Welcome to our third quarter 2025 results media briefing. Today we have with us our Deputy Chairman and Group CEO, Mr. Wee Ee Cheong, and our Group CFO, Mr. Leong Yung Chee. As usual, Mr. Wee will begin by giving a broad overview of how our franchise has done and the operating landscape we are operating in. Mr. Leong will then go into more details on the financials and business performance. After both presentations, we'll be taking questions from media. I'd like to invite our CEO to get us going. Mr. Wee, please.
Good morning. Thank you again for joining us today. As all of you know, geopolitical developments are impacting business outlook, but we always see encouraging signs. ASEAN continues to attract investments. Amid evolving tariff changes, we continue to see healthy intra-regional trade flows. While a softening rate environment is putting pressure on asset yields, we see healthy loan growth and fee income. For the third quarter, we have reported a strong operating profit of SGD 1.9 billion. We are happy with our performance for the first nine months, with healthy growth in loans, deposits, including CASA, wealth AUM, and fees. From this position of strength, we have proactively set aside additional preemptive general allowances. This substantially strengthens our pro vision coverage ratios, reinforcing resilience and flexibility to navigate headwinds and sustain long-term growth.
After building our coverage ratios, we retain a healthy capital position. By prioritizing balance sheet strength, we stand ready to act, support customers, and seize strategic growth opportunities across the region. For our shareholders, we remain committed to our SGD 2 billion share buyback with almost one quarter of the program completed as of September 2025. There is no change to our policy of 50% dividend payout. Our 2025 final dividend will not, let me emphasize, will not be impacted by this preemptive general allowance. Our core franchise performance remains sound, with strong fundamentals and positive momentum quarter-on-quarter. If we look at the loan growth, was robust, 2% quarter-on-quarter, 5% year-on-year. They are very broad-based. CASA, this is som ething that we have been always emphasizing for both retail and wholesale banking, registered healthy growth.
For the first nine months, up 19% year-on-year. Our wealth management AUM grew strongly during the quarter. Quarter-on-quarter, AUM up SGD 8 billion or 4% net new money. The invested AUM portions continue its upward trend. In terms of P&L, net interest income do wn 3% quarter-on-quarter. It was impacted by margin compression in a declining rate environment, but this was partially offset by healthy loan growth. Gross fee income saw robust, broad-based growth across loan-related parts and wealth management businesses, up 8% quarter-on-quarter, 10% year-on-year. Customer-related trade and investment income grew strongly. We maintain cost discipline, keep expenses flat while investing in growth initiatives. On the asset quality front, NPA formation and specific allowances were higher this quarter due to a few accounts in the U.S. and Greater China commercial real estate sector.
We conducted a thorough review of our portfolio. As a proactive move to further strengthen our balance sheets, we took the opportunity to ramp up our provision buffers to cushion against any further headwinds by setting aside general allowance of SGD 0.6 billion and raising our GP to performance ratio to 1%, which is higher than the 0.9% objective that we articulated previously. With this, our total NPA coverage improved to 100%, or 240% including collaterals. Following this exercise, we e xpect our total credit cost to normalize with asset quality risks contained barring any unexpected global volatility. Our balance sheet remains strong with CET1 ratio of 14.6% and robust liquidity ratios. We are very confident of delivering sustainable value for the long term.
Looking ahead, while no market is spared from external shocks, we believe ASEAN offers strong structural growth opportunities, and we are well-positioned to capture them. We are staying focused on growing our franchise and supporting businesses through our connectivity strategy. We are deepening relationships with our expanded retail base through wealth and lifestyle offerings, investing in innovations to uplift productivity. We are confident of executing our strategy and achieving sustainable growth as we invest for the future. We are in a strong position moving into next year with the following guidance. Low single-digit loan growth. Full year NIM of 1.75%-1.80%. High single to double-digit fee growth, driven by growth engine in wealth, cards, and trade. Low single-digit operating costs growth. Total credit costs of 25-30 basis points.
I will hand over to Yung Chee to share more. Thank you.
