All 3 Singapore-listed banks (in DBS, UOB, and OCBC) have since reported their results for the fourth quarter, as well as for the full year ended 31 December 2022.

As I am a shareholder of all 3 of them, I have reviewed their results when they were released, and in case you’ve missed out, you can read them via the respective links:

Just like in previous quarters after the 3 banks have released their results, I will put the figures together side-by-side to find out which one had the strongest results – and this quarter is no different.

In this post, you’ll find out which Singapore bank had the most resilient results (in terms of improvements made in its financial performance, as well as in its key financial ratios) in the fourth quarter, as well was for the full year 2022. On top of that, I’ll also be comparing the 3 banks’ valuations to find out which is the ‘cheapest’, and which is the most ‘expensive.’.

Let’s begin:

Financial Performance – Q4 FY2021 vs. Q4 FY2022

The following table is a comparison of the 3 banks’ financial performance for Q4 FY2022, compared against Q4 FY2021, with the strongest results in bold:

DBSUOBOCBC
Net Interest
Income
Up +53.3%

Q4 FY2021:
$2,140m

Q4 FY2022:
$3,280m
Up +52.7%

Q4 FY2021:
$1,677m

Q4 FY2022:
$2,560m
Up +59.9%

Q4 FY2021:
$1,492m

Q4 FY2022:
$2,386m
Net Fee &
Commission
Income
Down -18.9%

Q4 FY2021:
$815m

Q4 FY2022:
$661m
Down -16.4%

Q4 FY2021:
$580m

Q4 FY2022:
$485m
Down -24.4%

Q4 FY2021:
$528m

Q4 FY2022:
$399m
Other Non-
Interest
Income
Up +119.3%

Q4 FY2021:
$296m

Q4 FY2022:
$649m
Up +61.0%

Q4 FY2021:
$177m

Q4 FY2022:
$285m
Down -59.2%

Q4 FY2021:
$530m

Q4 FY2022:
$216m
Total
Income
Up +41.2%

Q4 FY2021:
$3,251m

Q4 FY2022:
$4,590m
Up +36.8%

Q4 FY2021:
$2,434m

Q4 FY2022:
$3,330m
Up +17.7%

Q4 FY2021:
$2,550m

Q4 FY2022:
$3,001m
Net ProfitUp +68.5%

Q4 FY2021:
$1,389m

Q4 FY2022:
$2,341m
Up +37.5%

Q4 FY2021:
$1,017m

Q4 FY2022:
$1,398m
Up +34.2%

Q4 FY2021:
$973m

Q4 FY2022:
$1,306m

My Observations: As you can see from the above, all 3 banks saw their net interest income skyrocketed – this was due to Fed’s series of aggressive interest rate hikes for the whole of 2022, with banks being key beneficiaries.

At the same time, all 3 banks also saw their net fee & commission income fell due to lower wealth management income as a result of people becoming more risk adverse considering the market headwinds.

However, in terms of performance for the fourth quarter, DBS is a clear winner here, as the percentage growth in its other non-interest income, total income and net profit saw the strongest improvement (compared to the same time period last year – i.e. Q4 FY2021.)

Financial Performance – FY2021 vs. FY2022

The following table are the 3 banks’ financial performance on a year-on-year (y-o-y) basis – i.e. FY2021 vs. FY2022, where I have bolded the strongest results:

