Moody’s Ratings has affirmed the Aa1 deposit and senior unsecured debt ratings of United Overseas Bank Limited (UOB), maintaining a stable outlook. This decision reflects expectations that UOB will uphold strong fundamentals through 2025–2026, despite challenges such as exposure to trade-oriented companies and the property sector in Hong Kong.
The affirmation includes UOB’s subordinated debt instruments and preferred securities, alongside its a1 Baseline Credit Assessment (BCA) and adjusted BCA. Moody’s anticipates UOB’s problem loan ratio to remain between 1.5% and 2.5%, with a slight decline in its core capital ratio, yet maintaining robust profitability. The bank’s liquidity and funding are expected to remain strong, relying primarily on deposit-led funding.
UOB’s a1 BCA considers asset risks from exposure to trade-oriented companies affected by US trade policies and the property sector in Hong Kong. These risks are mitigated by prudent client selection and a solid capital buffer. At the end of 2025, UOB’s Common Equity Tier 1 ratio was 15.4%, expected to modestly decrease to around 14% by 2026 due to higher capital distributions.
The bank’s Aa1 ratings benefit from a three-notch uplift, reflecting a high likelihood of public support from the Singapore government. Whilst upward pressure on these ratings is unlikely, improvements in macroeconomic conditions and lower asset risk could lead to upgrades of its BCA. Conversely, a decline in asset quality or return on assets below 1% could negatively impact the ratings.
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