Among the 30 companies in Singapore’s benchmark Straits Times Index (or STI for short), the 3 banks (in DBS, UOB, and OCBC) have the heaviest weightage – as at 29 February 2024, DBS has a weightage of 20.6%, OCBC has a weightage of 13.0%, and UOB has a weightage of 11.2%. Collectively, these 3 banks have a weightage of 44.8% – hence, any positive or negative movements in the 3 banks’ share price will have an impact on the movement of the STI.
I’m also an investor of all the 3 Singapore-listed banks. Hence, every earnings season, I will study each of their business update/financial reports as and when they are made available, and post my review. You can find my review of DBS, UOB, as well as OCBC’s 4th quarter and full year results for the financial year ended 31 December 2023 (i.e., FY2023) here.
On top of that, I will also do an analysis of their results by putting the figures reported side-by-side to find out which bank had the strongest performance. In this post, you will find out which bank had the strongest set of results for the 4th quarter, as well as for FY2023, along with which bank is currently the ‘cheapest’ and ‘most expensive’ based on their current valuations.
Let’s begin:
Financial Results (Q4 FY2022 vs. Q4 FY2023)
In this section, I will be putting the 3 banks’ financial results reported for the 4th quarter of FY2023 compared against the same time period last year to find out which recorded the highest improvement (in percentage terms):
Net Interest Income:
| DBS | UOB | OCBC | |
| Net Interest Income | Up +4.7% Q4 FY2022: $3,280m Q4 FY2023: $3,434m | Down -6.1% Q4 FY2022: $2,560m Q4 FY2023: $2,404m | Up +3.2% Q4 FY2022: $2,386m Q4 FY2023: $2,462m |
Only UOB saw a decline in its net interest income due to a 0.07 basis point (bp) dip in its net interest margin.
However, between DBS and OCBC (which saw an improvement in their net interest income), the former recorded a better improvement.
Net Fee & Commission Income:
| DBS | UOB | OCBC | |
| Net Fee & Commission Income | Up +31.2% Q4 FY2022: $661m Q4 FY2023: $867m | Up +17.3% Q4 FY2022: $485m Q4 FY2023: $569m | Up +15.3% Q4 FY2022: $399m Q4 FY2023: $460m |
While all 3 banks saw improvements in their net fee and commission income, DBS is a clear winner here for having the highest percentage improvement (by 31.2% due to increases across most fee income streams and the consolidation of Citi Taiwan, compared to 17.3% for UOB, and 15.3% for OCBC).
Other Non-Interest Income:
| DBS | UOB | OCBC | |
| Other Non-Interest Income | Up +8.8% Q4 FY2022: $649m Q4 FY2023: $706m | Up +53.7% Q4 FY2022: $285m Q4 FY2023: $438m | Up +42.1% Q4 FY2022: $247m Q4 FY2023: $351m |
Both UOB and OCBC saw strong double-digit percentage growth in its other non-interest income – the former was due to higher customer-related treasury income, and strong performance from trading and liquidity management activities, while the latter was due to improvements in its net trading income, and a net gain from the sale of investment securities.
However, UOB is the “winner” here for having a higher percentage improvement (+53.7% compared to OCBC’s +42.1%).
Net Profit:
| DBS | UOB | OCBC | |
| Net Profit | Down -3.1% Q4 FY2022: $2,341m Q4 FY2023: $2,269m | Up +21.8% Q4 FY2022: $1,398m Q4 FY2023: $1,403m | Up +12.4% Q4 FY2022: $1,443m Q4 FY2023: $1,662m |
DBS is the only one to record a dip in its net profit for the 4th quarter, due to one-off items in the integration cost and harmonisation of Citi Taiwan, and Corporate Social Responsibility (CSR) commitment to DBS Foundation and other charitable causes to support vulnerable communities amounting to $100m – excluding these 2 items, its net profit for the 4th quarter would have been up by 2.2%, which is still lower than growths in net profit recorded by UOB and OCBC.
