or about 10.3% of total loans or 6.6% of total assets.
In 4Q15, UOB posted earnings of $788 million, in line with Bloomberg consensus, but slightly above OCBC’s projection by $20 million.
Net Interest Margin (NIM) improved from 1.77% in 3Q15 to 1.79% this quarter.
But there was an increase in allowances for credit and other losses which rose 15% to $190 million.
Management has guided for single-digit loans growth and for NIM to hold at current level.
A final dividend of 35 cents was declared and together with the interim dividend and special dividend, the full year’s payout amounted to 90 cents.
As at 9.40am, UOB is down 2.58% at $17.35.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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