UOB Profit Down 12.6% In First Quarter
United Overseas Bank (UOB) reported a 12.6% decline in profit to $612m for the first quarter ending 31 March, dragged down by record low interest rates, higher costs and lack of a one-time gain in 1Q10. Total income slipped 5.3% from $1.5b to $1.4b, with core net interest income dipping 3.2% to $871m while that of fee and commission rose 16.3% to $330m. Despite recording a lower quarterly net interest income as compared to last year, UOB managed to arrest the downward run by registering a 1% growth from the previous quarter breaking a four consecutive quarters of decline. Its robust lending expansion helped offset the impact of margin pressure with net interest margin stablising at 1.9%. In Singapore and the key regional markets, loans expanded by healthy rates of 6% and 8 % respectively.

Significance: Profit of UOB, the smallest of the three local banks by market capitalisation, was considered relatively uninspiring after coming below the average estimate of $625m by analysts. Loan volume is expected to continue growing to offset the low interest margin in the next quarter.

Cosco’s 1Q11 Profit Improves 16.9%
Cosco’s (Singapore) profit for the first quarter ended 31 March improved 16.9% to $37.1m. Revenue for the period jumped 21% from $835m to $1b, substantially helped by growth in the shipbuilding and marine engineering segments which made up the lower contribution from high-value ship conversion, ship repair and dry bulk shipping activities. In light of the buoyant times of the offshore and marine industry, the group took in new orders for three special-purpose carriers and two self-erecting tender drilling rigs in the quarter. Its current order book stood at US$5.9b with progressive deliveries stretching up to 2013.

Significance: The Baltic Dry Index has fallen nearly 10% from 1,693 to 1,530 points for the year and impacted global charter rates which in turn led to a 45.9% tumble in revenue for its dry bulk shipping segment. Comfortingly, its timely diversification strategy to venture into the offshore and marine sector has paid off handsomely and is likely to cushion the blow.

IndoAgri Sets To List Subsidiary
Indofood Agri Resources (IndoAgri) has crossed the final regulatory hurdle to list its subsidiary Salim Ivomas Pratama (SIMP) on the Indonesia Stock Exchange. The Indonesia-based, Singapore-listed palm plantation owner announced that approval had been obtained from BAPEPAM-LK, the Indonesian Capital Market and Financial Institution Supervisory Board, to kick-start the book-building process and publish an abridged prospectus for the proposed listing. Referring to the abridged prospectus, expansion plans of the subsidiary include the ongoing construction of palm oil processing mills in Indonesia’s West Kalimantan and South Sumatra as well as construction of a sugar mill which has been slated to complete this year.

Significance: Concerns lingered over a potential loss of investors’ interest in the subsidiary. Shares of IndoAgri have fallen more than 15% since the announcement of the proposed listing, however, analyst viewed the selldown as over done and that “the market has not accounted for positives in the form of potential M&As and higher dividend payouts following this exercise.”