The 3 Singapore banks have already reported their business updates for the third quarter and for the first nine months of FY2020 – with UOB (SGX:U11) being the first to release its results on Wednesday (you can check out my summary here), followed by DBS (SGX:D05) and OCBC (SGX:O39) on Thursday (you can check out my summary for DBS here, and my summary for OCBC here.)

Today, I will be putting the 3 banks’ results side-by-side to find out which one had the best set of results. Just a brief recap, in the first and second quarter, DBS had the best set of financial results, with UOB recording the smallest drop in its financial ratios (you can check out my comparison done for the first quarter here, and for the second quarter here.)

Question: Is the outcome for the third quarter the same as the first and second quarters? Let us find out in this post…

**Financial Performance**

In this section, I will be looking at the bank’s key financial statistics (in particular its net interest income, non-interest income, total income, as well as its net profit attributable to shareholders) on a quarter-on-quarter (q-o-q) basis (i.e. Q3 FY2019 vs. Q3 FY2020), as well as on a year-on-year (y-o-y) basis (i.e. 9M FY2019 vs. 9M FY2020):

Q3 FY2019 vs. Q3 FY2020:

Net Interest Income:

- DBS’ net interest income fell 11.7% from S$2,460m to S$2,171m.
- UOB’s net interest income went down by 12.6% from S$1,687m to S$1,474m.
- OCBC’s net interest income saw a 11.2% decline from S$1,600m to S$1,420m.

Conclusion: While all 3 banks saw their net interest margin decline on a q-o-q basis due to a sustained low interest rate environment, OCBC saw the lowest q-o-q drop percentage (at -11.2%), followed by DBS (at -11.7%), and then UOB (at -12.6%.)

Non-Interest Income:

For DBS and UOB, their non-interest income is the sum of its net fee and commission income and its other non-interest income. Here are the figures:

- DBS’ non-interest income saw a 3.2% improvement from S$1,363m to S$1,406m.
- UOB’s non-interest income fell by 14.8% from S$922m to S$786m.
- OCBC’s non-interest income climbed 6.0% from S$1,055m to S$1,118m.

Conclusion: UOB was the only bank that saw its non-interest income recording a q-o-q decline (at -14.8%.) OCBC had the best q-o-q performance (at +6.0%.)

Total Income:

- DBS’ total income declined by 6.4% from S$3,823m to S$3,577m.
- UOB’s total income fell by 13.4% from S$2,609m to S$2,260m.
- OCBC’s total income dropped by 4.4% from S$2,655m to S$2,539m.

Conclusion: While all 3 banks saw their total income decline on a q-o-q basis, OCBC saw the lowest percentage of drop (at -4.4%), followed by DBS (at -6.4%), and then UOB (at -13.4%.)

Net Profit Attributable to Shareholders:

- DBS’ net profit attributable to shareholders fell 20.4% from S$1,629m to S$1,297m.
- UOB’s net profit attributable to shareholders tumbled 40.3% from S$1,118m to S$668m.
- OCBC’s net profit attributable to shareholders went down by 12.3% from S$1,172m to S$1,028m.

Conclusion: All 3 banks saw their bottom-lines weakened on a q-o-q basis as well. However, OCBC’s drop percentage was the smallest (at -12.3%), followed by DBS (at -20.4%), and then UOB (at -40.3%.)

9M FY2019 vs. 9M FY2020:

Net Interest Income:

- DBS’ net interest income edged down by 3.4% from S$7,199m to S$6,956m.
- UOB’s net interest income fell by 8.2% from S$4,927m to S$4,524m.
- OCBC’s net interest income went down by 4.1% from S$4,722m to S$4,530m.

Conclusion: All 3 banks saw their net interest income decline on a y-o-y basis, with DBS recording the smallest drop percentage (by -3.4%), followed by OCBC (by -4.1%), and then UOB (by -8.2%.)

Non-Interest Income:

- DBS’ non-interest income improved by 12.6% from S$3,884m to S$4,373m.
- UOB’s non-interest income went down by 10.0% from S$2,671m to S$2,404m.
- OCBC’s non-interest income dipped 3.2% from S$3,227m to S$3,124m.

Conclusion: DBS is the only bank that saw its non-interest income climb (by 12.6%.) OCBC’s non-interest income fell by 3.2%, and UOB’s non-interest income dropped 10.0%.

Total Income:

- DBS’ total income inched up by 2.2% from S$11,083m to S$11,329m
- UOB’s total income fell 8.8% from S$7,598m to S$6,927m.
- OCBC’s total income dropped 3.7% from S$7,949m to S$7,654m.

Conclusion: In terms of the 3 banks’ total income, DBS is the only one that saw y-o-y improvements (by +2.2%.) The other 2 banks saw their total income fell – with OCBC by 3.7%, and UOB by 8.8%.

Net Profit Attributable to Shareholders:

- DBS’ net profit attributable to shareholders dropped 24.0% from S$4,883m to S$3,709m.
- UOB’s net profit attributable to shareholders tumbled 33.3% from S$3,338m to S$2,226m.
- OCBC’s net profit attributable to shareholders weakened by 32.3% from S$3,627m to S$2,455m.

