It has almost become a ‘tradition’ for me to, after the 3 Singapore-listed banks (in DBS, UOB, and OCBC) having released their latest quarterly results, have a separate post to put their results side-by-side to find out which bank had the most resilient set of results.
This quarter is no different – now that the 3 banks have already released their latest business updates for the first quarter ended 31 March (you can check out my review for the individual banks’ Q1 business updates here – DBS, UOB, and OCBC), in this post, I seek to find out which bank had the strongest set of financial results and ratios (based on their improvement.) On top of that, I will also be putting the 3 banks’ current valuations (based on their share price as per market close yesterday, 10 May 2023) to find out which is the ‘cheapest’, and which is the ‘most expensive.’
Let’s begin:
Financial Results (Q1 FY2022 vs. Q1 FY2023)
In this section, you’ll find a comparison of the 3 banks’ results for the first quarter of FY2023 compared against the same time period last year (i.e. Q1 FY2022), along with the percentage improvement/decline:
Net Interest Income:
| DBS | UOB | OCBC | |
| Net Interest Income (S$’mil) | Up +49.6% Q1 FY2022: $2,187m Q1 FY2023: $3,271m | Up +42.9% Q1 FY2022: $1,686m Q1 FY2023: $2,409m | Up +55.6% Q1 FY2022: $1,503m Q1 FY2023: $2,338m |
All 3 banks saw their net interest income improved significantly, which can be attributed to a series of interest rate hikes by the Federal Reserve throughout the year 2022.
However, out of the 3 banks, OCBC’s net interest income grew the most, at 55.6%, as its net interest margin jumped the most (by 75 basis points from 1.55% in Q1 FY2022 to 2.30% in Q1 FY2023.)
Net Fee & Commission Income:
| DBS | UOB | OCBC | |
| Net Fee & Commission Income (S$’mil) | Down -4.5% Q1 FY2022: $891m Q1 FY2023: $851m | Down -3.5% Q1 FY2022: $572m Q1 FY2023: $552m | Down -13.2% Q1 FY2022: $552m Q1 FY2023: $453m |
Unlike its net interest income (which we have seen earlier), all 3 banks saw their net interest margin declined compared to last year, largely due to a decline in their wealth management fees.
However, UOB’s decline in this business segment was the least, by just 3.5%.
Other Non-Interest Income:
| DBS | UOB | OCBC | |
| Other Non-Interest Income (S$’mil) | Up +35.0% Q1 FY2022: $603m Q1 FY2023: $814m | Up > +100.0% Q1 FY2022: $101m Q1 FY2023: $563m | Up +9.5% Q1 FY2022: $502m Q1 FY2023: $559m |
Similar to its net interest income, all 3 banks saw their other non-interest income recording improvements compared to last year – but in terms of their percentage improvement, UOB was a runaway winner here, where its other non-interest income saw a 4x improvement, as a result of a record trading and investment income.
Net Profit:
| DBS | UOB | OCBC | |
| Net Profit (S$’mil) | Up +42.8% Q1 FY2022: $1,801m Q1 FY2023: $2,571m | Up +66.8% Q1 FY2022: $906m Q1 FY2023: $1,511m | Up +38.6% Q1 FY2022: $1,356m Q1 FY2023: $1,879m |
All 3 banks saw their net profit for the quarter hitting new highs (which is very, very impressive in my opinion.)
However, looking at their growth rate, UOB’s net profit growth came out on top here at 66.8%, followed by DBS at 42.8%, and finally OCBC at 38.6%.
Key Financial Ratios (Q4 FY2022 vs. Q1 FY2023)
Moving on, let us take a look at the 3 banks’ key financial ratios (where I will be comparing the statistics recorded for the current quarter under review – i.e. Q1 FY2023 ended 31 March 2023, against that recorded in the previous quarter 3 months ago – i.e. Q4 FT2022 ended 31 December 2022) to find out which had the strongest improvement:
Net Interest Margin:
| DBS | UOB | OCBC | |
| Net Interest Margin (%) | Up +0.07pp Q4 FY2022: 2.05% Q1 FY2023: 2.12% | Down -0.08pp Q4 FY2022: 2.22% Q1 FY2023: 2.14% | Down -0.01pp Q4 FY2022: 2.31% Q1 FY2023: 2.30% |
Between the 3 banks, only DBS saw its net interest margin inch up by another 0.07pp to 2.12% (but despite of that, among the 3 banks, its net interest margin is the lowest, followed by UOB, and then OCBC.)
