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:
- My Review of DBS Group Holdings’ Q4 & FY2022 Results
- United Overseas Bank Limited – My Review of its Q4 & FY2022 Results
- Overseas-Chinese Banking Corporation Limited’s Q4 & FY2022 Results – My Review
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:
| DBS | UOB | OCBC | |
| 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 Profit | Up +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:
| DBS | UOB | OCBC | |
| 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 Profit | Up +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:
| DBS | UOB | OCBC | |
| 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:
| DBS | UOB | OCBC | |
| 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:
| DBS | UOB | OCBC | |
| 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 |
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):
| DBS | UOB | OCBC | |
| Share Price | $34.34 | $29.94 | $12.70 |
| P/E Ratio | 10.92 | 11.14 | 10.28 |
| P/B Ratio | 1.56 | 1.15 | 1.08 |
| Dividend Yield ** | 5.8% | 4.5% | 5.4% |
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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