Decoding UOB’s FY2025 Earnings Call

Writing this with reference to the Earnings Call Transcript posted here: https://finance.yahoo.com/quote/UOVEY/earnings/UOVEY-H2-2025-earnings_call-415512.html

UOB just released its Full Year 2025 results, reporting a net profit of SGD 4.7 billion. Operating profit saw a slight 4% dip to SGD 7.7 billion. Here is my breakdown of the latest earnings call, and why UOB remains a core position in my portfolio

Falling Rates But Rising Fee Income

The market priced in severe NIM compression this year, but UOB's margins have proven stickier than anticipated. While full-year NIM settled at 1.89%, the downward trajectory has slowed. In fact, Q4 NIM ticked up to 1.84% (from 1.82% in Q3) , and management noted that as of end-January 2026, the exit NIM remains stable at 1.82%.

This resilience is a direct result of active funding cost management. UOB successfully drove double-digit CASA (Current Account Savings Account) growth in its wholesale banking division. This influx of cheap deposits pushed the group’s overall CASA ratio up to a highly efficient 58.4%. By aggressively defending their cost of funds, the bank managed to restrict the Net Interest Income (NII) decline to just 3% , despite benchmark rate pressures.

To offset that slight NII drag, UOB performed well in non-interest incomes. Fee income hit an all-time record, growing 10% year-on-year. This was structural, broad-based growth across credit cards, loan fees, and most notably, a 14% surge in wealth income. Gross fee income reached S$3.5 billion. When you combine this top-line fee growth with the fact that overall expenses actually fell 2% year-on-year, the picture is clear: UOB is exhibiting good cost discipline to protect its bottom line.

ASEAN Trade Boom

While the total group income fell 3%, income from the "ASEAN-4" markets actually grew by 5%. Trade loans grew by a staggering 26% year-on-year, jumping from SGD 35 billion to SGD 45 billion.

As supply chains shift away from China and into Southeast Asia, UOB is acting as the financial toll booth. CEO Wee Ee Cheong highlighted that trade encourages cross-selling—when companies trade, they need FX, cash management, and interest rate hedging.

"Troubled" Commercial Real Estate Loans?

During the Q&A, analysts peppered management with questions about the "hotspots": Commercial Real Estate (CRE) in Greater China and the US. 

Management clarified that CRE makes up only about 1% of the loan book in those markets. To be safe, they aggressively bumped their provision coverage (the money set aside for bad loans) to 2.1% in Greater China and a massive 4.7% in the US. That means for their total amount of CRE loans in the USA, they have set aside almost five times that amount in cash.  

Because they took the pain early, total credit costs in Q4 normalized to just 19 basis points. The balance sheet is a fortress, boasting a CET1 ratio of 15.1%.

Shareholder Returns Continues

This is the part that really matters to my dividend portfolio. UOB declared a final dividend of SGD 0.71, bringing the full-year core dividend to SGD 1.56 per share (a strict 50% payout ratio).

But it gets better. They are currently executing a SGD 3 billion capital return plan announced last year. They are already more than 50% through it, having paid out SGD 1 billion in special dividends (SGD 0.50 per share over two tranches in 2025) and executing SGD 2 billion in share buybacks.

From their recent press release, they have bought back and cancelled 18.5m shares out of 1.67bil shares outstanding as of end FY24. This translates to roughly 1.1% shareholder returns from share buybacks in 2025. The UOB SBB team is continuing to work, and they have just bought back 146k shares this week. 

Looking Ahead

Management highlighted that ASEAN-4 markets continue to show positive momentum , with countries like Vietnam exhibiting high single-digit GDP growth and Thailand's political stability encouraging Foreign Direct Investment (FDI). Furthermore, wealth inflows are accelerating, with wealth income growing 14% year-on-year , driven by family offices setting up in the region. UOB is perfectly positioned to capture this as the region's financial toll booth.

Another hidden gem in UOB's earnings call was their operating cost strategy. Management guided for low single-digit operating cost growth in 2026. UOB has rolled out AI tools to cap future human cost growth by making their contact centers and branches vastly more efficient. This is the kind of operational leverage that protects our bottom-line dividends. Our banks are well positioned to keep costs low even while inflation bites, through AI business integration. 

Management gave conservative guidance for 2026: Low single-digit loan growth, NIM around 1.75%–1.8%, and high single-digit fee growth.

UOB gave a boring and predictable forecast for its 2026 earnings. And in a world of geopolitical chaos, boring is beautiful. UOB will stay firmly in my dividends portfolio. I will gladly collect my share of dividends, reinvest the cash, and let the bank do the heavy lifting.