Highlights

• UOB’s 3Q26 net profit fell 15% qoq to S$1,250m, below consensus estimate of S$1,376m, as margin compression and weaker trading income weighed on earnings. Loan growth of 6% yoy cushioned the decline in NIM to 1.68%.
   
• Asset quality improved, with new NPL formation declining to S$500m, NPL ratio easing to 1.5% and credit costs falling to 24bp in 3Q26. However, NPL coverage declined 14ppt yoy and 2ppt qoq to 86%.
   
• Management expects mid-single-digit loan growth and a recovery in net interest income in 2027. Operating costs are expected to rise by mid to high single digits as UOB invests to build new revenue streams. 
   

Analysis

• United Overseas Bank (UOB) reported 3Q26 net profit of S$1,250m (-15% qoq), vs S$443m in 3Q25 when pre-emptive provisioning of S$615m depressed earnings. Earnings were below consensus estimate of S$1,376m.
   
• Loan growth cushioned margin compression. NIM fell 14bp yoy and 6bp qoq to 1.68% in 3Q26, due to higher deposit costs. Gross customer loans grew 6% yoy and 3% qoq, supporting net interest income of S$2,278m (+1% yoy, -1% qoq). Trade loans grew 31% yoy. Funding costs reduced NIM by 7bp qoq and asset repricing by 1bp, offset by the 2bp benefit from volume.
   
• Record fees supported by wealth management and lending activities. Net fee income increased 19% yoy and 10% qoq to S$733m. Wealth fees rose to S$258m (+18% yoy, +6% qoq) and loan & trade-related fees increased to S$293m (+4% yoy, +19% qoq). Wealth AUM was S$204b, up 3% yoy and unchanged qoq. Net new money totalled S$5b in 9M26.
   
• Other non-interest income weakened. Other non-interest income fell 29% yoy and 41% qoq to S$370m, reflecting the absence of prior-quarter divestment gains and softer trading and investment income. Trading and investment income declined 33% yoy and 15% qoq to S$322m.
   
• Cost discipline partly offset lower income. Operating expenses fell 4% qoq but rose 2% yoy to S$1,570m. Staff costs declined 10% qoq to S$851m, while IT-related expenses rose 5% qoq to S$310m. The cost-to-income ratio increased 1.1ppt qoq to 46.4%.
   
• Credit costs eased as NPL formation moderated. New NPLs fell to S$500m from S$902m in 2Q26. NPL ratio eased 0.1ppt qoq to 1.5%. Total allowances rose 23% qoq to S$258m. Total credit costs fell to 24bp from 28bp in 2Q26. NPL coverage dipped 14ppt yoy and 2ppt qoq to 86%.