Stock Upgraded: UOB fair price raise to $17.70 by UOB Kay Hian!

United Overseas Bank (UOB) posted an in-line set of 1Q results. Net profitrose 8.3% YoY to S$439m, slightly below our and market estimates of S$450mbased on a Bloomberg poll. The improvements came from net interest income,fee and commission income, associates' profits and lower impairmentcharges. Net interest income gained 12% YoY or 7% QoQ to S$653m, whilenon-interest income rose 11% YoY to S$350m, giving total income ofS$1,003m, up 12% YoY. We expect UOB to continue to develop its strength inthe consumer and SME segments both within and outside Singapore as itintegrates and standardises its processes and regional network. As the 1Qresults were fairly in line with expectations, we are adjusting moderatelyour FY06 estimate from S$1,820m to S$1,852m. In view of the recentre-rating for banking stocks, both in Singapore and the region, we areraising fair value from $15.60 to S$17.70. At yesterday's closing price of$16.70, the potential upside is 6% and we maintain our HOLD rating.