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UOB Profit Climbs 25%, Beats Estimates on Wealth Management

United Overseas Bank Ltd., Southeast Asia’s third-largest lender by assets, said profit rose for a fourth straight quarter on higher income from wealth management and capital markets.

Fourth-quarter net income rose 25 percent to S$696 million ($561 million) from S$558 million a year earlier, the bank said in a statement to the Singapore stock exchange today. That beat the S$614 million average of nine analysts’ estimates compiled by Bloomberg. Full-year profit rose to a record S$2.8 billion.

UOB joins DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. in boosting profit amid four years of shrinking loan profitability and 2012 economic growth that was Singapore’s slowest in three years. Cost control and businesses such as credit cards and fund management have helped the city’s banks compensate for the region’s thinnest lending margins.

“These are pretty good results as income from non-lending operations offset tighter loan margin,” said Francis Lun, a Hong Kong-based economist at GE Oriental Financial Group. “Income growth at UOB in 2013 may improve further as the economy in Asia accelerates. However, the earnings momentum will be in non-lending operations.”

Shares of UOB have declined 3.1 percent this year to S$19.2, compared with a 3 percent gain for the benchmark Straits Times Index.

Fees Rise

UOB’s fourth-quarter fees and commissions advanced 19 percent from a year earlier to S$388 million, led by income from fund management and investment-related services, it said in the statement. Other non-interest income jumped 38 percent to S$238 million on gains from the sale of securities.

Banks in Singapore earn the least on loans in Southeast Asia, based on their average net interest margin of 1.97 percent, according to data compiled by Bloomberg. UOB’s margin narrowed to 1.76 percent in the fourth quarter from 1.95 percent a year earlier, it said today.

Fourth-quarter net interest income, the difference between what the bank makes from lending and pays on deposits, declined 1.2 percent to S$967 million, it said.

The lender’s loan book expanded 8.3 percent to S$152.9 billion at the end of December from a year earlier. It set aside S$150 million as loan-loss provisions in the fourth quarter, 34 percent lower than a year earlier, according to the statement.

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