Between the other 2 banks, UOB is once again the “winner” here, as its improvement (in percentage term) is way superior compared to OCBC’s.
Financial Results (FY2022 vs. FY2023)
In terms of percentage improvement in terms of its financial results for the 4th quarter, it was a tie between DBS and UOB – where the former had the highest percentage improvement in its net interest income and net fee and commission income, while the latter had the highest percentage improvement in its other non-interest income and net profit.
Moving on, let us have a look at their financial results recorded for the full year to find out which emerged the strongest (in terms of improvement in percentage terms). I will be looking at the same 4 items: its net interest income, net fee & commission income, other non-interest income, and net profit:
Net Interest Income:
| DBS | UOB | OCBC | |
| Net Interest Income | Up +24.7% FY2022: $10,941m FY2023: $13,642m | Up +16.0% FY2022: $8,343m FY2023: $9,679m | Up +25.5% FY2022: $7,688m FY2023: $9,645m |
All 3 banks saw double-digit percentage improvements in their net interest income, helped by a huge jump in their net interest margin as interest rates continue to remain high.
Between the 3 banks, OCBC had the strongest improvement, at +25.5% to S$9,645m – which was a record high by the bank, led by a 5% growth in average assets and a 37-basis point expansion in net interest margin.
Net Fee & Commission Income:
| DBS | UOB | OCBC | |
| Net Fee & Commission Income | Up +9.5% FY2022: $3,091m FY2023: $3,384m | Up +4.3% FY2022: $2,143m FY2023: $2,235m | Down -2.5% FY2022: $1,851m FY2023: $1,804m |
Only OCBC saw a decline in its net fee & commission income, due to lower wealth-related fees as customer activities remain subdued amid global risk-off investment sentiments.
Between DBS and UOB, the former is the “winner” here, due to its higher improvement – led by higher fees from cards (which grew to a record of S$1.04 billion from higher spending), as well as from wealth management.
Other Non-Interest Income:
| DBS | UOB | OCBC | |
| Other Non-Interest Income | Up +27.7% FY2022: $2,470m FY2023: $3,154m | Up +85.3% FY2022: $1,089m FY2023: $2,018m | Up +17.8% FY2022: $1,747m FY2023: $2,058m |
While all 3 banks saw double-digit percentage improvements in their other non-interest income, UOB’s improvement was way superior, at 85.3% – driven by an all-time high customer-related treasury income and strong performance from its trading and liquidity management activities.
Net Profit:
| DBS | UOB | OCBC | |
| Net Profit | Up +22.8% FY2022: $8,193m FY2023: $10,062m | Up +24.9% FY2022: $4,819m FY2023: $5,711m | Up +27.1% FY2022: $5,639m FY2023: $7,165m |
It was a close fight between the 3 banks, as they recorded a 20+% growth in their net profit for the year. Not only that, the net profit for all the 3 banks was also a record breaking one.
However, among the 3 banks, OCBC’s improvement is the strongest (at 27.1%), followed by UOB (at 24.9%), and then DBS (at 22.8%).
Key Financial Ratios (Q3 FY2023 vs. Q4 FY2023)
When it comes to reviewing a bank’s financial ratios, my focus is on these 3: Net Interest Margin, Return on Equity, as well as Non-Performing Loans Ratio.
In this section, I will be comparing the 3 banks’ key financial ratios recorded for the previous quarter (i.e., Q3 FY2023 ended 30 September 2023) and for the current quarter (i.e., Q4 FY2023 ended 31 December 2023) under review, in terms of their growth/decline in percentage points:
Net Interest Margin:
| DBS | UOB | OCBC | |
| Net Interest Margin | Down -0.06pp Q3 FY2023: 2.19% Q4 FY2023: 2.13% | Down -0.07pp Q3 FY2023: 2.09% Q4 FY2023: 2.02% | Up +0.02pp Q3 FY2023: 2.27% Q4 FY2023: 2.29% |
OCBC is the clear “winner” here, as it is the only bank which saw a further improvement in its net interest margin. Coincidentally, its net interest margin is also highest among the 3 banks (at 2.29% in Q4 FY2023).