Return on Assets:
| DBS | UOB | OCBC | |
| Return on Assets (%) | Up +0.18pp Q4 FY2022: 1.23% Q1 FY2023: 1.41% | Up +0.13pp Q4 FY2022: 1.12% Q1 FY2023: 1.25% | Up +0.52pp Q4 FY2022: 1.11% Q1 FY2023: 1.63% |
All 3 banks saw their return on assets further improve from the previous quarter – however, OCBC’s improvement this time round was the highest, at 0.52pp, to 1.63%. Also, the bank’s return on assets is also the highest among the 3.
Return on Equity:
| DBS | UOB | OCBC | |
| Return on Equity (%) | Up +1.4pp Q4 FY2022: 17.2% Q1 FY2023: 18.6% | Up +1.0pp Q4 FY2022: 13.9% Q1 FY2023: 14.9% | Up +4.2pp Q4 FY2022: 10.5% Q1 FY2023: 14.7% |
Just like its return on assets, all 3 banks also saw their return on equity recording further improvements compared to the previous quarter.
In terms of their improvements, OCBC is the winner here, as its return on equity saw the strongest growth by 4.2pp. However, in terms of numbers, its actually the lowest among the 3 banks, at 14.7%. DBS’ return on equity, at 18.6%, was the highest, and it’s also a record high for the bank.
Non-Performing Loans Ratio:
| DBS | UOB | OCBC | |
| Non-Performing Loans Ratio (%) | No Change Q4 FY2022: 1.1% Q1 FY2023: 1.1% | No Change Q4 FY2022: 1.6% Q1 FY2023: 1.6% | Down -0.1pp Q4 FY2022: 1.2% Q1 FY2023: 1.1% |
OCBC is the winner here for being the only bank to see further improvements in its non-performing loans ratio, as non-performing assets continued to decline in its key markets. Together with DBS, their non-performing loans ratio were the lowest at 1.1%.
Which Bank had the Strongest Q1 FY2023 Results?
If you ask me, I think it’ll be a share of honours between UOB and OCBC – for the former, it had the highest percentage growth in terms of its other non-interest income and net profit, along with the lowest percentage decline in its net fee and commissions income; for the latter, it recorded the strongest growth in its return on assets, return on equity, and at the same time, for recording further improvements in its non-performing loans ratio.
Which of the 3 Banks is the ‘Cheapest’, as well as the ‘Most Expensive’
In the following table, I have put the valuations of the 3 banks (based on their share prices at close on 10 May 2023) side-by-side to do a comparison:
| DBS | UOB | OCBC | |
| Share Price (S$) | $31.62 | $28.12 | $12.32 |
| P/E Ratio | 10.42 | 11.20 | 10.03 |
| P/B Ratio | 1.49 | 1.16 | 1.08 |
| Dividend Yield (%) | 4.74% | 4.80% | 5.52% |
Looking at the above, OCBC is once again the ‘cheapest’, due to its P/E and P/B ratios being the lowest among the 3 banks, coupled with its dividend yield being the highest. At the other end, its a ‘close fight’ between DBS and UOB this time round, but DBS is still slightly more ‘expensive’ due to its higher P/B ratio, along with a lower dividend yield compared to UOB’s.
Closing Thoughts
So there you have it, my comparison of the 3 banks’ financial results and ratios.
Being a shareholder of all 3 of them, you can say I’m very satisfied with their record breaking net profit – even though UOB and OCBC were joint winners this time round for having the most improvement (in percentage terms) as far as their financial results and ratios are concerned respectively.
Finally, in terms of valuations, no surprises here that OCBC is once again the ‘cheapest’ (for the bank’s P/E and P/B ratios being the lowest, and dividend yield being the highest), and at the other end of the spectrum, DBS is the ‘most expensive’ (due to its slightly higher P/B ratio, along with a slightly lower dividend yield compared to UOB’s.)
Despite having said that, however, this post is meant for educational purposes only, and they do not represent any buy or sell calls for any of the 3 banks’ shares. As always, 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 the 3 banks.
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