SINGAPORE United Overseas Bank (UOB), the smallest of Singapore's three listed banks, posted a 0.3 percent rise in fourth-quarter net profit, beating expectations, but recorded higher provisions for bad loans amid an economic slowdown.
The bank said risks are largely manageable and the underlying economic fundamentals are strong enough to withstand shocks as the region enters a period of slower growth.
UOB's net profit came in at S$788 million ($563 million) in the three months ended December, versus S$786 million a year earlier and above an average forecast of S$768 million from six analysts polled by Reuters.
"Financial markets will continue to grapple with volatility and uncertainty in 2016 underpinned by ongoing concerns such as the impact of falling oil prices and China's slowdown on the global economy," CEO Wee Ee Cheong said in a statement.
Singapore banks have so far defied a slowdown in China and weak commodity prices which has hit energy services firms, but analysts are looking for more signs of asset quality deterioration in 2016.
UOB benefited form a 10 basis point rise in net interest margin which helped boost its net interest income by 9.3 percent. Customer loans grew at only 3.9 percent in the fourth quarter, up from the third quarter when loans grew at 3.6 percent.
UOB posted a 14.6 percent rise in provisions for bad loans with specific charges set aside for Singapore, Indonesia and Greater China.
($1 = 1.3989 Singapore dollars)
(Reporting by Saeed Azhar; Editing by Richard Pullin and Stephen Coates)
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Updated Date: Feb 17, 2016 03:00:14 IST