Thank you, CEO. Good morning, everyone. I'll take you through the financials. I will have 17 slides to walk through. What I'll do is I'll spend a little bit more time on the summary slide and the highlights, and then I'll move a little bit faster through the rest of the slides. On the first slide, we walk you through the highlights, and as CEO mentioned earlier to you, the macro picture today still has certain pockets of economic uncertainties. The benchmark rates have come lower. Asset yields continue to come under pressure, but despite that, our businesses have continued to deliver on the strategies that they have articulated.
Whether be it in the balance sheet, assets and deposits, loans and deposits, rather, if you look at the number of customers, our fee income, our trading income, our wealth AUM, our card fees, everything in those parameters have exhibited positive growth. From that position of strength, our operating profit has proved resilient by generating SGD 1.9 billion. At the same time, our liquidity, capital, and funding ratios have continued to stay strong and resilient. We have taken the opportunity in this backdrop to take the preemptive provision and bring our performing loans coverage to 1%. Overall, the NPL ratio remains flat at 1.6%. I've mentioned that the coverage ratio has increased to 100%, and including collateral, that's 240%.
As CEO mentioned, the final dividend payout will not be impacted by this preemptive general allowance that we have decided to set aside. Now, let me walk you through the third quarter's performance. On this page specifically, I've mentioned the SGD 1.9 billion, we focus on the fourth column. Operating profit of SGD 1.9 billion is a drop of 3% quarter-on-quarter. It coincidentally is also a 3% year-on-year comparison, and this is primarily driven because of the net interest margin, the interest rate environment. Our core fee drivers have continued to register resilient growth. Non-interest income has also risen 5%, backed by record-high customer flows and treasury income. Expenses have remained stable. Allowance, I've mentioned earlier on, we will discuss more in terms of these allowances in a slide later on.
I'll now bring you to the segmental performances, first focusing on the retail business. Retail business' profit before tax overall was stable at SGD 1.5 billion. It exhibited strong growth in our CASA and wealth businesses, and income pressures were mitigated with strength in terms of our balance sheet growth in deposits and loans. If you notice, we mentioned earlier on that if you look at the CASA line, we've actually grown 19% year-on-year. In terms of our AUM growth, we have also taken it 8% up year-on-year, with the invested portion from 37% of AUM a year ago, now it's 41%. Net new money flows at SGD 5 billion for the quarter. Our card billings grew 8% year-on-year. Asset quality remains strong, with credit costs significantly lower than last year.
This portfolio Operational credit, which we talked about in Thailand last year, has eased. I'll next move to the wholesale banking portfolio. Likewise, it has demonstrated broad-based growth in terms of loans and deposits growing 6% and 4% respectively, and in the loans portfolio, our trade loans in particular grew 22%. Again, this cements the strategy that our wholesale banking team was focusing on. If you look at the CASA as a proportion of our deposit business, deposits grew 4%. The CASA portion is now at 57%. Investment banking has maintained strong momentum with our fees reaching record levels. On a year-to-year basis, that has grown 29%. This diversified strategy has seen our income contribution from non-real estate sectors stay at 69%, with cross-border components of this contribution at 27%.
Our regional footprint continues to deliver as we diversify our income streams. The allowances have increased. This is primarily due to collateral markdowns for some non-systemic borrowers and preemptive provisions we have decided to proactively set aside. I'll next talk about our global markets business. It has grown 22% year-on-year, and for this particular quarter is our second highest performance on record. This was driven primarily from continued client demands for hedging and investment solutions. The non-customer part of the income has also benefited because of a favorable cost of funds environment, where our teams have managed to capture market opportunities across equities, foreign exchange, and rates, contributing to the overall performance. Next, I'll talk briefly about net interest income and margins. In my summary slide, I did mention that the net interest income moderated 3% quarter-on-quarter .
This was mitigated by asset growth. If you look at the bottom box, we grew assets from SGD 479 billion to SGD 494 billion on a quarterly basis. On a nine-month basis, there was SGD 473 billion to SGD 491 billion. The net interest margin did compress during this quarter by about 9 basis points compared to last quarter. If you recall, we had 1.91 in terms of our Q2 NIM. For Q3, it is 1.82. What is important to note is the exit NIMs. When we exited 2Q, it was 1.84. Our exit for this quarter is 1.82. In terms of the steepness of the decline in NIMs resulting from rates movement, you would have seen that this has significantly slowed in terms of decline.
