All 3 Singapore-listed banks have already reported its business updates for the third quarter of the financial year 2021 ended 30 September 2021. As I am a shareholder of all 3 of them, I have posted my reviews about their latest updates and you can find them below (you can click on the respective bank names below to read my review):

Another thing I tend to do after I’ve reviewed the individual bank’s results is to put them step-by-step to find out which bank had the best set of results. In the previous quarter (i.e. first half of the financial year 2021 ended 30 June 2021), OCBC has the most resilient set of financial result (as well as being the ‘cheapest’ in terms of valuations among the 3), and UOB edged out in that its financial ratios suffered from the least amount of decline compared to the other 2 banks (you can check out the comparison in full here.)

In the 3rd quarter, which of the 3 Singapore-listed banks displayed the most improvements in terms of its financial results (both on a quarter-on-quarter, or q-o-q, as well as on a year-on-year, or y-o-y basis), in its financial ratios (for the current quarter under review compared against the previous quarter 3 months ago), and also is currently the ‘cheapest’ in terms of their current valuations (based on their current traded prices)?

Let us find out in this post…

Key Financial Performance Figures (Q3 FY2020 vs. Q3 FY2021, and 9M FY2020 vs. 9M FY2021)

Q3 FY2020 vs. Q3 FY2021:

Net Interest Income:

DBS: Down 3.1% from $2,171m in Q3 FY2020 to $2,104m in Q3 FY2021

UOB: Up 8.8% from $1,474m in Q3 FY2020 to $1,604m in Q3 FY2021

OCBC: Up 2.8% from $1,421m in Q3 FY2020 to $1,461m in Q3 FY2021

Verdict: Both UOB and OCBC saw their net interest income recording q-o-q improvements; however, UOB saw a bigger percentage of q-o-q gain compared to OCBC.

Net Fee & Commission Income:

DBS: Up 11.3% from $798m in Q3 FY2020 to $888m in Q3 FY2021

UOB: Up 14.6% from $514m in Q3 FY2020 to $589m in Q3 FY2021

OCBC: Up 13.6% from $501m in Q3 FY2020 to $569m in Q3 FY2021

Verdict: All 3 banks saw q-o-q gains in its net fee and commission income. However, UOB saw the best q-o-q gain compared to the other 2 banks.

Other Non-Interest Income:

DBS: Down 6.4% from $608m in Q3 FY2020 to $569m in Q3 FY2021

UOB: Down 4.8% from $272m in Q3 FY2020 to $259m in Q3 FY2021

OCBC: Down 14.1% from $617m in Q3 FY2020 to $530m in Q3 FY2021

Verdict: All 3 banks saw their other non-interest income recording a q-o-q decline. However, UOB saw the smallest percentage of decline compared to DBS and OCBC.

Total Income:

DBS: Down 0.4% from $3,577m in Q3 FY2020 to $3,561m in Q3 FY2021

UOB: Up 8.5% from $2,261m in Q3 FY2020 to $2,453m in Q3 FY2021

OCBC: Up 0.8% from $2,539m in Q3 FY2020 to $2,560m in Q3 FY2021

Verdict: As UOB recorded the most gains in terms of its net interest income and net fee and commission income, along with suffering the least percentage of drop in terms of its other non-interest income, its total income clearly stood out.

Net Profit:

DBS: Up 31.1% from $1,297m in Q3 FY2020 to $1,700m in Q3 FY2021

UOB: Up 56.6% from $668m in Q3 FY2020 to $1,046m in Q3 FY2021

OCBC: Up 19.1% from $1,028m in Q3 FY2020 to $1,224m Q3 FY2021

Verdict: All 3 banks saw their net profit recording pretty impressive gains – largely due to a huge decline in the allowances for loans and other assets. However, UOB recorded the biggest q-o-q gain at 56.6%, followed by DBS at 31.1%, and then OCBC at 19.1%.

