UOB (UOBSP)

UOB is a high-rated commercial bank with a pan-Southeast Asian footprint, protected by deposits, capital, liquidity, and the high rating of its Singapore core even in a lower-rate environment where margins are compressing. The essence of the credit is not high growth or eye-catching capital markets revenue, but resilience backed by the deep funding base of the Singapore parent and the expanded customer network across Southeast Asia. Therefore, when assessing this issuer, the key point is not quarterly earnings momentum, but whether deposits, asset quality, capital, and liquidity are all being defended at the same time despite margin headwinds.

The current headwinds are clear. Full-year 2025 net interest margin declined from the previous year to 1.89%, and narrowed further to 1.82% in the first quarter of 2026. Net profit for the first quarter of 2026 was S$1.437bn, down 4% year on year, with lower benchmark rates and cautious customer behavior putting pressure on both net interest income and fee income. UOB should therefore not be viewed as a bank without headwinds.

Even so, the credit view can remain stable because the core defensive indicators have not deteriorated. As of end-March 2026, loans were S$354bn, deposits were S$426.7bn, and the loan-to-deposit ratio was a manageable 81.9%. The non-performing loan ratio was stable at 1.5%, general allowance coverage on performing loans was 1.0%, and non-performing asset coverage was adequate at 100%, or 272% after taking collateral into account. The Common Equity Tier 1 ratio was 15.3%, the all-currency liquidity coverage ratio was 144%, and the net stable funding ratio was 115%, showing clear buffers in both liquidity and capital.