All 3 Singapore-listed banks (in DBS, UOB, and OCBC) had released their financial results for the fourth quarter and for the full-year of 2020 ended 31 December 2020, and I have written a summary for each of them shortly after their results were released (and you can click on the respective links below to read them in case you’ve missed out):

What I will be doing in this post is to put the 3 banks’ financial results and statistics side-by-side to find out which bank had the best performance this time round. Also, I will be looking at the 3 banks’ current valuations (based on their share prices at the time of writing) to find out which bank is the ‘cheapest’ currently.

Let’s get started…

Key Financial Results (Q4 FY2019 vs. Q4 FY2020, and FY2019 vs. FY2020)

In this section, I will be taking a look at the 3 banks’ key financial results both on a quarter-on-quarter (q-o-q), and also on a year-on-year (y-o-y) basis:

Q4 FY2019 vs. Q4 FY2020:

The 3 banks’ total income comprises three components – net interest income, net fee and commission income, as well as other non-interest income. Let us take a look at each of them:

Net Interest Income:

  • DBS: Down 12.6% from S$2,426m to S$2,120m
  • UOB: Down 7.5% from S$1,635m to S$1,512m
  • OCBC: Down 10.8% from S$1,610m to S$1,436m

Verdict: As a result of the decline in interest rates, all 3 banks saw their net interest income decline on a q-o-q basis. However, UOB saw the smallest percentage of drop, followed by OCBC, and then DBS.

Net Fee & Commission Income:

  • DBS: Up 0.8% from S$741m to S$747m
  • UOB: Up 9.7% from S$476m to S$522m
  • OCBC: Down 7.0% from S$556m to S$517m

Verdict: Both DBS and UOB saw q-o-q improvements to its net fee and commission income, but UOB recorded a better percentage of gain.

Other Non-Interest Income:

  • DBS: Up 34.7% from S$294m to S$396m
  • UOB: Down 33.3% from S$321m to S$214m
  • OCBC: Down 29.6% from S$756m to S$532m

Verdict: Only DBS recorded a q-o-q gain in terms of growth in its other non-interest income, while both UOB and OCBC saw q-o-q declines – even though the latter suffered from a smaller percentage of drop compared to the former.

Net Profit Attributable to Shareholders:

  • DBS: Down 32.9% from S$1,508m to S$1,012m
  • UOB: Down 31.6% from S$1,006m to S$688m
  • OCBC: Down 9.0% from S$1,243m to S$1,131m

Verdict: While all 3 banks suffered q-o-q declines in their net profit attributable to shareholders, OCBC had the smallest percentage of drop, followed by UOB, and then DBS.

Question: Which bank had the best q-o-q financial performance:

Answer: UOB edged out here, for having the highest percentage gain in its net fee and commission income, as well as the smallest percentage of drop in its net interest income.

FY2019 vs. FY2020:

Similar to how I compared the three banks’ q-o-q results, I will be looking at their net interest income, net fee and commission income, other non-interest income, as well as their net profit attributable to shareholders to find out which bank emerged the winner in terms of their y-o-y results:

Net Interest Income:

  • DBS: Down 5.7% from S$9,625m to S$9,076m
  • UOB: Down 8.0% from S$6,563m to S$6,035m
  • OCBC: Down 5.8% from S$6,331m to S$5,966m

Verdict: All 3 banks’ net interest margin suffered from y-o-y declines, with DBS slightly edging out OCBC in terms of its percentage of drop (5.7% decline for DBS vs. 5.8% decline for OCBC.)

Net Fee & Commission Income:

  • DBS: Up 0.2% from S$3,052m to S$3,058m
  • UOB: Down 1.7% from S$2,032m to S$1,997m
  • OCBC: Down 5.7% from S$2,123m to S$2,003m

Verdict: Only DBS managed to record a y-o-y improvement in its net fee and commission income.

Other Non-Interest Income:

  • DBS: Up 31.7% from S$1,867m to S$2,458m
  • UOB: Down 20.3% from S$1,435m to S$1,114m
  • OCBC: Down 10.2% from S$2,417m to S$2,170m

Verdict: Once again, only DBS saw a gain (and a big one) in its other non-interest income on a y-o-y basis.

Net Profit Attributable to Shareholders:

  • DBS: Down 26.1% from S$6,391m to S$4,721m
  • UOB: Down 32.9% from S$4,343m to S$2,915m
  • OCBC: Down 26.4% from S$4,869m to S$3,586m

Verdict: While all 3 banks saw their net profit attributable to shareholders tumble on a y-o-y basis, but DBS saw the smallest percentage of decline (albeit just slightly compared to OCBC.)

Question: Which bank had the strongest set of y-o-y financial results?

Answer: DBS is the clear winner here, for being the only bank to record a y-o-y gain in its net fee and commission income and other non-interest income, along with having the smallest percentage of y-o-y decline in its net interest income and in its net profit attributable to shareholders.

Key Financial Ratios (Q3 FY2020 vs. Q4 FY2020, and FY2019 vs. FY2020)

UOB emerged the winner in terms of the 3 banks’ q-o-q financial results, while DBS had the strongest set of y-o-y financial results.

