Now that all the 3 Singapore-listed banks have released their 1H FY2021 results ended 30 June 2021 – with OCBC and UOB having released their results yesterday morning, followed by DBS this morning. As I am invested in all 3 of them, I’ve studied the documents posted and written summaries (as well as provided my personal thoughts about their results and outlook in the second half of the year ahead) and you check them out by clicking on the respective links below (in case you’ve missed them):

Today, I’ll be putting the 3 banks’ results side-by-side to compare which bank had the best set of results this time round (just to recap, in the first quarter, UOB and OCBC trumped in terms of having the best improvements in terms of their financial results, while DBS emerged the winner in having the best set of financial ratios – you can check out the article in full here), as well as which Singapore-listed bank is currently the ‘cheapest’ in terms of their current valuations (at the time of writing of this post):

Financial Performances (1H FY2020 vs. 1H FY2021)

In this section, I’ll be putting the 3 banks’ key financial statistics recorded for the first half of FY2021 compared against the same time period last year to find out which bank’s results improved the most:

Net Interest Income:

DBS: Down -12.3% year-on-year (y-o-y) to S$4,196m (1H FY2020: S$4,785m)

UOB: Up +1.9% y-o-y to S$3,107m (1H FY2020: S$3,050m)

OCBC: Down -6.7% y-o-y to S$2,902m (1H FY2020: S$3,109m)

Verdict: Only UOB saw a y-o-y improvement in terms of its net interest income, while the other 2 banks saw declines – with DBS suffering a double-digit percentage decline.

Net Fee & Commission Income:

DBS: Up +20.4% y-o-y to S$1,821m (1H FY2020: S$1,513m)

UOB: Up +28.5% y-o-y to S$1,234m (1H FY2020: S$960m)

OCBC: Up +16.4% y-o-y to S$1,148m (1H FY2020: S$986m)

Verdict: All 3 banks saw their net fee and commission income recording double-digit percentage improvements. But among the 3 banks, UOB’s net fee and commission income on a y-o-y basis improved the most.

Other Non-Interest Income:

DBS: Down -1.9% to S$1,426m (1H FY2020: S$1,454m)

UOB: Down -14.3% to S$563m (1H FY2020: S$657m)

OCBC: Up +40.8% to S$1,436m (1H FY2020: S$1,020m)

Verdict: It’s very clear cut from the above that OCBC is the winner in terms of its y-o-y improvement of its other non-interest income, being the only bank to record a positive growth (with the other 2 banks seeing their other non-interest income decline.)

Total Income:

DBS: Down -4.0% to S$7,443m (1H FY2020: S$7,752m)

UOB: Up +5.1% to S$4,903m (1H FY2020: S$4,667m)

OCBC: Up +7.3% to S$5,436m (1H FY2020: S$5,115m)

Verdict: Only DBS saw a y-o-y dip in its total income. Between the 2 other banks, OCBC recorded a slightly better gain compared to UOB.

Net Profit Attributable to Shareholders:

DBS: Up +53.9% to $3,712m (1H FY2020: S$2,412m)

UOB: Up +29.1% to S$2,011m (1H FY2020: S$1,558m)

OCBC: Up +86.3% to S$2,661m (1H FY2020: S$1,428m)

Verdict: Compared to 1H FY2020, all 3 banks saw their net profit attributable to shareholders skyrocket, which is encouraging to note. Among the 3 banks, OCBC saw the highest percentage of improvement (by +86.3%), followed by DBS (by +53.9%), and then UOB (by +29.1%).

Question: Which bank had the most resilient set of 1H FY2021 results?

Answer: I would say its a close one between UOB and OCBC – with the former emerging the winner in terms of having the best improvement in its net interest income, as well as in its net fee and commission income, and the latter edging out in terms of its y-o-y improvements in its other non-interest income and in its net profit attributable to shareholders.

However, OCBC edged out here as it recorded better improvements in terms of its total income compared to UOB.

So, OCBC in my opinion, had the most resilient set of 1H FY2021 results.