DBSUOBOCBC
Net Interest
Income
Up +29.6%

FY2021:
$8,440m

FY2022:
$10,941m
Up +30.6%

FY2021:
$6,388m

FY2022:
$8,343m
Up +31.3%

FY2021:
$5,855m

FY2022:
$7,688m
Net Fee &
Commission
Income
Down -12.3%

FY2021:
$3,524m

FY2022:
$3,091m
Down -9.1%

FY2021:
$2,357m

FY2022:
$2,143m
Down -17.6%

FY2021:
$2,245m

FY2022:
$1,851m
Other Non-
Interest
Income
Up +11.1%

FY2021:
$2,224m

FY2022:
$2,470m
Up +4.3%

FY2021:
$1,044m

FY2022:
$1,089m
Down -19.0%

FY2021:
$2,496m

FY2022:
$2,023m
Total
Income
Up +16.3%

FY2021:
$14,188m

FY2022:
$16,502m
Up +18.2%

FY2021:
$9,789m

FY2022:
$11,575m
Up +10.2%

FY2021:
$10,596m

FY2022:
$11,675m
Net ProfitUp +20.4%

FY2021:
$6,801m

FY2022:
$8,193m
Up +18.3%

FY2021:
$4,075m

FY2022:
$4,819m
Up +18.3%

FY2021:
$4,858m

FY2022:
$5,748m

My Observations: Just like their results for the fourth quarter, its results for the full year is also pretty much similar in that all 3 banks saw strong growths in its net interest income (again, this is due to a strong climb in its net interest margin), coupled with declines in its net fee & commission income (due to weaker wealth management fees.)

In terms of their performances, I would say its a tie between DBS (for the fact that it has the strongest improvement in its net profit, and in its other non-interest income) and UOB (as it recorded the strongest percentage growth in its total income, and at the same time, saw the lowest percentage decline in its net fee & commission income.)

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

DBS is, I would say, the winner here, for having the strongest performance in the fourth quarter (where its total income and net profit recorded the highest percentage growth compared to the other 2 banks), and also for the full year (where it saw the highest percentage improvement in its net profit.)

Key Financial Ratios – Q3 FY2022 vs. Q4 FY2022

The following table is a comparison of the 3 banks’ key financial ratios recorded for the current quarter under review (i.e. Q4 FY2022 ended 31 December 2022) compared against that recorded in the previous quarter 3 months ago (i.e. Q3 FY2022 ended 30 September 2022), with the strongest performance in bold:

DBSUOBOCBC
Net Interest
Margin
Up +0.15pp

Q3 FY2022:
1.90%

Q4 FY2022:
2.05%
Up +0.27pp

Q3 FY2022:
1.95%

Q4 FY2022:
2.22%
Up +0.25pp

Q3 FY2022:
2.06%

Q4 FY2022:
2.31%
Return on
Asssets
Up +0.05pp

Q3 FY2022:
1.18%

Q4 FY2022:
1.23%
Down -0.01pp

Q3 FY2022:
1.13%

Q4 FY2022:
1.12%
Down -0.26pp

Q3 FY2022:
1.37%

Q4 FY2022:
1.11%
Return on
Equity
Up +0.9pp

Q3 FY2022:
16.3%

Q4 FY2022:
17.2%
Down -0.01pp

Q3 FY2023:
14.0%

Q4 FY2022:
13.9%
Down -1.9pp

Q3 FY2022:
12.4%

Q4 FY2022:
10.5%
Non-Performing
Loans Ratio
Down -0.1pp

Q3 FY2022:
1.2%

Q4 FY2022:
1.1%
Up +0.1pp

Q3 FY2022:
1.5%

Q4 FY2022:
1.6%
No Change

Q3 FY2022:
1.2%

Q4 FY2022:
1.2%

My Observations: In terms of improvements made in its key financial ratios for the fourth quarter (compared against the third quarter), DBS emerged the winner among the 3 banks in that it recorded the highest improvement in its return on assets, return on equity, and its non-performing ratio being the lowest among the 3 banks (at just 1.1%.)

Key Financial Ratios – FY2021 vs. FY2022

The following table is a comparison of the 3 banks’ key financial ratios on a full year basis (i.e. FY2021 vs. FY2022), with the one having the strongest performance in bold:

