Brokerage group cheers to “buy” UOB with a target of 34.20 Singapore dollars. After acquiring a small business “Citigroup”

Reporters reported that In the case of UOB Group announced that it has acquired the right in the consumer banking business of “Citigroup” In Indonesia, Malaysia, Thailand and Vietnam, many brokerage firms reacted positively and unanimously recommended buying shares of “UOB”.

atDBS Vickers Securities Indicated in today’s analysis (17 Jan 2022) has raised the UOB target price. with a target price of 34.20 Singapore dollars from 29.93 Singapore dollars. With an adjusted target price, UOB’s return on equity (ROE) is assumed to increase 11% from 10% previously expected.

by Lim Rui Wen DBS Securities analyst Vickers said the acquisition will help UOB improve its regional strategy faster and better. It is expected to lend approximately S$9.1 billion, with S$6.2 billion in deposits. It includes S$6.700 million in assets under management and 2.40 million customers.

Therefore, it is believed that the deal is priced quite well, with the Citigroup assets being a good platform for UOB. to expand the scope and expand the franchise business in the region Strengthen your positioning and strategy in ASEAN As UOB is Singapore’s only bank with extensive operations in ASEAN.

In addition, Lim Rui Wen believes that UOB shares will continue to upgrade in the future. because the economy is expected to recover in a condition of higher interest rates Many analysts have forecast net interest margin (NIM) higher in 2022, as regional loans are known to have a higher NIM.

It also sees an opportunity for UOB to cross-sell its retail products in the medium term post-transaction. The two banks share their strengths in secured lending. And Citibank is strong in capital. He also believes that operations and business integration remain the key to the long-term synergies of the Group. UOB estimates it has a customer loss rate of around 10%, while also having the strength of around 5,000 employees at the time of acquisition.

whileJefferies Securities said that the UOB target price was raised The target price was S$33.50 from S$33.00.

side Krishna Guha Analyst at Jefferies Securities I have the same opinion that This deal is entirely valid as no capital increase is required. still maintain dividend payment policy Increased earnings per share and fair pricing. Also, don’t think mergers will be a problem. Because UOB has a former Citigroup employee in a senior management position and is making good business acquisitions. Moreover, more than two-thirds of their income comes from unsecured accounts. It will help to supplement and diversify the product and blend the existing income of the group. which will be able to cross-sell products

part RHB Securities It is seen as a support for UOB in Thailand and Indonesia. Unsecured lending businesses have higher NIMs, with RHB analysts saying the Citigroup deal is beneficial as it believes it will boost UOB’s long-term growth prospects, with 90 percent of Citibank loans are classified as unsecured loans in ASEAN countries. except in Malaysia It also noted that Unsecured lending business in Indonesia very strong

RHB Securities continues to recommend “BUY” for UOB with the same target price of S$33.50. which is based on an intrinsic value of 31 SGD. and a premium in Environmental, Social and Governance (ESG) Governance (ESG) 8%.

meanwhile Maybank Securities We recommend a ‘Buy’, keeping the UOB price target unchanged at S$31.15. consider that the agreement is appropriate It is believed that the acquisition of Citigroup assets will allow UOB to take advantage of the reopening of ASEAN countries. And it estimates that the acquisition will generate 4 percent earnings per share for UOB by 2023.

In addition, analysts believe that the opening of new ASEAN economies and interest rate hikes It creates a strong opportunity for credit card businesses and wealth management products. With the agreement, it is expected to double UOB’s retail customer base in ASEAN. Maybank believes that the proportion of UOB’s mass-premium wealth management business will have a great advantage. This could increase wealthy clients by about 81% and new wealthy clients by approximately 1.70 times.