Which Singapore-Listed Bank Had the Most Resilient Set of Q3 Results for FY2022?
All 3 Singapore-listed banks (in DBS, UOB, and OCBC) have already released their business updates for the third quarter ended 30 September 2022. As I have investments in them, I have posted reviews when their business updates were made available and you can find them in the respective posts below:
This post was originally posted here. The writer, Jun Yuan Lim is a veteran community member and blogger on InvestingNote, with a username known as @ljunyuan and has close to 2100 followers.
- DBS (SGX:D05) – https://www.thesingaporeaninvestor.sg/2022/11/03/dbs-group-holdings-q3-fy2022-business-update-what-you-need-to-know/
- UOB (SGX:U11) – https://www.thesingaporeaninvestor.sg/2022/10/28/my-review-of-united-overseas-banks-q3-fy2022-business-update/
- OCBC (SGX:O39) – https://www.thesingaporeaninvestor.sg/2022/11/04/my-review-of-ocbcs-q3-fy2022-business-update/
My focus in this post is to put the 3 banks’ results side-by-side to find out which one reported the most resilient set of results both on a quarter-on-quarter (Q3 FY2021 vs. Q3 FY2022) and on a year-on-year (9M FY2021 vs. 9M FY2022), as well as which is currently the ‘cheapest’ (based on their current valuations.)
Before I begin, a quick recap on the 3 banks’ performance for the 2nd quarter, as well as for the first half of the financial year – both UOB and OCBC stood out in terms of improvements in its financial results, as well as in its key financial ratios, with OCBC being ‘cheapest’ among the three.
So, can both UOB and OCBC continue its momentum and once again, emerge as the ‘winners’ once again in terms of its performance this time round? Let us find out in this post:
Financial Performance – 9M FY2021 vs. 9M FY2022
| DBS | UOB | OCBC | |
| – Net Interest Income | +21.6% growth
9M FY2021: | +22.8% growth
9M FY2021: | +21.5% growth
9M FY2021: |
| – Net Fee & Commission Income | -10.3% decline
9M FY2021: | -6.6% decline
9M FY2021: | -15.4% decline
9M FY2021: |
| – Other Non- Interest Income | -0.2% decline
9M FY2021: | -7.4% decline
9M FY2021: | -2.3% decline
9M FY2021: |
| Total Income | +9.8% growth
9M FY2021: | +12.1% growth
9M FY2021: | +7.8% growth
9M FY2021: |
| Net Profit | +8.1% growth
9M FY2021: | +11.9% growth
9M FY2021: | +14.3% growth
9M FY2021: |
My Observations: On a year-on-year (y-o-y) basis, UOB is a standout performer among the 3 banks this time round – where it recorded the highest percentage improvement in its net interest income and net fee and commission income, and this led to the bank having the strongest improvement in its total income.
Financial Performance – Q3 FY2021 vs. Q3 FY2022
| DBS | UOB | OCBC | |
| – Net Interest Income | +43.5% growth
Q3 FY2021: | +39.3% growth
Q3 FY2021: | +43.7% growth
Q3 FY2021: |
| – Net Fee & Commission Income | -13.2% decline
Q3 FY2021: | -9.9% decline
Q3 FY2021: | -20.4% decline
Q3 FY2021: |
| – Other Non- Interest Income | +32.3% growth
Q3 FY2021: | +58.5% growth
Q3 FY2021: | +13.2% growth
Q3 FY2021: |
| Total Income | +27.6% growth
Q3 FY2021: | +29.8% growth
Q3 FY2021: | +23.1% growth
Q3 FY2021: |
| Net Profit | +31.5% growth
Q3 FY2021: | +34.1% growth
Q3 FY2021: | +31.1% growth
Q3 FY2021: |
My Observations: Just like in its y-o-y results, UOB once again emerged on top in terms of improvements in its results on a quarter-on-quarter (q-o-q) basis – where the bank recorded the highest percentage of improvements in its other non-interest income, along with the smallest percentage of drop in its net fee and commission income.
Not only that, UOB also pipped the other 2 banks in terms of its percentage improvement in total income and net profit.