Conclusion: While all 3 banks saw their net profit attributable to shareholders decline on a y-o-y basis, DBS saw the smallest percentage of drop (by -24.0%), followed by OCBC (by -32.3%), and then UOB (by -33.3%.)

Question: Which Bank Recorded the Best Set of Financial Results?

Answer: On a q-o-q basis, OCBC was the clear winner here. However, on a y-o-y basis, DBS had the best performance among the 3 Singapore banks.

**Key Financial Ratios**

In this section, let us put the 3 banks’ financial ratios reported for the current quarter under review (i.e. Q3 FY2020 ended 30 September 2020), and compare them against the ratios recorded in the previous quarter (i.e. Q2 FY2020 ended 30 June 2020) to find out which bank was the best performer:

Net Interest Margin:

- DBS’ net interest margin fell by 0.09 percentage points (pp) from 1.62% to 1.53%.
- UOB’s net interest margin went up by 0.05pp from 1.48% to 1.53%.
- OCBC’s net interest margin dipped by 0.06pp from 1.60% to 1.54%.

Conclusion: UOB was the only bank that saw its net interest margin recording improvements 3 months on (by +0.05pp), while the other 2 banks saw its net interest margin deteriorated – with OCBC suffering from a smaller drop (by -0.06pp) compared to DBS (which saw its net interest margin fell by -0.09pp.)

Return on Assets:

- DBS’ return on assets edged up by 0.04pp from 0.77% to 0.81%.
- UOB’s return on assets inched down by 0.02pp from 0.65% to 0.63%.
- OCBC’s return on assets climbed 0.29pp from 0.69% to 0.98%.

Conclusion: Both DBS and OCBC saw their return on assets recording improvements 3 months on (OCBC’s return on assets saw a 0.29pp improvement while DBS’ return on assets went up by 0.04pp.) UOB was the only bank which saw its return on assets weakened (by 0.02pp.)

Return on Equity:

- DBS’ return on equity inched up by 0.02pp from 9.8% to 10.0%.
- UOB’s return on equity edged down by 0.02pp from 7.1% to 6.9%.
- OCBC’s return on equity went up by 2.5pp from 6.2% to 8.7%.

Conclusion: Just like its return on assets, both DBS and OCBC saw their return on equity recording improvements compared to the previous quarter, with OCBC recording a stronger improvement (by +2.5pp) compared to a +0.02pp improvement recorded by DBS. UOB’s return on equity fell by 0.02pp.

Non-Performing Loans Ratio:

- DBS’ non-performing loans ratio went up by 0.1pp from 1.5% to 1.6%.
- UOB’s non-performing loans ratio came down by 0.1pp from 1.6% to 1.5%.
- OCBC’s non-performing loans ratio remained the same at 1.6%.

Conclusion: UOB is the winner here, with its non-performing loans ratio edging down.

Question: Which Bank Had the Most Resilient Set of Financial Ratios?

Answer: It is a tie between UOB and OCBC – the former had the best improvement in its net interest margin and non-performing loans ratio, while the latter saw the most improvements in its return on assets and in its return on equity.

**Which Bank is the ‘Cheapest’ Currently in Terms of Their Current Valuations?**

The following table contains the 3 banks’ current valuations (based on their current share prices at the time of writing):

DBS | UOB | OCBC | |

Share Price | $22.25 | $20.36 | $8.87 |

P/E Ratio | 10.3 | 9.1 | 10.3 |

P/B Ratio | 1.1 | 0.9 | 0.9 |

Dividend Yield** | 3.9% | 3.8% | 3.6% |

*** The dividend yield was calculated based on their projected dividend payouts in FY2020, which is capped at 60.0% of their total dividend payouts in FY2019, as advised by the Monetary Authority of Singapore. DBS is projected to pay out a total of 87.0 cents/share, UOB is projected to pay out a total of 78.0 cents/share, and OCBC is projected to pay out a total of 31.8 cents/share.*

Conclusion: Among the 3 Singapore banks, UOB seem to be the cheapest right now (in terms of their current valuations), with their current P/E and P/B ratios being the lowest.

**In Conclusion**

Looking at all the statistics in this post, OCBC’s results this time round was the most impressive, in terms of its latest q-o-q performance (where it recorded the smallest percentage drop in its net interest income, total income, as well as in its net profit attributable to shareholders. It also recorded the biggest percentage climb in its non-interest income.)

On top of that, OCBC’s return on assets and return on equity also saw the best improvements (among the 3 banks) when compared against the previous quarter.

Finally, in terms of valuations (based on their share prices at the time of writing this post), UOB is the ‘*cheapest’* among the 3, followed by OCBC, and then DBS.

Having said that, this post is by no means any recommendation to buy or sell shares of the 3 Singapore banks. Please do your own due diligence before you make any investment decisions.

*Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings, United Overseas Bank Limited, and Overseas-Chinese Banking Corporation.*

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