The bank's earnings fell on declining revenue and higher allowance amid the global pandemic, while the reopening of economies following lockdowns helped improve its quarterly operating profits.

United Overseas Bank reported third-quarter net earnings of S$668 million ($489.6 million) – 5 percent lower quarter-on-quarter and 40 percent down year-on-year, according to its quarterly earnings report, published on Wednesday.

The bank's 3 percent quarterly growth in operating profit to S$1.25 billion was led by improved margins as well as higher fees as economic activity gradually resumed. However, it took a pre-emptive additional allowance of $339 million for non-impaired assets.

Improved Quarter

Net interest income of S$1.47 billion was 1 percent higher compared to the previous quarter but 13 percent down on-year, led by an improvement in net interest margin of 5 basis points to 1.53 percent as liquidity buffers eased in line with a stabilizing funding environment.

Fee income grew 15 percent to S$514 million as wealth management and credit card fees rebounded with the resumption of business activities across the region and gradual easing of movement controls. Trading and investment income declined from S$294 million in the second quarter to S$210 million, as there was a larger recovery from market volatility last quarter.

Softer Performance

UOB's net earnings for the first nine months of 2020 stood at S$2.23 billion, 33 percent lower than a year ago. The bank's net earnings in the previous quarter was S$703 million ($513.41 million) – 18 percent down from the first quarter and 40 percent down from the same period the year before – mainly due to lower margins and higher credit costs.

Annualized earnings per share stood at S$1.55 for the quarter, down 40.8 percent from S$2.62 a year ago.

Unclear Recovery

«While there are early signs of recovery across the global economy, the trajectory remains uneven and unclear. Given the evolving geopolitical and pandemic situation, we remain vigilant, especially in our key regional markets,» Wee Ee Cheong, UOB deputy chairman and chief executive, said in a statement.

Singapore's gross domestic product (GDP) grew by 7.9 percent in the third quarter, based on advance estimates released by the Ministry of Trade and Industry (MTI) in October. The ministry did not revise its full-year GDP outlook, which predicts an overall contraction of 5 to 7 percent.