UOB Delivers Strong FY2024 Results Amidst Global Volatility
Lim & Tan Securities | 24 March 2025
Resilient Performance in a Challenging Environment
UOB’s FY2024 annual report highlights the bank’s ability to adapt and thrive in a volatile macroeconomic landscape. Despite global uncertainties, UOB achieved a record net profit of \$6.0 billion, up 6% year-on-year. The bank’s total income grew 3% to \$14.3 billion, driven by stable net interest income and double-digit growth in wealth management and card fees.
Diversifying Revenue Streams
UOB has been proactively reshaping its business mix, investing \$800 million over the past decade to build regional capabilities in payments, trade, and cash management. These strategic investments have transformed the bank’s wholesale business, fueling CASA growth and strengthening connectivity across the region. Looking ahead, UOB plans to extend these digital capabilities to its private banking arm, further driving AUM and wealth fee growth.
Prudent Capital Management
Recognizing its strong capital position, UOB will use \$2 billion of surplus capital for share buybacks over the next three years. Additionally, the bank is recommending a final dividend of 92 cents per share, bringing the total dividend for FY2024 to \$1.80 per share. A special dividend of 50 cents per share will also be paid in two tranches, coinciding with UOB’s 90th anniversary.
Cautious Outlook Amidst Global Headwinds
While global growth is expected to soften in 2025, ASEAN economies remain resilient, supported by a recovery in retail spending and trade momentum. However, the report cautions that further escalation of geopolitical tensions and the recent U.S. policy announcements pose increased inflation risks and could disrupt global supply chains, investment, and trade.
Recommendation and Valuation
Given UOB’s attractive yield of 4.7% (normalized dividend) and 6% (including special dividend), as well as its reasonable valuation of 10x PE, we maintain an “Accumulate” rating on the stock. The bank’s \$2 billion share buyback program also provides good price support amidst global market volatilities, and the consensus 1-year target price of \$42.50 implies a potential upside of 12%.
