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On Wednesday, JPMorgan maintained its positive stance on United Overseas Bank Ltd . (UOB:SP) (OTC: OTC:UOVEY), reiterating an Overweight rating and a price target of SGD43.00. Currently trading with a P/E ratio of 11.08 and a market capitalization of $48.16 billion, UOB has shown strong momentum with a 44% return over the past year. The bank’s strategic goals, set during a corporate day last year, include achieving a 14% return on equity (RoE) and a cost-to-income ratio (CIR) of 40% by 2026. According to InvestingPro, the bank maintains a "GOOD" overall financial health score, suggesting solid fundamentals.
UOB has updated its CIR guidance for the current year to 42%, a slight increase from the previously stated range of 41-42%. This adjustment is intended to bolster the bank’s revenue-generating capabilities throughout the year and provide flexibility regarding cost management for 2026 and 2027. The bank’s commitment to a SGD3 billion capital return over the next three years is seen as a key factor that could enable it to leverage more rapidly if necessary. InvestingPro data reveals that UOB has maintained dividend payments for an impressive 34 consecutive years, with a current attractive yield of 4.69%.
JPMorgan’s projections include a CIR of 41.4% in 2025, 40.5% in 2026, and 39.5% in 2027. The firm also anticipates a regular payout of approximately 54% and share buybacks of SGD1.5 billion annually over the three-year period. These financial strategies are expected to result in a RoE slightly below 14% for 2026 and just above that threshold for 2027.
As the year progresses, JPMorgan forecasts that UOB shares will approach 1.4 times the book value. This projection is based on the confidence that the bank’s RoE, share buyback program, and profit delivery will align with the target of a 14% RoE.
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