UOB(US:UOVEY) Xin Hua Cai Jing·2025-11-11 09:28Core Viewpoint - CGS International maintains a "Hold" rating on UOB but lowers the target price from SGD 38.30 to SGD 36.50 due to concerns over the bank's earnings recovery following a significant one-time provision in Q3 2025 to address risks in the US and Greater China commercial real estate sectors [1][2]. Group 1: Financial Performance - UOB recorded a special provision of SGD 479 million in Q3 2025, with credit costs reaching 55 basis points, significantly higher than the bank's previous guidance of 25-30 basis points for the fiscal year [1]. - The increase in provisions is attributed to declining transaction valuations in the US and Greater China commercial real estate markets, necessitating write-downs on loan book asset values [1]. - UOB decided to recognize an additional general provision of SGD 615 million, bringing the total general provision for Q3 to SGD 687 million [1]. Group 2: Earnings Forecast - CGS International has significantly reduced UOB's earnings per share (EPS) forecasts, cutting the 2025 fiscal year EPS estimate by 18.8%, and lowering the 2026 and 2027 fiscal year EPS estimates by 13.1% and 10.4%, respectively [2]. - Despite UOB management's positive signals regarding credit costs normalizing in Q4 and FY 2026, market concerns about high credit costs are expected to persist in the short term [2].