All 3 Singapore-listed banks in DBS (SGX:D05), UOB (SGX:U11), and OCBC (SGX:O39) have since published their results for the 2nd quarter, as well as for the 1st half of the financial year ended 30 June 2023.
I have also reviewed their results when they were made available, and you can check them out via the respective links below in case you have missed it:
UOB – https://www.thesingaporeaninvestor.sg/2023/07/27/uobs-q2-1h-fy2023-results-my-review/
OCBC – https://www.thesingaporeaninvestor.sg/2023/08/04/my-review-of-ocbcs-q2-1h-fy2023-results/
What I will be focusing on in this post is to put their results side-by-side and do a comparison to find out which of the 3 recorded the strongest improvement in terms of their financial results (for the 2nd quarter, and for the 1st half of the year), 3 key financial ratios (its net interest margin, return on equity, and non-performing loans ratio for the 2nd quarter, compared against the 1st quarter of the year), and dividend payout to its shareholders (for the 1st half of the year).
On top of that, I will be comparing which of the 3 banks is currently the ‘cheapest’, as well as the ‘most expensive’ in terms of their current valuations.
Let’s begin:
Financial Results (1H FY2022 vs. 1H FY2023)
In this section, you will find a comparison of the 3 banks’ results in terms of its net interest income, net fee and commission income, other non-interest income, and net profit for the 1st half of FY2023, compared against the 1st half of FY2022:
Net Interest Income:
| DBS | UOB | OCBC | |
| Net Interest Income (S$’mil) | Up +61.0% 1H FY2022: $4,325m 1H FY2023: $6,965m | Up +36.5% 1H FY2022: $3,549m 1H FY2023: $4,846m | Up +47.6% 1H FY2022: $3,203m 1H FY2023: $4,727m |
All 3 banks saw their net interest income continuing to record strong growths as a result of a jump in its net interest margin. However, DBS’ net interest income grew the most, at 61.0% compared to last year, driven by the commercial book from a high interest margin.
Net Fee & Commission Income:
| DBS | UOB | OCBC | |
| Net Fee & Commission Income (S$’mil) | Up +0.9% 1H FY2022: $1,659m 1H FY2023: $1,674m | Down -5.6% 1H FY2022: $1,139m 1H FY2023: $1,075m | Down -11.6% 1H FY2022: $999m 1H FY2023: $883m |
Again, DBS came out on top here, as its net fee and commission income was the only one (among the 3 banks) to record an improvement – albeit slightly, contributed by an increase in credit card fees due to higher spending including for travel.
Other Non-Interest Income:
| DBS | UOB | OCBC | |
| Other Non-Interest Income (S$’mil) | Down -3.5% 1H FY2022: $1,437m 1H FY2023: $1,387m | Up > +100.0% 1H FY2022: $374m 1H FY2023: $1,144m | Up +17.0% 1H FY2022: $1,021m 1H FY2023: $1,195m |
On the 3 banks’ non-interest income, both UOB and OCBC saw year-on-year improvements – for the former, it was due to a record high customer-related treasury income from increased hedging demands and a good performance from trading and liquidity management activities; for the latter, it was due to a growth in profit from insurance, as well as in its wealth management income.
However, UOB’s growth in terms of its other non-interest income was way superior.
Net Profit:
| DBS | UOB | OCBC | |
| Net Profit (S$’mil) | Up +43.8% 1H FY2022: $3,616m 1H FY2023: $5,200m | Up +44.9% 1H FY2022: $2,018m 1H FY2023: $2,925m | Up +38.5% 1H FY2022: $2,592m 1H FY2023: $3,589m |
While all 3 Singapore Banks saw a huge jump in their net profit, it was a close one between both DBS and UOB – but the latter edged out here for having a slightly better improvement in percentage terms (44.9% vs. 43.8% for DBS).