We do expect further pressures because there are further expected rate cuts, one more we believe for this year and two more next year, the downward trajectory, I think has slowed significantly. In this quarter, that 25 basis points drop in asset repricing primarily came from Sing Dollar, which accounted for about 60 basis points. From HIBOR, there was a +14, there is some delays in repricing the HIBOR rebounds, which we expect to show up in the fourth quarter. We have proactively managed our funding cost, that has mitigated the drop in NIM. That accounted for that green box of 16 basis points. I'll speak briefly around fee income next. This slide shows gross fee income.
If you look at gross fee income across all spectrums, overall it grew 10%, each of the components showed almost high single digits or low double-digit growth over this period of time. These fee drivers demonstrate the resilient growth led by activities such as wealth, particularly in unit trust and structured products on the back of improved market sentiment and consumer optimism. Card fees also sustained its growth momentum. On card fees on a net basis, we took a harmonization of our rewards scheme in Thailand post the Citi integration. This was taken in 3Q, effective 1st of October, which means that this normalization would be normalized into 4Q at 2026. A little bit more background on that, Goola, I noticed that you were raising eyebrows on that.
When we had the rewards program, when we integrated the Citi franchise, the rewards redemption ratios were at different levels. Citi's ratios were a little richer than ours. We brought that in line, although that still puts us still competitively ahead of market in Thailand. That rationalization was effective 1st of October. The next page on expenses. Period to period, our expenses have actually come off, on the cost to income ratio, it has ticked up from 44.3 to 45.2 simply because income numbers have come down, not because expenses have gone up. We continue to keep very tight cost management while continuing to invest in talent, technology, and innovation to drive our franchise expansion, meet regulatory requirements, and provide services for our customers. The next page on non-performing assets.
NPL ratio is unchanged at 1.6%. There was some new NPA formation this quarter, I mentioned earlier, to non-systemic accounts in selected markets. With the higher write-offs and recoveries, we have maintained proactive in reviewing and monitoring our credit portfolio for asset quality risks. Next page. The $0.6 billion that CEO mentioned earlier on, more specifically is $615 million. This is a preemptive general provision. We did so because in the midst of reviewing our portfolio with the macroeconomic uncertainties and some sector specific headwinds that we see, we wanted to build a stronger buffer for potential valuation adjustments going forward. We do so today because our capital liquidity and funding ratios are in a position of strength. By doing this, we have brought our general provisions coverage from 0.8% to 1%.
We have brought our NPA coverage from 88% to 100%, and from the unsecured NPA coverage numbers from 209% to 240%. The next page speaks briefly to the credit costs. The 32 basis points total credit costs from second quarter bumps up to 134 basis points because of the preemptive allowa nces that we have put in place. We do expect with this buffer, our credit cost levels will normalize from the fourth quarter and into 2026. Next page, provisions coverage. I have mentioned this briefly earlier on. The key numbers would be the general allowance on loans, 1%, the NPA coverage, 100%, unsecured NPA coverage, 240%. Next page on the loan momentum in our balance sheet, it grew 5% year-on-year, 2% quarter-on-quarter. This was quite broad-based across geographies as well as industries.
I mentioned earlier on, in particular within our loans, our trade loans continued to show the fastest growth, exhibiting 22% growth. Next page, a little information on our funding situation. If you look at our LCR, our NSFR ratios, you look at our CASA to deposit ratios, these continue to demonstrate that our funding positions, liquidity positions remain healthy and comfortably above minimum regulatory requirements. Last but not least, some information on our capital position. At 14.6%, fully loaded at 14.5%, our capital position remains strong. Questions around our share buyback, I think we have addressed earlier on. The SGD 2 billion share buyback, we remain fully committed. As of September, we have executed 24% of that, and this is way ahead of the trajectory if you drew simply a straight line from now to 2027.
Our payout ratio of 50% remains a commitment we make to shareholders, and I will emphasize again that the dividend payout for 2025 will not be impacted by our decision to set aside this preemptive general allowance. With that, I conclude my presentation, and we can take questions.
Thank you, CFO. We will now take questions from media. Any questions? Daniel.
