Singapore’s United Overseas Bank expects a boost in interest income for the next quarter following the U.S. Federal Reserve’s recent rate hike.
In the second quarter, UOB saw a 35% increase in core net profit, totaling 1.5 billion Singapore dollars ($1.13 billion). Its net interest income also grew by 31% compared to last year, thanks to a wider net interest margin of 2.13% resulting from higher interest rates, as stated in a press release on Thursday.
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Net interest margin, a measure of lending profitability for banks, is expected to remain strong in the following quarter. UOB’s CFO, Lee Wai Fai, expressed optimism in an exclusive interview with CNBC’s JP Ong on “Street Signs Asia.”
The U.S. Federal Reserve raised interest rates by 25 basis points, bringing the benchmark borrowing costs to a target range of 5.25%-5.5%, the highest level in over 22 years.
UOB’s stock rose 0.7% to a three-month high, in line with the Straits Times Index in Singapore, and slightly below the 1% gain for the MSCI Asia ex-Japan.
Forward guidance
UOB expects loan repricing and stronger cost of funding due to the flight to quality for
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