The bank is also expected to have a steady core capital ratio.

UOB will remain stable despite a slight decrease in profitability, Moody’s reported.

In the latest rating report, Moody’s projects UOB to maintain a good asset quality in the next 12 to 18 months, a steady core capital ratio, and a strong funding and liquidity profile.

Moody’s also expects UOB to report a non-performing loans (NPL) ratio in the 1.5%-2% range over the outlook horizon, slightly higher than the 1.5% reported for 2023.

UOB’s return on assets is also expected to be around 1% in 2024-2025, slightly down from 1.1% in 2023, amidst lower net interest margins from easing monetary policies in Singapore, the US, and the ASEAN region.

Meanwhile, the bank’s core capital ratio denoted by tangible common equity to adjusted risk-weighted assets (TCE/RWA) will remain at around 14% amidst slow RWA growth and 50% dividend payout ratios for 2024-2025.

“UOB’s Aa1 ratings reflect the bank’s a1 BCA and three notches of rating uplift based on Moody’s assumption of a very high likelihood of public support from the Government of Singapore (Aaa stable),” Moody’s said.