Good morning. My question will be on the allowances, right? There's the specific allowances and the general allowances. General allowances, you mentioned there were sector specific hits. Can you mention what some of the sectors are? For the specific provisions, can you go a bit deeper into, I guess, the Greater China, United States, commercial real estate clients that you mentioned earlier?
Yeah. Sure. The NPA formation and SP charges arose specifically from U.S. and Greater China CRE. This actually, of the total loan portfolio, is a relatively small proportion, but we still see continued headwinds in these two markets. In the additional allowances, also factors in something I mentioned to Goola before we started the call, which is by recognizing some of these recoveries that we are doing, actually it's accelerated some of the markdowns in the collaterals. These flows can be chunky, and it's very hard to predict in terms of the trajectory. By building this GP position, it allows us more room to cope with any sort of asset quality gyrations. Also we see a U-shaped recovery. As I mentioned, these are all secure.
By setting up a preemptive provision, that will give us time to recover and also, from the customer standpoint, we also move along with the customer. As a commercial bank, I think our primary job is to make sure that we are in a position to protect the interest of the customer. That is important. Otherwise, it's very easy just to get rid of it. The general provision will give us the strength, and also you look at the coverage is secure on the unsecured basis is 240%. We have time while the earning continue to be strong and robust. We are not using that to penalize our shareholders, too. All this, the shareholder will still get the preemptive general allowance, the dividend.
In Hong Kong, we do see selective interest coming back, although it's not broad-based. Residential, for example, I think is fairly stable, but commercial real estate continues to be soft.
Also, you look at the IPO market in Hong Kong, right? It's grown three times, right? SGD 25 billion. There's still plenty of liquidity in the system. The question now is at what point? Forget about the view, we just set aside first.
I think Bloomberg has a question.
Okay. You said that you expect credit costs to normalize after this. Does that mean you think the worst is over, or could there be more provisions ahead, based on your U shape?
If I know everything, I will not be a banker. I'll go to a casino. At the end of the day, I think if I have to take a calculated view, for the two markets we are operating in, I would say the worst is a U-shaped kind of thing, right? We are dealing with cash flow, we are dealing with assets. There's many factors to talk about when you talk about recovery. What is more important is we manage our balance sheet first. We can overcome if, assuming we misjudge the situation. We are strong enough to take the headwind. That is important. This is why we are talking about preemptive.
Maybe if I could add to that. If you look at the Hong Kong context, the loan-to-value of our portfolio is at 44%. Right?
Forty-four.
Yes, 44%. With this buffer, actually, we are bringing our credit costs back in line with our guidance of 25-30, not just for this year, but also for 2026. Q4 and 2026, credit costs will be within the 25-30 basis points. Big caveat here is the global market, as much as we can see in 2026, this is what we expect with the normal cave ats of barring any big market unforeseen volatility. I think that remains. Paul.
Yeah. Also a follow-up question on the provision. Do you expect this to be something one-off or something that like expect in the future? Is there going to be another provision for this lump sum?
This one, no.
Yeah, Goola, sorry.
Sorry, just to change subject a little bit. You said with the HIBOR rebound wasn't affected in the didn't impact 3Q. Meaning that it should be better because?
Yes. The rebound actually happened around mid-August. Right? Some of those effects may have come through, but we don't think all of that repricing has actually been reflected into our 3Q numbers.
Yeah, there is a lag effect in terms of the repricing of the portfolio. It should support the NIM into 4Q 2025. Back to Bloomberg.
Just looking at the unique positioning here that UOB has because DBS and other Singapore banks haven't made similar provisions necessarily. What are you seeing in commercial real estate today that they're?
I think the risk appetite as well as geographical focus of the three Singapore banks are different. I cannot comment on their areas of business. I think in the areas that we focus on, I think we have seen some upticks in the CRE portfolio within our books. These are assets that we have already identified and flagged early on, and these are not new exposures. We have not actually put on new exposures in real estate in these markets. We have continued to grow our balance sheet in these markets, but not in these sectors. I'll come back to the point again, which I mentioned to Goola earlier, which is some of this is because of recoveries that we are executing right now. When you do the recoveries, you end up marking collaterals down.
This is the reason why you see an uptick.
Okay. The recoveries are with the CRE portfolio. Those have to be marked down because of the. Those recoveries, were they in Hong Kong and the U.S. as well?
It's a mix.
