Fwd: United Overseas Bank: 2Q Results Highlights

[Speculatist]

Forward for your interest please


FOR INTERNAL CIRCULATION

UOB reported 2Q07 earnings of S$585m, up 32% YoY and 13% QoQ. This is
higher than market estimate of S$511m (based on an earlier Dow Jones poll).
This excluded the one-off items in 2Q06 which were due to the divestment of
OUE and Hotel Negara. UOB's 1H07 earnings came in at S$1103m, up 25% YoY.

UOB saw improvement from both non-interest income and net interest income.
The latter grew 13% YoY to S$761m in 2Q07, but was flat QoQ.

Net Interest Margin (NIM) improved from 1.97% in 2Q06 to 2.04% in 2Q07. For
the half-year, NIM improved from 2.01% in 1H06 to 2.10% in 1H07. Net
customer loans grew 7.3% over Dec 2006 and 17.5% over June 2006 to
S$82,461m as at June 2007.

In terms of non-interest income, Fee & Commission income grew strongly, up
45% YoY and 27% QoQ to S$330m. This came from several areas including Fund
Management (+136% to S$99m), Services (+44% to S$23m), Credit Card (+31% to
S$42m) and Investment Banking (+20% to $55m). Associates also did well,
improving from S$42m in 2Q06 (excluding one-off gains) to S$65m in 2Q07.

However, impairment charges and expenses were higher. Expenses rose from
S$419m in 2Q06 and S$472m in 1Q07 to S$504m in 2Q07. Impairment changes
also increased YoY from S$36m in 2Q06 to S$81m in 2Q07.

Other key ratios also showed improvement. Non-performing loans (NPLs) fell
38% to S$2,382m as at June 2007. NPL ratio improved from 5.3% in Jun 2006
to 2.8% by June 2007. Total Capital Adequacy Ratio (CAR) was 15.7% as at
June 2007 with Tier-one at 10.8%.

Management has declared a special dividend of 15 cents together with an
interim dividend of 20 cents or a total of 35 cents (versus 20 + 20 cents
in the same period last year). Book will close on 23 Aug 2007 and dividend
will be paid on 3 Sep 2007.

Pending the analysts' briefing later this evening, we are maintaining our
fair value estimate of S$23.30 for now. However, we are likely to revise up
our FY07 earnings to take into account the stronger than expected 2Q
results.


See attached for UOB's results & a comparison table between UOB and DBS
results.

(See attached file: UOB-070807-Results.pdf)(See attached file:
UOB-070807-Compare.pdf)


Carmen Lee
Head, OCBC Investment Research
Email: car...@ocbc-research.com
Address: 18 Church Street, #01-00, OCBC Centre South, Singapore 049479.
Website: www.ocbcresearch.com
Company Registration No: 198301152E
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