DBSUOBOCBC
Net Interest
Margin
Up +0.30pp

FY2021:
1.45%

FY2022:
1.75%
Up +0.30pp

FY2021:
1.56%

FY2022:
1.86%
Up +0.37pp

FY2021:
1.54%

FY2022:
1.91%
Return on
Asssets
Up +0.10pp

FY2021:
1.02%

FY2022:
1.12%
Up +0.07pp

FY2021:
0.92%

FY2022:
0.99%
Up +0.12pp

FY2021:
1.13%

FY2022:
1.25%
Return on
Equity
Up +2.5pp

FY2021:
12.5%

FY2022:
15.0%
Up +1.7pp

FY2021:
10.2%

FY2022:
11.9%
Up +1.5pp

FY2021:
9.6%

FY2022:
11.1%
Non-Performing
Loans Ratio
Down -0.2pp

FY2021:
1.3%

FY2022:
1.1%
No Change

FY2021:
1.6%

FY2022:
1.6%
Down -0.3pp

FY2021:
1.5%

FY2022:
1.2%

My Observations: Looking at the above table, on a full year basis, OCBC’s improvements in its key financial ratios compared to last year edged out – where it recorded the highest growth in its net interest margin, return on assets, along with the highest drop in its non-performing ratio (down to 1.2% – but in terms of numbers, DBS had the lowest non-performing loans ratio at 1.1%.)

Question: Which Singapore Bank Recorded the Strongest Improvement in its Financial Ratios?

It’s a share of honours between DBS (which had the strongest improvement in Q4 compared against Q3), and OCBC (the bank had the highest improvement for FY2022 compared against FY2021.)

Dividend Payout to Shareholders:

The following table is a comparison of growth in the 3 banks’ dividend payout for the full year:

DBSUOBOCBC
Dividend
Per Share
Up +66.7%**

FY2021:
120.0 cents

FY2022:
200.0 cents
Up +12.5%

FY2021:
120.0 cents

FY2022:
135.0 cents
Up 28.3%

FY2021:
53.0 cents

FY2022:
68.0 cents
** The high percentage is due to the inclusion of a special dividend payout of 50.0 cents in FY2022; excluding that, DBS’ total dividend payout for FY2022 would be 150.0 cents – compared to FY2021, it is still a +25.0% growth.

My Observations: Again, DBS is the winner here, for having the strongest growth in terms of its dividend payout compared to last year.

In case you’re not already aware, in FY2023, DBS will be paying out 42.0 cents/share every quarter, while UOB and OCBC will be paying out 50.0% of their earnings as dividends.

Which Bank is Currently the ‘Cheapest’, and Which is the Most ‘Expensive’?

The following table is the valuations of the 3 banks based on their share prices as of market close yesterday (27 February 2023):

DBSUOBOCBC
Share Price$34.34$29.94$12.70
P/E Ratio10.9211.1410.28
P/B Ratio1.561.151.08
Dividend Yield **5.8%4.5%5.4%
** For dividend yield, I have computed based on the banks’ dividend payout for FY2022, as follows: DBS: $2.00/share, UOB: $1.35/share, OCBC: $0.68/share

My Observations: From the valuations, OCBC is once again the ‘cheapest’, as its P/E and P/B ratios are the lowest compared to the other 2 banks; At the other end, UOB is the most ‘expensive’ as its P/E ratio is the highest among the 3, coupled with its yield being the lowest.

Closing Thoughts

Among the 3 banks, DBS is the clear victor this time round, as it had the most resilient financial performance (for both the fourth quarter, as well as for the full year), along with recording the strongest improvement in its key financial ratios (in the fourth quarter compared to the third quarter.) On top of that, its dividend growth (on a y-o-y basis) is also the strongest.

Looking ahead, with the Federal Reserve likely to tune down the magnitude of interest rate hikes in the coming months ahead (barring unforeseen circumstances), the 3 banks’ net interest margin will likely record a much slower growth, or even stabilise – and this will lead to their net interest income recording a much lower percentage increase in the coming quarters ahead, or even a decline (as loan volume could slow down as consumers and businesses become more prudent in light of the current high interest rate environment.)

As the tough economic conditions are set to persist for a while more (in my opinion, we could potential see improvements coming in the year 2024), wealth management income could continue to be adversely impacted (as people continue to be mindful of the potential risks.)

With that, I have come to the end of my share today on the comparison of the 3 banks’ results. I hope you’ve found the information presented useful, and do take note that this post does not represent any calls to buy or sell shares of any of the banks. You’re strongly advised to do your own due diligence before you make any investment decisions.

Disclaimer: At the time of writing, I am a shareholder of all 3 Singapore banks – DBS Group Holdings, United Overseas Bank Limited, and Overseas-Chinese Banking Corporation Limited.

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