9M FY2020 vs. 9M FY2021:

Net Interest Income:

DBS: Down 9.4% from $6,956m in 9M FY2020 to $6,300m in 9M FY2021

UOB: Up 4.1% from $4,524m in 9M FY2020 to $4,711m in 9M FY2021

OCBC: Down 3.7% from $4,530m in 9M FY2020 to $4,363m in 9M FY2021

Verdict: Among the 3 Singapore-listed banks, only UOB saw a gain in terms of its net interest income compared to the same time period last year.

Net Fee & Commission Income:

DBS: Up 17.2% from $2,311m in 9M FY2020 to $2,709m in 9M FY2021

UOB: Up 23.6% from $1,475m in 9M FY2020 to $1,823m in 9M FY2021

OCBC: Up 15.5% from $1,487m in 9M FY2020 to $1,718m in 9M FY2021

Verdict: All 3 banks saw y-o-y improvements in its net fee and commission income, with UOB recording the biggest improvement (at 23.6%), followed by DBS (at 17.2%), and then OCBC (by 15.5%.)

Other Non-Interest Income:

DBS: Down 3.2% from $2,062m in 9M FY2020 to $1,995m in 9M FY2021

UOB: Down 11.5% from $929m in 9M FY2020 to $822m in 9M FY2021

OCBC: Up 20.0% from $1,637m in 9M FY2020 to $1,965m in 9M FY2021

Verdict: OCBC is the winner here for being the only bank to record a y-o-y gain in its other non-interest income.

Total Income:

DBS: Down 2.9% from $11,329m in 9M FY2020 to $11,004m in 9M FY2021

UOB: Up 6.2% from $6,927m in 9M FY2020 to $7,356m in 9M FY2021

OCBC: Up 5.1% from $7,564m in 9M FY2020 to $8,046m in 9M FY2021

Verdict: Both UOB and OCBC saw y-o-y gains in its total income; however, UOB edged out here for having a slightly better gain (at 6.2%) compared to OCBC (at 5.1%.)

Net Profit:

DBS: Up 45.9% from $3,709m in 9M FY2020 to $5,412m in 9M FY2021

UOB: Up 37.3% from $2,226m in 9M FY2020 to $3,057m in 9M FY2021

OCBC: Up 58.2% from $2,455m in 9M FY2020 to $3,885m in 9M FY2021

Verdict: Compared to last year, where bank set aside huge amounts of allowances for loans and other assets (for prudence), the amount set aside this year is significantly smaller (due to business sentiments slowly improving as business activities are gradually resuming once again as countries start to re-open after a majority of their population are fully vaccinated.) However, among the 3 banks, OCBC saw the biggest percentage of improvement (at 58.2%), followed by DBS (at 45.9%), and then UOB (at 37.3%.)

Question: Which Singapore-listed bank displayed the best set of results for the third quarter, as well as for the first nine months of FY2021?

Answer: UOB is the winner here, for having the best q-o-q (it recorded the highest percentage growth in its net interest income, net fee and commission income, total income, and net profit), as well as y-o-y (where it scored the highest growth in its net interest income, net fee and commission income, as well as in its total income) results.

Key Financial Ratios (Q2 FY2021 vs. Q3 FY2021)

UOB was the winner in the previous section in terms of growth in its q-o-q and y-o-y results. Will the bank edge out DBS and OCBC once again in terms of improvements in its key financial ratios? Let us find out in this section, where I will be comparing the stats reported for the current quarter under review (i.e. Q3 FY2021 ended 30 September 2021) against that reported in the previous quarter 3 months ago (i.e. Q2 FY2021 ended 30 June 2021):

Net Interest Margin:

DBS: Down by -0.02 percentage points (pp) from 1.45% in Q2 FY2021 to 1.43% in Q3 FY2021

UOB: Down by -0.01pp from 1.56% in Q2 FY2021 to 1.55% in Q3 FY2021

OCBC: Down by -0.06pp from 1.58% in Q2 FY2021 to 1.52% in Q3 FY2021

Verdict: All 3 banks’ net interest margin continued to trend downwards in the current quarter under review (compared to the previous quarter.) However, UOB suffered from the smallest amount of decline (by just 0.01pp), and also, among the 3 banks, it had maintained the highest net interest margin at 1.55%.

