UOB’s 2025 results reflect a year defined less by structural earnings repositioning and more by balance sheet prudence under mounting external uncertainty. The bank strengthened credit buffers through sizeable pre-emptive provisioning, a decision that materially shaped reported profitability even as core operating drivers remained resilient. Earnings therefore illustrate the interaction between margin compression, risk recognition and diversified income support rather than a shift in business model orientation.

Operating profit reached SGD 7.7 billion (about $5.7 billion), down 4% year-on-year (YoY), while net profit stood at SGD 4.7 billion (about $3.5 billion), reflecting pre-emptive provisions, tax and minority interests. Net interest income eased 3% despite loan growth of 4%, with net interest margins moderating to 1.89% for the full year and 1.84% in the fourth quarter. Net fee income rose 7% to a record SGD 2.6 billion (about $1.9 billion), while customer treasury income and investment banking fees both reached record highs.

Trade loans expanded 26% YoY to SGD 45 billion (about $33.3 billion). Retail current account and savings account balances rose 12%, credit card billings increased 6%, and wealth income grew 14% as high-net-worth assets under management reached SGD 201 billion (about $148.7 billion). Asset quality remained stable, with non-performing loans at 1.5% and total credit costs normalising to 19 basis points in the fourth quarter.

Chief executive Wee Ee Cheong highlighted the bank’s performance against a volatile external environment. “Across ASEAN, momentum towards deeper regional integration is growing. Trade, capital flows and cross-border investment continue to expand, reinforcing the region as a key growth engine.” He said diversification supported resilience, with strong fee, trade-related and treasury income partly offsetting margin compression.

Group chief financial officer Leong Yung Chee added that margin compression reflected “asset repricing and keen competition,” acknowledging that loan growth alone was insufficient to offset the pressure from declining benchmark rates.

Pre-emptive provisioning reshaped reported earnings

A defining feature of UOB’s 2025 results was the proactive strengthening of credit buffers. During the third quarter, the bank set aside SGD 615 million (about $455 million) in additional general allowances following an internal portfolio review. This reduced quarterly profitability but reinforced the bank’s balance sheet against potential deterioration in selected portfolios.

Leong said the bank had “pre-emptively anticipated many of these” risks and that the buffers “allow us to navigate these potential hotspots and stay within our guidance of credit costs being 25 to 30 basis points,” identifying commercial real estate exposures in the United States and Greater China as areas under closer monitoring.

The charge introduced earnings volatility amid margin compression. Asset quality remained stable, with credit costs easing to 19 basis points in the fourth quarter and the non-performing loan ratio holding at 1.5%. Higher provisions strengthened loss absorption capacity, supporting continued client activity despite external uncertainty.

Fee momentum reinforces earnings resilience

While provisioning and margin pressure shaped headline profitability, diversified income streams cushioned operating performance. Fee income reached a record SGD 2.6 billion (about $1.9 billion), supported by wealth distribution, loan-related fees and sustained customer activity across wholesale and retail franchises. Customer treasury flows also achieved all-time highs as corporates and investors increased hedging and liquidity management activity amid market volatility.

Retail banking contributed materially to this resilience. Credit card billings rose 6% YoY, reflecting steady consumer engagement across regional markets. Wealth income increased 14% as investment demand lifted assets under management.

Deposit growth remained stable, with current account and savings account balances rising 12%, reinforcing funding stability even as spreads narrowed. Within the retail franchise, balance accumulation translated into portfolio allocation and investment uptake, particularly among emerging affluent customers.

Digital distribution scaled this transition through UOB’s TMRW platform, its mobile-first banking and wealth engagement proposition. Wee said: “Our digital wealth momentum, dealing with the mass affluent market, remains very strong,” with sales more than doubling YoY through the platform.

Leong noted that the credit cards business “continued to achieve new highs,” underscoring its role as a consistent fee generator. Wealth inflows and investment conversion trends further supported advisory income expansion across the franchise.

Despite continued investment, total expenses edged down 2% year-on-year, bringing the cost-to-income ratio to 44.6% for the full year — reflecting disciplined cost management even as lending spreads compressed. IT-related expenses rose 7% to SGD 1.136 billion (about $840.6 million), with Leong framing AI as a productivity lever enabling staff to deliver “faster and better responses”.

ASEAN franchise sustains structural growth momentum

Regional connectivity continues to shape UOB’s long-term strategic positioning, allowing deposits gathered domestically to circulate across trade, settlement and treasury ecosystems. Wee highlighted Indonesia, Malaysia, Thailand and Vietnam, collectively the “ASEAN-4” franchise, as key contributors.

He highlighted that global markets “benefited from active client hedging amid market volatility,” with treasury income reaching an all-time high. He added that income from the ASEAN-4 grew 5% YoY even as overall group income declined 3%, demonstrating the region’s counter-cyclical support to group earnings.

Wholesale banking reflected this regional activity through transaction demand. Trade loans grew 26% YoY, supported by supply chain realignment and intra-regional commerce. Transaction banking accounted for close to half of wholesale income, driven by cross-border payments, trade finance and cash management flows.

Wee said the expansion reflects deeper connectivity to the ASEAN trading economy, with trade relationships enabling broader intermediation: “Trade encourages cross-selling. If you do trade, you do foreign exchange. If you are doing foreign exchange, you can package interest rate hedging and cash management. The broader wallet associated with trade is not because of trade loans per se, it has implications for how we share the business.”

Cross-border income accounted for 27% of wholesale banking revenue, underscoring how regional integration translates directly into transaction density and advisory flows. Connectivity therefore functions not merely as geographic presence but as operating infrastructure that converts trade, settlement and hedging needs into layered fee income.

Outlook shaped by prudence and diversified income support

UOB’s 2025 performance reflects continued caution in balance sheet expansion alongside confidence in diversified income streams. Record fee income and resilient client activity absorbed margin compression, reinforcing operating stability during a period of heightened uncertainty.

The bank’s forward guidance reinforces this trajectory. Low-single-digit loan growth alongside high-single-digit fee expansion, with net interest margins projected at 1.75% to 1.8% for 2026. While spread compression may persist, the bank anticipates continued expansion in activity-based income.

Earnings resilience will therefore rely on diversification, regional connectivity, and disciplined risk management, rather than aggressive credit growth. Record fee income, steady ASEAN momentum, and normalising credit trends underscore that the bank’s underlying operating engines remain intact, even as it prioritises prudence over short-term earnings maximisation.