Key Financial Ratios (Q1 FY2021 vs. Q2 FY2021)

Moving on, let us take a look at some of the key financial ratios reported by the 3 Singapore banks for the current quarter under review (i.e. Q2 FY2021 ended 30 June 2021), compared against the previous quarter (i.e. Q1 FY2021 ended 31 March 2021) and find out which bank scored the most improvement in terms of its key financial ratios 3 months on:

Net Interest Margin:

DBS: Down -0.4 percentage points (pp) to 1.45% (Q1 FY2021: 1.49%)

UOB: Down -0.01pp to 1.56% (Q1 FY2021: 1.57%)

OCBC: Up +0.02pp to 1.58% (Q1 FY2021: 1.56%)

Verdict: Only OCBC saw its net interest margin recording improvements compared to the previous quarter, while the other 2 banks recorded declines.

Return on Assets:

DBS: Down -0.22pp to 1.03% (Q1 FY2021: 1.25%)

UOB: Down -0.01pp to 0.92% (Q1 FY2021: 0.93%)

OCBC: Down -0.33pp to 1.11% (Q1 FY2021: 1.44%)

Verdict: All 3 banks saw their return on assets weaken compared to the previous quarter; however, UOB’s return on assets declined the least (by just -0.01pp), followed by DBS (by -0.22pp), and then OCBC (by -0.33pp.)

Return on Equity:

DBS: Down -2.7pp to 12.7% (Q1 FY2021: 15.4%)

UOB: Down -0.01pp to 10.1% (Q1 FY2021: 10.2%)

OCBC: Down -3.1pp to 9.3% (Q1 FY2021: 12.4%)

Verdict: Just like its return on assets, all 3 banks’ return on equity declined compared to the previous quarter – with UOB’s return on equity declined the least once again (where its edged down by just -0.01pp), followed by DBS (down by -2.7pp), and then OCBC (down by -3.1pp.)

Non-Performing Loans Ratio:

All 3 banks’ non-performing ratios were maintained at 1.5%, same as in the previous quarter.

Question: Which bank had the best set of key financial ratios for 1H FY2021?

Answer: UOB edged out OCBC here, as it suffered the least amount of decline in terms of its return on assets, as well as in its return on equity compared to OCBC.

Dividend Payout to Shareholders

With the Monetary Authority of Singapore lifting the cap on dividend payouts for the banks and financial institutions, both DBS and OCBC restored their payout to that declared in FY2019 – for the former, its dividend payout of 33.0 cents/share is the same as that declared in Q2 FY2021 (do take note that DBS is the only Singapore bank that declares a dividend for its shareholders on a quarterly basis); for the latter, its dividend payout of 25.0 cents/share is the same as that declared in 1H FY2019 (which is before the pandemic.)

UOB is the only bank to increase its interim dividend payout to its shareholders – with its payout up from 55.0 cents/share in 1H FY2019 to 60.0 cents/share in 1H FY2021. As such, in my opinion, the bank is the clear winner here in terms of improvements in its dividend payouts.

Which Bank is Currently the ‘Cheapest’ in Terms of its Valuations?

I’ve put the 3 banks’ current valuations (based on their current share prices) side-by-side in the table below, with their P/E and P/B ratios taken from Yahoo Finance:

DBSUOBOCBC
Share PriceS$30.78S$26.49S$12.38
P/E Ratio14.4114.9212.77
P/B Ratio1.441.151.12
Dividend Yield**4.0%4.9%4.3%
** In terms of the dividend yield, I’ve calculated them based on the 3 banks’ dividend payouts in FY2019 (which is 123.0 cents/share for DBS, 130.0 cents/share for UOB, and 53.0 cents/share for OCBC), as in my opinion, it is very likely that the 3 banks will be paying more or less about the same amount as that declared for the year.

Looking at their current valuations, it seems to me that OCBC is currently the ‘cheapest’, as its current P/E and P/B ratios are lower compared to the 2 other banks. On the other hand, DBS is the most ‘expensive’ among the 3 with the bank having the highest current P/B ratio and at the same time having the lowest current dividend yield.

Closing Thoughts

On the whole, I would say that UOB is the ‘winner’ among the 3 banks this time round, for edging out among the 3 banks in terms of my comparison of the key financial ratios, having an improvement in its interim dividend payout (which came as a surprise to me, as I expected the banks to pay the same amount declared in the same time period in FY2019), and finally, in terms of its valuation, its in the ‘middle’ of the 3 banks – with OCBC being the ‘cheapest’ and DBS being the most ‘expensive’.

Now, despite having said that, everything that you have just read above is purely for educational purposes only. They do not represent any buy or sell calls for any of the Singapore-listed banks. You should always 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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