Report Summary

• UOB made a large one-off provision of S\$615m in 3Q25 due to commercial real estate exposure in the US and Greater China, which has raised concerns about credit quality management.
• CGS International cut UOB’s FY25F EPS by 18.8%, and FY26F/27F by 13.1%/10.4%, citing both this provision and expected net interest margin (NIM) compression from lower interest rates.
• Despite management’s confidence that provisions are sufficient, lingering macroeconomic and credit risk concerns keep the stock on Hold, with a lower target price of S\$36.50.
• Dividend per share for FY25F is expected to be S\$2.00, slightly lower YoY, as the provision is not included in payout calculations.
• ESG scores for UOB remain strong, especially in the social and environmental pillars, which could benefit valuations as responsible investing gains traction.
• Key risks include further credit deterioration, higher provisioning, and slower non-interest income growth; potential upside from provision write-backs or stronger trading income.
• Comparative sector data places UOB’s profitability and valuation metrics below peers like DBS and OCBC for the forecast period.