It's a mix of Hong Kong and U.S.
Yeah.
The troublesome area is Hong Kong and the U.S.
I would say Greater China.
Greater China. Can I just ask a question about excess liquidity, whether you will deploy in HQLA? If you do, what currencies would they be? Singapore, SGS Singapore government securities, or would it be horror of horrors, U.S. Treasuries or somewhere else?
I think over the last couple of quarters with the pressures from NIM, I think you would have seen that the logical thing to deploy some of the excess liquidity is actually to make sure you focus on a bit more of your NII as opposed to keep defending where the NIM would be.
Those excess capital would naturally be deployed to NSFR friendly instruments.
Which are?
It will be a combination.
Combination of?
Yes. Currencies.
Currency. Do you reveal the currency?
We don't reveal the port of the.
Obviously not. You don't.
I think it's not simply just bucketing into one or two types of currencies. I think we've got to look at the profile of our asset liability mix, we've got to be quite nimble in shifting between those buckets.
Including the region, because you are in the region. Including the Middle East. Sorry, I just wanted to clarify the $615 million general allowance. Is this the largest single provision buffer that you've set aside in one quarter?
We did have one, I think, in the full year period. I think it was a smaller amount, if I recall.
The buffer is largely for U.S. and Greater China.
A general allowance is actually set aside for us to have that flexibility to deal with market volatility and challenges. I think while there are pockets in other markets, the primary areas or focus actually would be in those two markets.
There's this interest rate cycle in the U.S. to which Hong Kong is related, even though HIBOR has rebounded. The risk-free rate affects all these assets. As the interest rate comes down and these assets rebound, would you look at writing back, or this is one and done?
Yeah, of course. Definitely.
You would look at writing?
Of course.
Definitely.
At the moment.
Some of these could be writing back. Yes. This is why we say it's preemptive. This is not a total loss, right? Preemptive.
This was for the third quarter. This was based on before the latest interest rate cut. You used the valuations of before the interest rate cut.
Yes. Oh, it was about a week and a half ago, right? You're talking of U.S. rate cuts?
U.S. rate cut, because we are down to the floor, right?
U.S. rate cuts was, there was one cut about a week and a half ago, and there's another one we expect for 4Q, and two more that we expect for 2026.
Yeah. Again, this is preemptive, right? If you anticipate the rate is cutting. Hopefully, in fact, most of our investors, they are buying equity now. They are more prone to buying equity because interest rate, everything is down, the bond is down. Hopefully all this will translate the way we say it will.
Any questions? Yeah.
Just a question on expenses. I think nine-month expenses are lower on factor cost management. Can you explain sort of what this factor cost management means? Are you going to cut back on certain spending, I don't know, like marketing or anything like that? I guess also your outlook for hiring in the year ahead, right? Are you expecting to maintain the same level of headcount just because of the margin compression as you mentioned earlier?
The expenses that come off, it's a combination of various things that we are doing. I think you're right, we did really look at all the various expense buckets within the bank to see are there excesses that we can further trim down. Some of it is also sales related expenses. The fact that income comes down, sales comes down, you actually can trim some of the sales related expenses. Aside from that, I think your other question was in terms of headcount and so on. Our headcount posture remains stable. What we have done is to actually focus on reinvesting some of the cost savings into productivity tools.
Some of the investments have been in newer areas like Gen AI productivity tools that we're rolling out so that we can augment the productivity of our staff, without actually tuning headcount from that perspective. There is also a couple of things you need to keep in mind. Technology obsolescence and compliance costs continue to weigh heavily on us, these are areas that we cannot compromise. Technology obsolescence presents risk, not just to us, but our service to customers. Compliance, especially in the scheme of things now with e-comm scams, frauds and so on, AML, KYC matters, I think these are areas that we absolutely cannot compromise. What we have saved, we've actually reinvested, although we've marginally managed to bring the cost down, it still feels a little elevated in terms of a cost to income ratio perspective.
Can I just ask one question? In terms of overlays, you say you ha ve about one core factory, and this would add something to it. Now, one of your peer that has a lot of overlay has actually said that they could consider releasing some if the earnings become very volatile. You're adding to it now. I'm just trying to, in my own mind.