Return on Equity:
| DBS | UOB | OCBC | |
| Return on Equity | Down -2.1pp Q3 FY2023: 18.2% Q4 FY2023: 16.1% | Down -0.1pp Q3 FY2023: 13.9% Q4 FY2023: 13.8% | Down -1.6pp Q3 FY2023: 14.0% Q4 FY2023: 12.4% |
Compared to the previous quarter (i.e., Q3 FY2023), all 3 banks saw a decline in their return on equity. However, UOB’s drop is the lowest, by just 0.1pp.
In terms of Return on Equity by numbers for the 4th quarter, DBS comes out on top, at 16.1%.
Non-Performing Loans Ratio:
| DBS | UOB | OCBC | |
| Non- Performing Loans Ratio | Down -0.1pp Q3 FY2023: 1.2% Q4 FY2023: 1.1% | Down -0.1pp Q3 FY2023: 1.6% Q4 FY2023: 1.5% | Unchanged Q3 FY2023: 1.0% Q4 FY2023: 1.0% |
In my opinion, OCBC is the “winner” here for having the lowest non-performing loans ratio among the 3, at just 1.0%.
Key Financial Ratios (FY2022 vs. FY2023)
In the previous section, where I compared the 3 key financial for the 3 banks recorded in the 4th quarter against that recorded in the 3rd quarter, OCBC emerged on top as it had the highest improvement in its net interest margin, as well as the lowest non-performing loans ratio.
What about for the full-year, which bank emerged on top? Let us find out in this section:
Net Interest Margin:
| DBS | UOB | OCBC | |
| Net Interest Margin | Up +0.40pp FY2022: 1.75% FY2023: 2.15% | Up +0.23pp FY2022: 1.86% FY2023: 2.09% | Up +0.37pp FY2022: 1.91% FY2023: 2.28% |
No surprises there that all 3 banks recorded strong improvements in their net interest margins as interest rates for the year continued to remain high.
But among the 3, DBS recorded the strongest improvement, at 0.40pp, followed by OCBC, at 0.37pp, and then UOB, by 0.23pp.
However, OCBC had the highest net interest margin between the 3 banks, at 2.28%.
Return on Equity:
| DBS | UOB | OCBC | |
| Return on Equity | Up +3.0pp FY2022: 15.0% FY2023: 18.0% | Up +2.3pp FY2022: 11.9% FY2023: 14.2% | Up +2.6pp FY2022: 11.1% FY2023: 13.7% |
It was a close one (in terms of improvements) between the 3 banks, but DBS emerged on top with a 3.0pp improvement in its return on equity for FY2023. Also, at 18.0%, the bank’s return on equity is not only the highest among the 3 banks, but also a record for the bank.
Non-Performing Loans Ratio:
| DBS | UOB | OCBC | |
| Non- Performing Loans Ratio | Unchanged FY2022: 1.1% FY2023: 1.1% | Down -0.1pp FY2022: 1.6% FY2023: 1.5% | Down -0.2pp FY2022: 1.2% FY2023: 1.0% |
OCBC is the winner here for recording the highest improvement in its non-performing loans ratio (by 0.2pp), as well as having the lowest the lowest non-performing loans ratio among the 3 banks, at 1.0%.
Dividend Payouts to Shareholders
DBS pays out a quarter dividend to its shareholders, while UOB and OCBC pays out a dividend to its shareholders on a half-yearly basis.
Let us have a look at the 3 banks’ full-year dividend payout for FY2023, compared against last year:
| DBS^^ | UOB | OCBC | |
| Dividend Per Share | Down -4.0% FY2022: 200.0 cents FY2023: 192.0 cents | Up +25.9% FY2022: 135.0 cents FY2023: 170.0 cents | Up +20.6% FY2022: 68.0 cents FY2023: 82.0 cents |
If you take DBS’ special dividend payout declared in FY2022 into consideration, then UOB is the “winner” here for having the highest improvement (in percentage terms) in its dividend payout.
