Analyst Glenn Thum of Phillip Securities maintained a Hold rating on UOB, with a price target of S$34.60.
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Glenn Thum has given his Hold rating due to a combination of factors affecting UOB’s financial performance. The bank’s earnings in the second quarter of 2025 were lower than anticipated, primarily because of reduced net interest income (NII) and increased provisions. This resulted in a lower-than-expected profit for the first half of 2025, which was only 47% of the full-year forecast. Additionally, the interim dividend decreased by 3% year-over-year, although the dividend payout ratio remained stable at 50%.
Despite a 3% increase in fee income, the overall decline in NII due to net interest margin (NIM) compression has led to a downgrade from an ‘Accumulate’ to a ‘Neutral’ rating. The target price was also adjusted downward to S$34.60 from S$36.30. Although UOB plans to return S$3 billion of surplus capital over the next three years, including a share buyback and maintaining its dividend payout ratio, the expected decline in earnings by approximately 4% year-over-year has influenced the Hold rating. The successful integration of Citi portfolios is seen as a positive factor for future fee income growth, but current challenges in NII and margin compression have tempered expectations.
According to TipRanks, Thum is a 5-star analyst with an average return of 18.0% and an 84.62% success rate. Thum covers the Financial sector, focusing on stocks such as OCBC, JPMorgan Chase, and Bank of America.
In another report released on August 8, J.P. Morgan also maintained a Hold rating on the stock with a S$36.50 price target.