SHARES of UOB U11 rallied on Thursday (Feb 17) morning after the financial institution’s sturdy exhibiting for its full-year FY2021 outcomes.
As at 9.29 am, the counter surged 1.8 per cent to hit S$33.33 – an all-time excessive for the lender – after some 1.2 million shares have been traded.
No married offers have been recorded based on ShareInvestor knowledge.
The counter ultimately closed at S$32.86 on Thursday, up 0.3 per cent.
The financial institution had posted a fourth quarter internet revenue rise of 48 per cent to S$1.02 billion for the monetary yr 2021 on Wednesday.
Following the outcomes, analysts have maintained their “purchase” calls on the lender.
In separate Thursday reviews, DBS Group Analysis, RHB and OCBC Funding Analysis elevated their targets, having all revised their internet curiosity margin (NIM) forecasts upwards.
DBS analyst Lim Rui Wen sees a re-rating cycle forward for UOB’s share value, because the financial institution is more likely to profit from sturdy enterprise and the upcoming US Federal Reserve hike.
The analysis home’s view of 5 hikes in 2022 and a pair of extra in 2023 will probably be constructive for UOB’s NIM by means of FY2023 and past, she stated, including that these larger NIM and barely larger non-interest earnings projections have resulted in estimates going up 5 to six per cent.
Her goal value (TP) of S$37, up from S$34.20, is predicated on larger return on fairness (ROE) assumptions, and is equal to round 1.4 occasions the FY2022 estimated price-to-book (P/BV) ratio and is 1 customary deviation above its common 12-year ahead P/BV a number of.
Like DBS, RHB raised its estimates on account of an upward revision on NIM, with forecasts for FY2022 and FY2023 earnings up 2 per cent and 14 per cent respectively, based mostly on the brokerage’s perception that there will probably be 4 price hikes in FY2022.
“Given (UOB’s) sturdy fundamentals – resilient asset high quality, excessive allowance buffers, improved CASA (present account saving account) ratio and strong capital – we count on wholesome earnings development in FY2022 and FY2023,” the brokerage added.
RHB’s new TP of S$38.10, up from S$33.50, follows larger ROE assumptions to 11.5 per cent and is 1.37 occasions the P/BV ratio. It additionally features a 6 per cent atmosphere, social and governance premium based mostly on its methodology, down from the earlier 8 per cent on account of elevated safety challenges in banking.
Together with the upsides of NIM, OCBC analysts see the financial institution benefiting from the gradual border reopening in Asean, which is supportive of additional restoration in regional enterprise flows over the medium time period.
They’re additionally assured within the financial institution sustaining its 50 per cent dividend payout ratio, as its complete FY2021 dividend of S$1.20 per share implied about 49 per cent dividend payout ratio, up from the earlier 45 per cent that arose from the Financial Authority of Singapore’s dividend cap regulation.
The brokerage thus pencilled in a good worth of S$36.50, which is 1.33 occasions the present P/BV ratio, noting that the lender’s share value has gained round 21 per cent and outperformed the sector since their earlier “purchase” reiteration.
In the meantime, Maybank Securities on Thursday saved “purchase” and elevated its UOB TP to S$36.69, which is 1.4 occasions the FY2022 estimated P/BV ratio, from S$31.15, and raised FY2022-2023 earnings by 7 to 12 per cent.
Its analyst Thilan Wickramasinghe cited rising ROEs above 12 per cent by FY2023, based mostly on components akin to a normalised curiosity atmosphere, financial savings by means of digitalisation and increasing payment earnings with the acquisition of Citi’s client banking property in 4 Asean markets, which ought to combine by H2 of FY2022.
As for Jefferies, analyst Krishna Guha on Wednesday caught along with his earlier TP of S$33.50 as he famous the current earnings have been a “secure set of numbers” and broadly consistent with consensus, electing to not revise any estimates upwards.
“We are going to search for a bit extra color on the normalisation of credit score price and the implied allowance expense for FY2022,” he added.
READ MORE:
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