United Overseas Bank (UOB) shares plunged 3.07% in Thursday's pre-market trading following the release of its disappointing third-quarter results. The Singapore-based bank reported a staggering 72% year-on-year decline in net profit, primarily due to a significant increase in provisions for potential loan losses.
UOB's net profit for the third quarter of 2025 fell to 443 million Singapore dollars, drastically missing analysts' expectations of S$1.35 billion. The sharp decline was largely attributed to S$1.36 billion in allowances for credit and other losses, including S$615 million in pre-emptive general provisions. This cautious approach reflects the bank's concerns about potential economic headwinds.
Adding to investors' worries, UOB projected lower margins for the coming year. The bank expects its 2026 full-year net interest margin (NIM) to be between 1.75% and 1.80%, down from the 1.85%-1.90% projected for 2025. This outlook, combined with expectations of low single-digit loan growth and higher credit costs, paints a challenging picture for UOB's near-term profitability. Despite these headwinds, UOB's CEO, Wee Ee Cheong, reassured that the bank's dividend plans remain intact, emphasizing the strength of its capital base.