Return on Assets:

DBS: Down by -0.02pp from 1.03% in Q2 FY2021 to 1.01% in Q3 FY2021

UOB: Up by +0.01pp from 0.92% in Q2 FY2021 to 0.93% in Q3 FY2021

OCBC: Up by +0.02pp from 1.11% in Q2 FY2021 to 1.13% in Q3 FY2021

Verdict: Both UOB and OCBC saw slight improvements in its return on assets; however, OCBC pipped UOB slightly in terms of growth compared to the previous quarter. Also, OCBC had the highest return on assets as at the end of the third quarter (at 1.13%.)

Return on Equity:

DBS: Down -0.06pp from 12.7% in Q2 FY2021 to 12.1% in Q3 FY2021

UOB: Up by +0.03pp from 10.1% in Q2 FY2021 to 10.4% in Q3 FY2021

OCBC: Up by +0.02pp from from 9.3% in Q2 FY2021 to 9.5% in Q3 FY2021

Verdict: While UOB edged out here in terms of growth in terms of its return on equity (compared to the other 2 banks), but as at the end of the third quarter, DBS’ return on equity is the highest, at 12.1% (even though it fell by 0.06pp when compared against the previous quarter.)

Non-Performing Loans Ratio:

DBS: Remained the same at 1.5% in Q2, as well as in Q3 FY2021

UOB: Remained the same at 1.5% in Q2, as well as in Q3 FY2021

OCBC: Remained the same at 1.5% in Q2, as well as in Q3 FY2021

Verdict: All 3 banks had their non-performing loans ratio remaining constant in the previous quarter, as well as in the current quarter under review.

Question: Which of the 3 Singapore-listed bank recorded the strongest improvement in terms of growth of its key financial ratios compared to the previous quarter?

Answer: Just like in its financial performance (which I’ve talked about in the previous section), UOB again emerged the winner in terms of improvements in its financial ratios for the current quarter (compared to the previous quarter) – as it suffered the smallest magnitude of drop in its net interest margin, and also the highest growth in its return on equity.

Which Bank is Currently the ‘Cheapest’ Currently?

To find out which bank is currently the cheapest, I tend to compare their valuations (based on their current traded prices) and they are as follows:

DBSUOBOCBC
Current Share Price$32.40$27.97$11.96
P/E Ratio13.9714.1810.82
P/B Ratio1.441.101.07
**Dividend Yield3.8%4.6%4.4%
** For my calculation of the 3 banks’ dividend yield, I’ve taken the dividend payouts declared in FY2019 – for DBS, it was at 123.0 cents/share, for UOB, it was at 130 cents/share, and for OCBC, it was at 53.0 cents/share.

Among the 3 Singapore-listed banks, OCBC is currently the ‘cheapest’ in terms of its valuations – with its P/E and P/B ratios being the lowest; at the other end, DBS is currently the most ‘expensive’, as its P/B is the highest among the 3 banks, coupled with its dividend yield being the lowest.

Closing Thoughts

From the comparisons in the sections above, it is clear that UOB is the winner here in terms of improvements in its financial results (both on a q-o-q, as well as on a y-o-y basis.) The bank also emerged the winner here in terms of its key financial ratios (as it had the smallest percentage of drop in terms of its net interest margin compared to the previous quarter, along with having the highest growth in its return on equity.)

In terms of price (based on their respective current valuations), UOB is also in the middle – it’s neither the ‘cheapest’ (OCBC), nor the most ‘expensive’ (DBS.)

However, despite having said that, this post is by no means a recommendation to buy or sell any of the 3 Singapore-listed banks. You should always do your own due diligence 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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