Financial Performance (Q2 FY2022 vs. Q2 FY2023)
Next, let us take a look at the same 4 financial figures (net interest income, net fee and commission income, other non-interest income, and net profit) reported by the 3 banks for the 2nd quarter of FY2023, compared against the same time period last year (i.e., 2nd quarter of FY2022) and find out which one had the most resilient set of results:
Net Interest Income:
| DBS | UOB | OCBC | |
| Net Interest Income (S$’mil) | Up +54.4% Q2 FY2022: $2,320m Q2 FY2023: $3,581m | Up +30.8% Q2 FY2022: $1,863m Q2 FY2023: $2,437m | Up +40.5% Q2 FY2022: $1,700m Q2 FY2023: $2,389m |
While all 3 banks saw strong growth in their net interest income for the 2nd quarter, DBS’ came out on top, as its growth was the strongest – at +54.4% (contributed by a 0.58 percentage point [pp] jump in its net interest margin from 1.58% in Q2 FY2022 to 2.16% in Q2 FY2023), followed by OCBC, at +40.5% growth, and then UOB, at +30.8%.
Net Fee & Commission Income:
| DBS | UOB | OCBC | |
| Net Fee & Commission Income (S$’mil) | Up +7.2% Q2 FY2022: $768m Q2 FY2023: $823m | Down -7.6% Q2 FY2022: $567m Q2 FY2023: $524m | Down -9.9% Q2 FY2022: $477m Q2 FY2023: $430m |
Among the 3, only DBS saw an improvement in its net fee & commission income – it was also the first year-on-year (y-o-y) increase in this business segment in 6 quarters, which can be attributed to higher wealth management fees, as well as higher credit card fees.
Other Non-Interest Income:
| DBS | UOB | OCBC | |
| Other Non-Interest Income (S$’mil) | Down -1.7% Q2 FY2022: $652m Q2 FY2023: $641m | Up > +100.0% Q2 FY2022: $273m Q2 FY2023: $581m | Up +30.6% Q2 FY2022: $487m Q2 FY2023: $636m |
Both UOB and OCBC saw double-digit percentage improvements in their other non-interest income – for the former, it was due to higher customer-related treasury income and strong performance from trading and liquidity management activities in the current quarter under review; for the latter, it was due to net gains from the sale of investment securities, and a higher profit from insurance.
However, UOB’s growth in percentage terms was a much higher one compared to OCBC’s.
Net Profit:
| DBS | UOB | OCBC | |
| Net Profit (S$’mil) | Up +44.8% Q2 FY2022: $1,815m Q2 FY2023: $2,629m | Up +27.1% Q2 FY2022: $1,113m Q2 FY2023: $1,415m | Up +33.5% Q2 FY2022: $1,481m Q2 FY2023: $1,710m |
While all 3 banks recorded a very strong growth in its net profit in the 2nd quarter, but the growth of net profit of DBS was the highest, at 44.8%, followed by OCBC, at +33.5%, and then UOB, at +27.1%.
Key Financial Ratios
When it comes to reviewing the banks’ key financial ratios, I will compare the statistics reported for the current quarter under review (i.e., Q2 FY2023 ended 30 June 2023) against that reported in the previous quarter (i.e., Q1 FY2023 ended 31 March 2023) to find out which of the 3 saw the strongest improvement in this area:
Net Interest Margin:
| DBS | UOB | OCBC | |
| Net Interest Margin (%) | Up +0.04pp Q1 FY2023: 2.12% Q2 FY2023: 2.16% | Down -0.02pp Q1 FY2023: 2.14% Q2 FY2023: 2.12% | Down -0.04pp Q1 FY2023: 2.30% Q2 FY2023: 2.26% |
DBS is a clear winner here, as its net interest margin is the only one that continued to record an improvement compared to the previous quarter.
Return on Equity:
| DBS | UOB | OCBC | |
| Return on Equity (%) | Up +0.6pp Q1 FY2023: 18.6% Q2 FY2023: 19.2% | Down -0.8pp Q1 FY2023: 14.9% Q2 FY2023: 14.1% | Down -1.2pp Q1 FY2023: 14.7% Q2 FY2023: 13.5% |
Just like for its net interest margin, DBS is the only one among the 3 Singapore Banks to record a further improvement in its return on equity – in fact, its return on equity, at 19.2% for Q2 FY2023, was a new high for the bank – remarkable!
Non-Performing Loans Ratio:
| DBS | UOB | OCBC | |
| Non-Performing Loans Ratio (%) | Unchanged Q1 FY2023: 1.1% Q2 FY2023: 1.1% | Unchanged Q1 FY2023: 1.6% Q2 FY2023: 1.6% | Unchanged Q1 FY2023: 1.1% Q2 FY2023: 1.1% |
Amid the uncertainty in the macroeconomic environment, it is good to see all 3 banks’ non-performing loans ratio remaining unchanged.
