Analysts have either maintained or lowered their estimates slightly on United Overseas Bank (UOB) after the bank’s net profit for the 1QFY2025 ended March 31, stood at $1.49 billion, coming in at 96.6% of the Bloomberg consensus forecast. The missed estimates were due to higher general provisions (GPs). During the quarter, UOB took the preemptive step of increasing its total allowance to $290 million or 35 basis points (bps) to strengthen its provision coverage amid the current uncertainties.
CGS International analysts Tay Wee Kuang and Lim Siew Khee have lowered their target price to $38.60 from $38.80 previously as they believe UOB will continue to recognise higher GPs for the remainder of FY2025. For the same reason, Tay and Lim have reduced their earnings per share (EPS) estimates for FY2025, FY2026 and FY2027 by 4.4%, 4.2% and 4.9% respectively, to reflect a “likely stagnation” of profit in FY2025 due to the higher GPs.
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