Key Financial Ratios (Q2 FY2022 vs. Q3 FY2022)
In this section, let us take a look at the 4 key financial ratios (i.e. net interest margin, return on assets, return on equity, and non-performing loans ratio) recorded by the 3 banks for the current quarter under review (i.e. Q3 FY2022 ended 30 September 2022), and compare them against that recorded in the previous quarter 3 months ago (i.e. Q2 FY2022 ended 30 June 2022) to find out which bank recorded the most improvements:
| DBS | UOB | OCBC | |
| Net Interest Margin | +0.32pp growth
Q2 FY2022: | +0.28pp growth
Q2 FY2022: | +0.35pp growth
Q2 FY2022: |
| Return on Assets | +0.19pp growth
Q2 FY2022: | +0.21pp growth
Q2 FY2022: | +0.06pp growth
Q2 FY2022: |
| Return on Equity | +2.9pp growth
Q2 FY2022: | +3.0pp growth
Q2 FY2022: | +0.9pp growth
Q2 FY2022: |
| Non-Performing Loans Ratio | +0.1pp growth
Q2 FY2022: | +0.2pp growth
Q2 FY2022: | +0.1pp growth
Q2 FY2022: |
My Observations: Once again, UOB is the winner in terms of improvements in its key financial ratios – where the bank saw the biggest growth in its return on assets and return on equity (compared to the previous quarter), as well as recording the biggest improvement in its non-performing loans ratio (where it improved by 0.2pp from 1.7% in Q2 FY2022 to 1.5% in Q3 FY2022.)
Dividend Payouts
DBS is the only bank where the management pays out a dividend on a quarterly basis (and for the current quarter under review, the bank’s management have declared a payout of 36.0 cents/share), while the management of UOB and OCBC declares a dividend payout on a half-yearly basis (once when they release their results for the first half of the year, and once when they release their results for the second half of the year.)
As such, there are no comparisons here.
Which Singapore-Listed Bank is Currently the ‘Cheapest’?
The following table is the 3 banks’ valuations based on their share prices at market close last Friday (04 November 2022.)
| DBS | UOB | OCBC | |
| Share Price | $34.47 | $28.40 | $12.04 |
| P/E Ratio | 13.30 | 11.64 | 10.80 |
| P/B Ratio | 1.58 | 1.10 | 1.02 |
| Dividend Yield** | 4.18% | 4.23% | 4.9% |
** For the computation of dividend yield, I assume that DBS will be paying out a total of 144.0 cents for FY2022 (meaning 36.0 cents every quarter), UOB will be paying out a total of 120.0 cents for FY2022 (meaning 60.0 cents for both its interim as well as its final dividend), and OCBC will be paying out a total of 59.0 cents (meaning 28.0 cents of interim dividend already declared, along with a 3.0 cent increase to its final dividend payout to 31.0 cents – which in my opinion is likely if the bank is able to continue reporting a similar set of results like the one we’ve just seen this time round.)
My Observations: It’s very clear from the table above that OCBC is currently the ‘cheapest’ among the 3, as its P/E and P/B ratios are the lowest, coupled with its dividend yield being the highest.
On the other end, DBS continues to be the ‘most expensive’, as its P/E and P/B ratios are the highest, coupled with its dividend yield being the lowest.
Closing Thoughts
While all 3 Singapore-listed banks have declared very resilient sets of results this time round – mainly attributed by huge increases in the net interest income as a result of strong jumps in the net interest margin, UOB is the undisputed winner this time round – where it came out on top not just in terms of improvements in its financial results, but also recorded the strongest growth in terms of its key financial ratios.
OCBC is once again the ‘cheapest’ of the 3 banks in terms of their current valuations – due to its P/E and P/B ratios being the lowest, along with its dividend yield being the highest. No surprises there that DBS is currently the ‘most expensive’ – not just in terms of its current share price, but also in terms of its current valuations (with its P/E and P/B ratios being the highest, and its dividend yield being the lowest among the 3 Singapore banks.)
Despite having said that, this post does not constitute any buy or sell calls for the shares of the 3 Singapore-listed banks. Everything you’ve just read above is purely for educational purposes only. Please do your own due diligence before you make any investment decisions.
Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings Limited, United Overseas Bank Limited, and Overseas-Chinese Banking Corporation Limited.
Once again, this article is a guest post and was originally posted on ljunyuan‘s profile on InvestingNote.
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