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Fundamental View
AS OF 12 Nov 2025UOB has solid stand-alone credit profile and benefits from the high likelihood of support from the government of Singapore, where it is one of the three major local banks.
The bank is more focused on Singapore and Southeast Asia than on Greater China; its traditional strengths are the SME and retail sectors, although its large corporate book is now over 60% of loans.
UOB has been conservatively managed with a sound risk profile, a strong focus on liquidity and a long track record of relatively good performance. However, its 3Q25 results showed some softness with substantial provisions set aside for HK and US CRE.
Business Description
AS OF 12 Nov 2025- UOB was established in 1935 as a Chinese family-owned bank catering to the Hokkien (Fujian) community, Singapore's largest Chinese ethnic sub-group. The Wee family owns about 18% of the shares. A further 5.2% is held by the Lien family which previously controlled Overseas Union Bank, which UOB merged within 2001. The Wee family has significant real estate and hospitality interests in Singapore and regionally.
- UOB's main markets are Singapore and Malaysia where its presence dates back to before Singapore's independence. It expanded through acquisitions in Thailand (Bank Radanasin and Bank of Asia) and Indonesia (Bank Buana), and more recently bought over Citi's consumer franchise in Malaysia, Thailand, Indonesia and Vietnam.
- Franchise strengths are in SME and consumer lending. Building & construction accounts for 27% of loans, followed by housing at 24%, financial institutions at 11% and general commerce at 11% at 2Q25.
- Loans by geography comprise Singapore at 50% of loans, Greater China at 14%, Malaysia at 10%, Thailand at 8%, and Indonesia at 3% at 2Q25.
Risk & Catalysts
AS OF 12 Nov 2025UOB has a greater focus on Southeast Asia than its Singapore bank peers, which leaves it open to more asset quality risk in a downturn / high interest rate environment. It has 8% of its loan book in Thailand, where we are cautious about macroeconomic conditions.
The bank has benefited more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now aligns with peers.
It posted a large profit decline in 3Q25 which was a negative surprise. Although the improved coverage ratios following the preemptive provision recognition are welcome, its NPL coverage ratio remains 40-60 ppt behind peers, and we did not find reassurance from its credit cost outlook. Topline performance also lagged peers.
Key Metric
AS OF 12 Nov 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 1.23% | 1.31% | 1.52% | 1.51% | 1.44% |
| ROA | 0.92% | 0.99% | 1.19% | 1.19% | 0.81% |
| ROE | 10.2% | 11.9% | 14.2% | 13.7% | 9.0% |
| Equity to Assets | 9.3% | 8.6% | 8.8% | 9.2% | 8.9% |
| CET1 Ratio (fully-loaded) | 13.5% | 13.3% | 13.4% | 15.4% | 14.5% |
| NPL Ratio | 1.62% | 1.58% | 1.52% | 1.53% | 1.60% |
| Provisions / Loans | 0.20% | 0.20% | 0.25% | 0.27% | 0.68% |
| Liquidity Coverage Ratio | 133% | 147% | 158% | 143% | 142% |
| Net Stable Funding Ratio | 116% | 116% | 120% | 116% | 116% |
CreditSight View Comment
AS OF 07 Nov 2025UOB is conservatively run with a large family ownership and a sound balance sheet. The bank is more focused on SG and Southeast Asia than on Greater China. Outside SG, its main operations in ASEAN are in Thailand, Malaysia and Indonesia which collectively make up ~20% of its loan book. It acquired Citi’s consumer operations in Thailand, Malaysia, Indonesia and Vietnam, which has been good for the franchise. The bank has benefitted more from the final Basel III rules implementation than its peers but it has lost this advantage again since 3Q25. The substantial preemptive provisions taken in 3Q25 to strengthen coverage ratios heavily hit the bank’s 3Q25 results, but UOB’s NPL coverage ratio remained 40-60 ppt behind the two peers. New NPAs have risen due to its CRE exposure in HK and the US.
Recommendation Reviewed: November 07, 2025
Recommendation Changed: July 04, 2017
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