United Overseas Bank's share buyback reflects the management's confidence in the earnings outlook, Morningstar senior equity analyst Michael Makdad says in a note.

The bank has guided for high-single-digit loan growth and double-digit fee growth this year, he writes. UOB's current and savings account ratio, has increased to 55% from 49% at the start of last year, he says.

This gives the bank potential to defend its net interest margins even if the Fed cuts interest rates, a prospect that is looking less likely, he adds. Morningstar remains positive on UOB's 2025 earnings outlook and raises UOB's fair value estimate to S$41 from S$40. Shares are 0.1% lower at S$38.54.