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SINGAPORE'S United Overseas Bank Group (UOB) said on Tuesday its net profit in the first quarter rose an annual 2.1 per cent, boosted by loan growth.
Net profit rose to 529 million Singapore dollars (S$530 million) from 518 million in the first quarter of last year, it said.
'The Group's core banking business remained strong,' UOB said in a statement.
Net interest income grew 11.8 per cent to 852 million dollars as loan growth helped to offset a 4.1 per cent drop in non-interest income, which fell to 414 million dollars, the bank said.
Lower trading and investment income was partially offset by higher fee and commission income, reflecting strong performance of the regional economies, it said.
Investment in collateralised debt obligations (CDOs) declined further to 268 million dollars, including 82 million dollars in asset-backed securities.
CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.
World financial markets have been battered since last August by fallout from a crisis in the US subprime, or high-risk, loan sector which forced commercial banks to tighten lending criteria leading to a credit crunch which spread to threaten the global economy.
Banks around the world suffered multi-billion-dollar losses linked to subprime loans given to US homebuyers with risky credit histories.
UOB said impairment charges increased by 1.8 per cent to 89 million dollars, largely attributed to provision for CDOs.
It said it has fully provided for its asset-backed securities CDOs.
'Amidst current market volatilities, we expect loans growth to moderate this year. But there are always opportunities during challenging times,' said Wee Ee Cheong, UOB Group's deputy chairman and chief executive officer.
UOB subsidiaries operate in Singapore, Malaysia, Indonesia, Thailand and China.
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