However, if you strip out DBS’ special dividend payout, then it is the “winner” here as its dividend payout for FY2023 represented a 28.0% improvement, compared to UOB’s 25.9% improvement.
Which of the 3 Singapore-Listed Banks Had the Strongest Improvement in its Q4 and Full Year Results
In terms of financial results, for the 4th quarter, it was a tie between DBS and UOB (the former had the strongest improvement in its net interest income and net fee and commission income, while the latter had the strongest growth in its other non-interest income and net profit). For the full-year, OCBC edged out for having the highest improvement in its net interest income and net profit.
Looking at their financial ratios, in terms of improvements made in the 4th quarter compared against the 3rd quarter, OCBC was the winner (for having the highest improvement in its net interest margin, and at the same time, the lowest non-performing loans ratio). For the full-year, it was a tie between DBS and OCBC (the former had the strongest improvement in its net interest margin as well as in its return on equity, while the latter had the highest net interest margin, and lowest non-performing loans ratio).
To answer the question on which bank had the strongest results for the 4th quarter and for the full year, I would say its OCBC, for having the highest percentage improvement in its FY2023 financial results, as well as in in the 3 key financial ratios I’ve looked at (for the 4th quarter compared against the 3rd quarter, as well as for the full-year compared against a year ago).
Which Bank is Currently the ‘Cheapest’ and the ‘Most Expensive’?
The table below is a comparison of the 3 banks’ valuations based on its traded price when the Singapore market concluded trading last Friday, 01 March 2024:
| DBS (SGX:D05) | UOB (SGX:U11) | OCBC (SGX:O39) | |
| Share Price: | $33.55 | $28.19 | $12.99 |
| P/E Ratio | 8.61 | 8.39 | 8.05 |
| P/B Ratio | 1.39 | 1.01 | 1.12 |
| Dividend Yield## | 5.72% | 6.03% | 6.31% |
Comparing the current valuations of the 3 Singapore-listed banks above, it seems that OCBC is once again the ‘cheapest’ due to its P/E ratio being the lowest among the 3, and at the same time, its dividend yield being the highest.
On the other hand, DBS is the ‘most expensive’, as its current P/E and P/B ratios are the highest among the 3, and at the same time, its dividend yield is also the lowest.
Closing Thoughts
To be honest, I was a bit surprised that OCBC turned out to emerge victorious in terms of improvements in its 4th quarter and FY2023 financial results and key financial ratios this time round – to summarise, it saw the highest improvements (in percentage terms) in its financial results for the full year, as well as in its key financial ratios.
DBS also recorded a very good performance as well, where it came out on top in terms of percentage improvement in its financial results for the 4th quarter (where it shared the position with UOB), as well as for the full-year (where it shared the top spot with OCBC). If you strip out its special dividend payout declared in the final quarter of FY2022, the percentage improvement in its dividend payout is also the highest among the 3 banks.
In terms of their valuations, OCBC is currently the ‘cheapest’ among the 3 banks due to its current P/E ratio being the lowest, and dividend yield being the highest.
At the other end of the spectrum, DBS is the ‘most expensive’, due to its current P/E and P/B ratios being the highest among the 3, and at the same time, its dividend yield is the lowest.
To conclude, OCBC not only has the strongest improvement in terms of its Q4 and FY2023 results this time round, it is also the ‘cheapest’ based on its current valuations. Personally, while I was ‘slightly disappointed’ by its mid-single digit percentage improvement (by 5.0%) in its final dividend payout (which went up from 40.0 cents to 42.0 cents), but since Ms Helen Wong have taken over as the CEO of the bank, I have seen improvements made and looking ahead, I am confident of her leadership abilities to bring the bank forward.
With that, I have come to the end of my comparison of the 3 Singapore-listed banks’ results for the 4th quarter and for the full year ended 31 December 2023. Do take note that the contents in this post does not comprise any buy or sell calls for any of the banks, and that 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 all 3 Singapore-listed banks.
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