(Bloomberg) -- United Overseas Bank Ltd.’s fourth-quarter profit expanded, as a decline in its lending income was cushioned by stronger fee income from wealth and credit cards. 

Net income, excluding one-off expenses, rose 7% to S$1.5 billion ($1.1 billion) from a year earlier in the three months ended Dec. 31, Southeast Asia’s third-largest lender said Thursday. That was in line with the S$1.51 billion average estimate of two analysts surveyed by Bloomberg News.

Net interest income retreated as net interest margin, a gauge of lending profitability, shrank on both quarterly and yearly basis. The bank lowered its 2024 loan-growth projection to a low single-digit percentage, from a mid single-digit estimate made in the previous quarter.

Shares of the lender fell as much as 2.1% in Singapore trading. 

Chief Executive Officer Wee Ee Cheong said that the global economic outlook remains uncertain in the near term, though Southeast Asia continues to be a bright spot. Domestic demand remains robust, tourism is recovering well and the region has drawn manufacturing and investments as global firms diversify their supply chains, Wee said at an earnings briefing.  

“Overall, results are pretty decent though net interest margin was slightly disappointing,” said analysts at Goldman Sachs Group Inc. led by Melissa Kuang.

The pressure on loan margin is due in part to competition on good quality credits, Chief Financial Officer Lee Wai Fai said at the briefing.

One bright spot for UOB has been credit card fees that have been a bonanza for the lender, as it rode on the wave of interest to buy tickets to Taylor Swift and Ed Sheeran gigs via its concert tie-ups. Credit card fees surged 66% to a new high of S$382 million in 2023. 

UOB is the second Singapore bank to report full-year earnings that are at an all-time high. Its bigger rival DBS Group Holdings Ltd. earlier this month posted record results and rewarded shareholders with a bonus share issue. The banks’ robust performances that have been propelled by elevated interest rates may have peaked however as rates are expected to decline this year. 

Oversea-Chinese Banking Corp will report results next week.

Here are more details of UOB’s fourth-quarter earnings:

  • Net interest income fell 6% to S$2.4 billion
  • Net interest margin at 2.02% shrank by seven basis points from previous quarter, 20 bps from a year ago
  • Fee income including credit cards and wealth rose 17% to S$569 million
  • Other non-interest income, which includes trading, expanded 54% at to S$438 million
  • Wealth clients’ assets under management rose 14% to S$176 billion
  • Gross loans at S$321 billion at end-2023, barely changed from S$320 billion a year ago

--With assistance from Pui Gwen Yeung and Natalie Choy.

(Updates throughout with details)

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