In terms of the 3 banks’ financial ratios, which bank will emerge the winner? Let us have a look at it in this section, where I will be looking at the statistics recorded for Q3 FY2020 (ended 30 September 2020) compared against Q4 FY2020 (ended 31 December 2020), as well as the statistics recorded in FY2019 compared against FY2020:

Q3 FY2020 vs. Q4 FY2020:

Net Interest Margin:

  • DBS: Down 0.04 percentage points (pp) from 1.53% to 1.49%
  • UOB: Up 0.04pp from 1.53% to 1.57%
  • OCBC: Down 0.07pp from 1.63% to 1.56%

Verdict: Only UOB recorded an improvement in its net interest margin 3 months on, while the other 2 banks saw declines (even though DBS suffered from a smaller percentage of drop.)

Return on Assets:

  • DBS: Down 0.18pp from 0.81% to 0.63%
  • UOB: Up 0.02pp from 0.63% to 0.65%
  • OCBC: Up 0.29pp from 0.73% to 1.07%

Verdict: While UOB and OCBC saw improvements in their return on assets compared to 3 months ago, but OCBC saw a much higher gain.

Return on Equity:

  • DBS: Down 2.3pp from 10.0% to 7.7%
  • UOB: Up 0.1pp from 6.9% to 7.0%
  • OCBC: Up 2.33pp from 6.97% to 9.3%

Verdict: Again, both UOB and OCBC recorded improvements in their return on equity in the current quarter under review compared to the previous quarter. However, OCBC is the winner here with the highest gain (by 2.33pp.)

Non-Performing Loans Rate:

  • DBS: Remained at 1.6% in the 2 periods under review
  • UOB: Up 0.1pp from 1.5% to 1.6%
  • OCBC: Remained at 1.5% in the 2 periods under review

Verdict: OCBC is the winner here, as the bank managed to keep its non-performing loans rate at a low of 1.5%.

Question: Which bank had the best results in terms of its financial ratios when compared against that recorded 3 months ago?

Answer: OCBC is the clear winner here, for having the most gain in its return on asset, return on equity, as well as keeping its non-performing loans ratio low at 1.5%.

FY2019 vs. FY2020:

Net Interest Margin:

  • DBS: Down 0.27pp from 1.89% to 1.62%
  • UOB: Down 0.21pp from 1.79% to 1.57%
  • OCBC: Down 0.16pp from 1.777 to 1.61%

Verdict: While all the 3 banks saw their net interest margin recording y-o-y declines, OCBC saw the smallest level of decline (at 0.16pp), followed by UOB (at 0.21pp), and then DBS (at 0.27pp.)

Return on Assets:

  • DBS: Down 0.38pp from 1.13% to 0.75%
  • UOB: Down 0.4pp from 1.08% to 0.69%
  • OCBC: Down 0.41pp from 1.26% to 0.85%

Verdict: Again, all 3 banks saw y-o-y declines in their return on assets. However, DBS suffered from the least amount of drop, followed by UOB, and then OCBC.

Return on Equity:

  • DBS: Down 3.9pp from 12.5% to 8.6%
  • UOB: Down 3.9pp from 11.0% to 7.1%
  • OCBC: Down 3.8pp from 11.4% to 7.6%

Verdict: All 3 banks saw their return on equity decline by about the same margin in the current year under review vs. the previous year. However, OCBC suffered from a slightly smaller level of decline compared to DBS and UOB.

Non-Performing Loans Ratio:

  • DBS: Up 0.1pp from 1.5% to 1.6%
  • UOB: Up 0.1pp from 1.5% to 1.6%
  • OCBC: Remained the same at 1.5%

Verdict: OCBC is the winner here, as it had kept its non-performing loans ratio constant at 1.5%.

Question: Which bank had the best set of financial ratios on a y-o-y basis?

Answer: OCBC is the winner here once again, as the bank managed to come out on top for maintaining its non-performing loans ratio at 1.5%, and also for its smallest degree of decline in its net interest margin as well as in its return on equity.

Which Bank is the ‘Cheapest’ Currently?

To find out which bank is currently the ‘cheapest’, let me put their current valuations (which I’ve gotten from ShareInvestor’s WebPro platform) based on their current share prices yesterday (25 February 2021) side-by-side:

DBSUOBOCBC
Share Price$26.90$24.65$11.07
P/E Ratio14.611.112.9
P/B Ratio1.31.11.1
*Dividend Yield3.2%3.2%2.9%

* The banks’ dividend yield is calculated based on a full-year payout of S$0.87/share for DBS, S$0.78/share for UOB, and S$0.318 for OCBC in FY2020.

Verdict: Looking at the current valuations of all 3 banks, it seems that UOB is the ‘cheapest’ as its P/E and P/B ratio are at its lowest, coupled with its dividend yield being the highest.

In Conclusion

Personally, I would say that there is no clear winner here – UOB had the strongest q-o-q financial results, DBS had the best set of y-o-y financial results, while OCBC’s financial ratios were the most resilient.

While UOB is the ‘cheapest’ among the 3 banks, but one should not invest in any company just because its share price is cheap – there are other statistics to look at as well.

Last but not least, the contents in this post is purely for educational purposes only, and they do not represent any recommendation to buy or sell shares of any 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 Limited, United Overseas Bank Limited, and Overseas-Chinese Banking Corporation Limited.

 

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