Dividend Payout to Shareholders
DBS is the only bank to declare a dividend payout to its shareholders on quarterly basis, while UOB and OCBC declares a payout to its shareholders on a half-yearly basis.
Which bank has the strongest improvements in terms of its dividend payout for the 1st half of FY2023 compared to the last year? Let us find out in the table below:
| DBS | UOB | OCBC | |
| Dividend Per Share (S$’cents) | Up +25.0% 1H FY2022: 72.0 cents 1H FY2023: 90.0 cents | Up +41.7% 1H FY2022: 60.0 cents 1H FY2023: 85.0 cents | Up +42.9% 1H FY2022: 28.0 cents 1H FY2023: 40.0 cents |
All 3 banks saw a double-digit percentage bump in their dividend payouts – but among the 3, OCBC’s growth in terms of improvements in its dividend payouts for the 1st half of FY2023 was the strongest, at +42.9%, compared to UOB’s +41.7% growth, and then DBS’ +25.0% improvement.
Which Bank Had the Most Resilient Performance in Q2 & 1H FY2023?
Undoubtedly, DBS is a clear winner here – as the bank had the joint-highest improvement in its financial results for the 1st half of the year together with UOB, highest improvement in its financial results for the 2nd quarter of the year, and at the same time, the only bank that saw improvements in its net interest margin and return on equity.
As for the other 2 banks, UOB had the joint-highest improvement in its financial results for the first half of FY2023, while OCBC’s dividend payout for 1H FY2023 improved the most.
Which Bank is Currently the ‘Cheapest’, and ‘Most Expensive’?
Finally, let us take a look at which of the 3 banks is currently the ‘cheapest’, and which is the ‘most expensive’, based on their current traded price as at noon today (07 August):
| DBS | UOB | OCBC | |
| Share Price (S$) | $34.34 | $28.85 | $13.03 |
| P/E Ratio | 7.88 | 7.72 | 7.44 |
| P/B Ratio | 1.53 | 1.06 | 1.12 |
| Dividend Yield^^ | 5.8% | 4.7% | 5.2% |
Looking at the valuations of the 3 banks, once again, DBS is the ‘most expensive’, due to its current P/E and P/B ratios being the highest. At the other end, OCBC edged out for being the ‘cheapest’ this time round, as its P/E ratio was the lowest among the 3, coupled with its dividend yield being higher compared to UOB.
Closing Thoughts
The growth in the 3 banks’ results, particularly a bumper in dividend payout for all of them, was a surprise (at least for me) – because at the beginning of the year, taking the current economic headwinds into consideration, I was of the opinion that if the banks’ results could match that reported last year, along with their dividend payouts maintained the same as last year, it would be considered as a good set of results.
Among the 3 banks, its no surprise that DBS came out on top in terms of improvements in its results for the 2nd quarter, and for the 1st half of FY2023, considering they have set new highs on several fronts, including its total income for the both periods, as well as its return on equity. And having said that, it’s again no surprise that the current share price of the Singapore bank is the ‘most expensive’.
With that, I have come to the end of my comparison of the 3 Singapore Banks’ results for the 2nd quarter, as well as for the 1st half of FY2023. Do take note that everything you have just read in this post is for educational purposes only. They do not imply and buy or sell calls for any of the banks’ shares. Please do your own due diligence before you make any investment decisions.
Disclaimer: At the time of writing, I am a shareholder of DBS, UOB, and OCBC.
Are You Worried about Not Having Enough Money for Retirement?
You're not alone. According to the OCBC Financial Wellness Index, only 62% of people in their 20s and 56% of people in their 30s are confident that they will have enough money to retire.
But there is still time to take action. One way to ensure that you have a comfortable retirement is to invest in real estate investment trusts (REITs).
In 'Building Your REIT-irement Portfolio' which I've authored, you will learn everything you need to know to build a successful REIT investment portfolio, including a list of 9 things to look at to determine whether a REIT is worthy of your investment, 1 simple method to help you maximise your returns from your REIT investment, 4 signs of 'red flags' to look out for and what you can do as a shareholder, and more!
You can find out more about the book, and grab your copy (ebook or physical book) here...
Comments (0)