Singapore's United Overseas Bank (UOB) said on Friday its earnings for the fourth quarter of 2016 slipped 6.2 per cent on-year to 739 million Singapore dollars and warned that global uncertainties may limit growth prospects in 2017.
For the quarter, net interest income was stable at S$1.28 billion, with strong loan growth offset by a 10 basis-point fall in the net interest margin to 1.69 per cent.
Shares of UOB jumped, trading up 1.39 per cent at 10:40 a.m. HK/SIN.
Non-interest income fell 6.3 per cent to S$753 million in the quarter on lower trading and investment income.
But fee and commission income rose 10.6 per cent to S$531 million on higher credit card and wealth management fees.
Like its two Singapore peers, OCBC and DBS, UOB reported a hit from its oil and gas industry exposure.
Difficulties in the oil, gas and shipping industries led to a S$313 million increase in specific allowances on loans to S$428 million.
The non-performing loan ratio rose slightly to 1.5 per cent, from 1.4 per cent in the third quarter. Both DBS and OCBC also saw that ratio increase.
Speaking to CNBC's pre-market programme The Rundown, David Marshall, senior analyst for Asia-Pacific banks at CreditSights, noted that troubles faced by oil and gas support services firm have been a bane for Singapore banks over the past year.
"Trends (in the fourth quarter) are similar to the first nine months. The issue really is a challenging environment, (it's) a bit subdued so not a lot of revenue growth... and that problem with the bad debt. The overall credit quality seems pretty good for the Singapore banks, it's the oil and has services sector that's causing problems," he said.
UOB's CEO Wee Ee Cheong highlighted that performance was stable despite a subdued growth environment.
"Global uncertainty, slow growth and rapid digital transformation will continue in 2017. However, Asia with its increasing integration and consumer affluence presents opportunities for long-term players such as UOB," Wee said in a statement.
For the full year, UOB's net profit slipped 3.5 per cent to S$3.10 billion.
Net interest income rose 1.3 per cent to S$4.99 billion for 2016, with UOB citing healthy loan growth in the consumer and the non-bank financial institution customer segments.
Full-year non-interest income slipped 1.6 per cent to S$3.07 billion, with trading and investment income falling 8.1 per cent on lower earnings from the sale of investment securities, offset by higher trading income.
UOB proposed a final dividend of 35 Singapore cents a share, bringing the total dividend payout for the year to 70 Singapore cents, down from 90 Singapore cents in 2015.