(Adds bad debt charges and CEO comments)
By Saeed Azhar
SINGAPORE, July 31 United Overseas Bank
, Singapore's third-biggest bank, doubled its bad debt
charges in the second quarter, saying a group of investors was
struggling to service high-end property loans in the city state.
The bank on Thursday reported a 3.2 percent rise in
quarterly profit, beating market estimates and helped by an
increase in net interest income and investment gains.
Its non-performing loan ratio was stable at 1.2 percent.
"This is (an) isolated case, which involved a group of
borrowers," Chief Executive Wee Ee Cheong told reporters. "There
is no systemic risk as far as the overall housing loan market is
UOB said its bad debt charges rose to S$150 million ($120.3
million) in the second quarter from S$75 million a year earlier,
due in part to impairment of non-performing accounts amounting
to S$25 million in Singapore and S$41 million in Thailand.
Bank officials said the Singapore loans were related to
investment properties in the pricier segment of the market.
Moody's Investors Service earlier this month said its
outlook for Singapore's banking system was negative over the
next 12 to 18 months due to an expected rise in problem loans as
interest rates rise and asset prices fall.
Analysts expect a moderation in loan growth in the months
ahead due to a slowdown after a series of Singaporean government
measures to cool the property market.
UOB officials said mortgage growth slowed to a single-digit
pace in the second quarter, while applications for housing loans
fell by 25 to 30 percent.
"If the policy continues. I would say people will take a
wait-and-see attitude. Nobody wants to buy," Wee said.
UOB reported net profit of S$808 million for the April-June
quarter, up from S$783 million in the year-ago quarter and
exceeding a mean estimate of S$764 million from seven analysts
polled by Reuters.
Net interest income increased 10.7 percent to S$1.12
billion, due to a higher loan base, the bank said.
(1 US dollar = 1.2466 Singapore dollar)
(editing by Jane Baird)