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United Overseas Bank (UOB.SP): Profit Dragged by Provisions, Shares Stabilize

United Overseas Bank (UOB.SP), a major bank in Singapore, announced that 1Q net income declined 18.7% on year to S$855 million, better than market expectations of S$792 million.

However, this is the Bank's first quarterly profit drop since 2016.

The Bank said an Impairment Charge of S$286 million (up from S$93 million in the prior-year period) was tied to "the challenging macro environment this quarter". Major banks in Singapore are writing up large provisions against non-performing loans amid economic impacts caused by the coronavirus pandemic

1Q net interest income edged up 0.4% on year to S$1.59 billion, as the net interest margin shrank to 1.71% (5 basis points lower on quarter, 8 basis points lower on year) amid declining interest rates in major economies.

On a Daily Chart, UOB is showing signs of stabilization from the market crash in March.

Source: GAIN Capital, TradingView

It has formed a Bullish Pattern of Higher Highs and Lows since marking a recent low (closing low) at S$17.57 on March 23.

The stock has returned to levels around the 20-day moving average, while encountering Overhead Resistance at S$20.70 (around the 50-day moving average).

Above S$20.70, further resistance will be found at S$22.38 (last seen in March).

Only a return to the Key Support at S$18.60 would call for a Bearish Reversal.


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