• DBS, OCBC and UOB comprise more than 45% of the STI weightage and have averaged 37% total return since the end of 2019, outpacing the STI’s 15% total return over the period. For their FY22 (ended 31 Dec), the trio all reported record net profit, with respective FY22 ROEs at 15.0% for DBS, 11.1% for OCBC and 11.9% for UOB.
   
• The combined NII for the trio in 4Q22 was above S$8 billion, up from around S$7.3 billion in 3Q22, producing nine consecutive quarters of combined QoQ growth. This saw the trio’s combined NII for FY22 at S$27 billion, up 30% from FY21, which comprised just over two-thirds of the trio’s combined FY22 total income.  
   
• Total FY22 dividend payouts amount to S$2.00 per share (includes special dividend of S$0.50 per share) for DBS, S$0.68 per share for OCBC and S$1.35 per share for UOB. While final distributions are subject to shareholder approval, the FY22 payouts are up from FY21 pay outs of S$1.20 per share for DBS, S$0.53 per share for OCBC and S$1.20 per share for UOB.
   
• EY Parthenon has recently published an investment banking trends report for 2023, identifying three key themes for the year that include the pursuit of operating models that are customised and experience-led, technology adoption, and gaining headway in sustainability.
   

DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") have averaged 37% total returns since the end of 2019, bringing their 10-year annualised total returns to 9.4% as of 24 Feb. The trio maintained a combined 46.8% weightage within the Straits Times Index (“STI”) as of the end of January. The trio also maintained a combined 3.7% weightage in the FTSE Developed Asia Pacific ex Japan Index, with the weightage increasing by more than 2.5 times to 9.9% in the FTSE Developed Asia Pacific ex Japan Sustainable Yield Index. The FTSE Global Sustainable Yield Index Series excludes extreme yielding stocks and examines the financial and operating strength of prospective constituents (including profitability, capital structure and operation efficiency), with specific emphasis on companies with strong balance sheets and the ability to generate cash flow.

For their FY22 (ended 31 Dec), the trio all reported record net profit. DBS reported on 13 Feb its FY22 net profit grew 20% from FY21 to S$8.19 billion, with total income rising 16% to S$16.5 billion, crossing S$16 billion for the first time. UOB reported on 23 Feb a record high core net profit of S$4.8 billion in FY22, up 18% from FY21. Including one-off expenses relating to the acquisition of Citigroup’s Malaysia and Thailand consumer businesses, UOB’s net profit was also a record high at S$4.6 billion. OCBC, on 24 Feb, reported Group net profit for FY22 increased 18% from FY21 to S$5.7 billion.

The recent performances of DBS, OCBC and UOB are tabled below.

Source: SGX, Bloomberg, Refinitiv (Data as of 24 Feb 2023)
 

The combined total income of the trio increased to near S$40 billion in FY22, with the combined Net Interest Income (“NII”) up 30% to near S$27 billion, while combined Non-Interest Income (“NOII”) declined 9% to near S$13 billion.

• DBS reported its FY22 Commercial Book* total income was up 21% to S$15.3 billion from FY21, with NII rising 40% to S$10.7 billion in FY22 from S$7.7 billion in FY21. This was attributed to a 48 bps increase in Commercial Book Net Interest Margins (“NIM”) to 2.11%, as well as 4% loan growth. This was partially offset by lower wealth management and investment banking fee income. At the same time, DBS’ FY22 Treasury Markets total income normalised to S$1.17 billion from the record high of $1.5 billion in the previous year and was in line with the guided run-rate, with the previous year's record results due to exceptionally favourable market conditions. The DBS CEO maintained guidance for mid-single digit loan growth and double digit fee income growth in 2023.
   
• OCBC reported its FY22 NII grew 31% YoY from S$5.9 billion in FY21 to a record S$7.7 billion, underpinned by a 37-basis point expansion in NIM and 6% growth in average assets with NOII at S$3.99 billion, down 16% from the previous year. Net fee income for the year was S$1.85 billion, 18% lower than FY21 largely attributed to softer wealth management fees attributable to prevailing risk-off investment sentiments. This was partly offset by an increase in fees from loan and trade-related activities. OCBC also maintained guidance of mid-single digit loan growth for 2023.
   
• UOB reported FY22 NII increased 31% to S$8.3 billion from S$6.4 billion in FY21, led by robust NIM expansion of 30 bps to 1.86% on rising interest rates and loan growth of 3%. Despite credit card fees registering a double-digit growth from higher customer spending and the consolidation of Citigroup’s credit card business, FY22 net fee income declined 9% to S$2.1 billion as muted investor sentiments weighed on wealth and fund management fees. UOB also maintained guidance of mid-single digit loan growth for 2023 and double-digit fees growth on the back of a low base.

EY Parthenon maintain three relevant themes for APAC Investment Banks in 2023. These include:

• The pursuit of customised and experience-led operating models. This includes enhancement of both client and colleague experiences and re-evaluating the future of work with sub-themes such as the ability to have more impact on environmental and social causes.
   
• Technology adoption, in addition to commitment to secure technology enhancements. This includes focus on Embedded Finance and BaaS, data privacy and cybersecurity, and blockchain. Doubling down on technology was also flagged by Morgan Stanley and Oliver Wyman in 2020 as a key subtheme of the wealth management industry.
   
• Gaining headway in sustainability. This includes having a systematic and transparent approach to sustainability, getting sustainability right internally and helping clients make traction on sustainability.

DBS is the first bank in Singapore to sign up to the Net-Zero Banking Alliance (NZBA), and the first in Southeast Asia to publish a concrete and comprehensive set of targets for its Scope 3 financed emissions. OCBC noted it achieved carbon neutrality for banking operational emissions in 2022, supporting its commitment to be Net Zero by 2050. On 31 Oct, UOB announced ambitious commitments to reach net zero by 2050, underlining its goal to support a just transition that advances sustainable socioeconomic development in tandem with decarbonisation in Southeast Asia.

*Note that DBS has separated Treasury Markets from the rest of the bank, labelled under Commercial Book, to improve the transparency of the performance trends of its customer franchise. The profit and loss items for Treasury Markets were already previously available in the business unit section of the performance summary, and the revised format is in line with global banks which have already adopted such disclosure formats for some time.