UOB, the Financial sector company, was revisited by a Wall Street analyst today. Analyst Glenn Thum from Phillip Securities maintained a Hold rating on the stock and has a S$30.40 price target.
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Glenn Thum has given his Hold rating due to a combination of factors impacting UOB’s financial performance. The bank’s third-quarter earnings were significantly below expectations, primarily due to higher-than-anticipated specific provisions and a substantial pre-emptive general provision. This has led to a projected decline in earnings for the fiscal year 2025 by approximately 22%.
Additionally, UOB experienced a decrease in net interest income due to a compression in net interest margin, alongside a slight dip in fee income. Despite these challenges, UOB’s management has provided guidance for a stabilization of credit costs and a potential recovery in net interest margin in the latter half of 2025. The bank’s strategic initiatives, such as the integration of Citi portfolios, are expected to drive fee income growth and support expansion into the ASEAN region. However, the overall outlook remains cautious, justifying the Hold rating.
In another report released yesterday, DBS also maintained a Hold rating on the stock with a S$33.90 price target.