I think it's difficult to be clairvoyant about what we face in the year ahead. I think if you look at where we are in terms of trade policy issue, political tensions and so on, the situation continues to have pockets where we can't see that clearly. Putting these in place allows us that flexibility to navigate, but it doesn't mean that we will use it. If we don't use it could be reversed. Putting that in place gives us confidence, and also be in a posture where if our customers require us to support them in their growth areas, we are in a position to do so.
If any of the media online have questions, please use the Raise Hand function, and we'll call on you. We can continue with those in the room as well.
In terms of the region, are there any credit costs anywhere in the region that you see coming up or is the region okay? Because they've all raised interest rates, right? Even Indonesia.
I would say quite stable. Thailand, a bit of a headwind, but I think generally it's okay. In the overall scheme of things. If you can see the growth without the currency transla tion.
The constant currency.
It's still growing. Our exposures to the consumer markets in the region, is more focused on our higher customer segments, whereas in Singapore, it's broader based.
The retail bank and the consumer banking, is that more stable versus the corporate side, because all the issues are on the wholesale side? Is the retail banking more stable than the corporate banking at the third quarter?
Retail will be more reflection of the overall economy, right? You cut across general population. The wholesale will be a little bit more chunky in nature, right? I would say yes, in terms of diversification, yeah, retail will definitely, the segment that you're in is important. Industry, employment situation and economy become very important. If you look at the Citibank portfolio when we acquired, they are generally unsecured, but they're very focused on the segment that they want to focus, right? If you have a barometer, we are the largest card issuer for Visa and Mastercard in the region. The eight and a half million customers we have, if you look at the gross card billings, they grew 8% year-on-year. In terms of customer spendings and confidence in their franchise, I think it shows, right?
There are obviously a spread, it's roughly half in Singapore, half in the region. It gives you a good sense that this diversified customer base across the region provides a level of stability for our retail franchise. Wholesale is a lot more susceptible, I think, to asset pricing pressures. Particularly in this environment, everyone is chasing higher quality companies, right? There is intense competition in that space for sure.
We have a question from Timothy from The Straits Times, who is online. Because his connection is bad, I will just read out the question. Do the additional provisions cover SMEs or large corporations?
Across our portfolio.
Okay. Any other questions?
Actually, provision is very positive, and it's quite a ball.
I'm sorry, could you?
You are buying insurance, right?
Okay.
Right. We, as an organization, I think, taking the long-term view, you don't just focus on P&L. It's very easy to focus on P&L, right? Today, if you forget about the preemptive provision, the number looks everything okay. We are taking a view here to make sure that our balance sheet is continue to be strong. Right? We are in a position. It's no different than during the COVID, we set aside 3 billion, right? To help our customer. That will give the market the confidence. Okay. We give ourselves time to react, to recover.
If you had not set aside the SGD 615 million, what would your net profit figure have been?
Yeah. It would be close to SGD 1 billion. Right.
It's kind of a n ormalized.
Yeah. Around SGD 1 billion.
Around SGD 1 billion.
Yeah. Some minor adjustments for tax and other things, around SGD 1 billion.
That would have still been down. Q2, quite a bit year-on-year.
Yeah. That's right.
Please. Ching, do you want this one?
Just one more. Any chance you can give us any specific names or characterize the borrowers? Are these developers, office building owners?
No, I don't think we are in a po sition to tell you exactly who I have. The next day, I will receive a call why.
The sector, it is commercial real estate. It's commercial.
Resident. Yeah. This basically is secure commercial real estate, as what Yung Chee said. Our rate is quite low, right?
Yes.
We don't want to be in a position to force sale a certain thing, right?
Oh. Okay.
That together with our customer, this is where you call franchise value, right? Otherwise, when you have a crisis situation, the tendency is everyone will overreact. Okay. Do you want to do that? Okay. You have a property, I overreact, I sell. No. We want to set aside. We want to be calm. We want to be measured. Okay. That to me is important. You have to look at it from the overall standpoint rather than just focus on, oh, I want to have a P&L, I want to protect my profit. I will sell everything just to make Right? It's more than that.
Okay. If there's no other questions, thank you, everyone. As usual, if you have any further questions later, do reach out to the communications team. Thank you, and have a good day.
Thank you.
Thanks, everyone, for your time.