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THE SINGAPOREAN INVESTOR

Author: ljunyuan   |   Latest post: Fri, 12 Aug 2022, 10:30 AM

 

Which Singapore-Listed Bank Had the Best Set of Result for the Second Quarter and First Half of 2022

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Which Singapore-Listed Bank Had the Best Set of Result for the Second Quarter and First Half of 2022

All 3 Singapore banks (in DBS, UOB, and OCBC) have released their financial results for the second quarter, as well as the first half of 2022 – as a shareholder of the banks (my average invested price for DBS, UOB, and OCBC are $24.00, $23.26, and $10.50 respectively), I have posted my review of results when they were released, and you can read about them in separate posts below (in case you’ve missed them):

Just like in the previous quarters, after the 3 banks have released their results, I will put their statistics side-by-side to find out which one has the most resilient set of results, and also at the same time, I also put their current valuations (based on their current traded price) side-by-side to find out which bank is currently the “cheapest”, and this quarter is no different.

To recap, in this previous quarter (i.e. Q1 FY2022 ended 31 March 2022), both DBS and UOB edged out for in terms of improvements in their financial performance (compared against the numbers recorded in Q1 FY2021 ended 31 March 2022), while OCBC recorded the most improvements in its key financial ratios (compared against that recorded in Q4 FY2021 ended 31 December 2021.) Also, DBS continue to remain as the most “expensive” among the 3 Singapore banks, with OCBC being the “cheapest” (you can read the full article here about my comparison of the 3 banks’ Q1 FY2022 results here.)

Will we see a similar set of results again this time round? Let us find out in this post:

Financial Performance – 1H FY2021 vs 1H FY2022

DBSUOBOCBC
– Net Interest
Income
+10.6% growth

1H FY2021:
S$4,196m
1H FY2022:
S$4,641m
+14.2% growth

1H FY2021:
S$3,107m
1H FY2022:
S$3,549m
+10.4% growth

1H FY2021:
S$2,902m
1H FY2022:
S$3,203m
– Net Fee &
Commission
Income
-8.9% decline

1H FY2021:
S$1,821m
1H FY2022:
S$1,659m
-5.1% decline

1H FY2021:
S$1,200m
1H FY2022:
S$1,139m
-13.0% decline

1H FY2021:
S$1,148m
1H FY2022:
S$999m
– Other Non-
Interest Income
-13.1% decline

1H FY2021:
S$1,426m
1H FY2022:
S$1,239m
-37.2% decline

1H FY2021:
S$596m
1H FY2022:
S$374m
-8.1% decline

1H FY2021:
S$1,436m
1H FY2022:
S$1,320m
Total Income+1.3% growth

1H FY2021:
S$7,443m
1H FY2022:
S$7,539m
+3.2% growth

1H FY2021:
S$4,903m
1H FY2022:
S$5,061m
+0.7% growth

1H FY2021:
S$5,486m
1H FY2022:
S$5,522m
Net Profit
Attributable
to Shareholders
-2.6% decline

1H FY2021:
S$3,712m
1H FY2022:
S$3,616m
+0.3% growth

1H FY2021:
S$2,011m
1H FY2022:
S$2,018m
+6.6% growth

1H FY2021:
S$2,661m
1H FY2022:
S$2,837m

My Observations: I would say both UOB and OCBC are tied in terms of their percentage improvement in their results for the first half of the year (compared to last year) – for UOB, it had the highest percentage improvement in its net interest income, along with having the lowest percentage drop in its net fee and commission income, resulting in it having the highest percentage improvement in its total income; for OCBC, it had the smallest percentage drop in its other non-interest income, and at the same time, having the highest percentage improvement in its net profit attributable to shareholders.

Financial Performance – Q2 FY2021 vs. Q2 FY2022:

DBSUOBOCBC
– Net Interest
Income
+17.5% growth

Q2 FY2021:
S$2,089m
Q2 FY2022:
S$2,454m
+18.1% growth

Q2 FY2021:
S$1,578m
Q2 FY2022:
S$1,863m
+16.4% growth

Q2 FY2021:
S$1,461m
Q2 FY2022:
S$1,700m
– Net Fee &
Commission
Income
-11.5% decline

Q2 FY2021:
S$868m
Q2 FY2022:
S$768m
-2.4% decline

Q2 FY2021:
S$581m
Q2 FY2022:
S$567m
-15.3% decline

Q2 FY2021:
S$563m
Q2 FY2022:
S$477m
– Other Non-
Interest Income
-9.8% decline

Q2 FY2021:
S$632m
Q2 FY2022:
S$570m
+6.2% growth

Q2 FY2021:
S$257m
Q2 FY2022:
S$273m
+28.1% growth

Q2 FY2021:
S$548m
Q2 FY2022:
S$702m
Total Income+5.7% growth

Q2 FY2021:
S$3,589m
Q2 FY2022:
S$3,792m
+11.8% growth

Q2 FY2021:
S$2,417m
Q2 FY2022:
S$2,702m
+11.9% growth

Q2 FY2021:
S$2,522m
Q2 FY2022:
S$2,879m
Net Profit
Attributable
to Shareholders
+6.6% growth

Q2 FY2021:
S$1,703m
Q2 FY2022:
S$1,815m
+11.0% growth

Q2 FY2021:
S$1,003m
Q2 FY2022:
S$1,113m
+27.7% growth

Q2 FY2021:
S$1,160m
Q2 FY2022:
S$1,481m

My Observations: In terms of the 3 banks’ quarterly results, OCBC is the winner here for having a huge percentage improvement in its other non-interest income (and this contributes to the bank also recording the highest percentage improvement in its total income for the quarter under review compared to the same quarter last year.) On top of that, OCBC also recorded the highest percentage improvement in its net profit attributable to shareholders for Q2 FY2022 (compared against Q1 FY2022.)

Key Financial Ratios (Q1 FY2022 vs. Q2 FY2022)

Next, let us take a look at the key financial ratios reported by the 3 banks for Q2 FY2022 ended 30 June 2022, compared against that reported in the previous quarter 3 months ago (i.e. Q1 FY2022 ended 31 March 2022) to find out which bank recorded the strongest improvement:

DBSUOBOCBC
Net Interest
Margin
+0.12pp gain

Q1 FY2022:
1.46%
Q2 FY2022:
1.58%
+0.05pp gain

Q1 FY2022:
1.58%
Q2 FY2022:
1.63%
+0.16pp gain

Q1 FY2022:
1.55%
Q2 FY2022:
1.71%
Return on
Assets
-0.05pp decline

Q1 FY2022:
1.04%
Q2 FY2022:
0.99%
+0.08pp gain

Q1 FY2022:
0.77%
Q2 FY2022:
0.85%
+0.08pp gain

Q1 FY2022:
1.23%
Q2 FY2022:
1.31%
Return on
Equity
+0.3pp gain

Q1 FY2022:
13.1%
Q2 FY2022:
13.4%
+1.1pp gain

Q1 FY2022:
8.8%
Q2 FY2022:
9.9%
+0.09pp gain

Q1 FY2022:
10.6%
Q2 FY2022:
11.5%
Non-Performing
Loans Ratio
+0.0pp

Q1 FY2022:
1.3%
Q2 FY2022:
1.3%
-0.1pp decline

Q1 FY2022:
1.6%
Q2 FY2022:
1.7%
+0.1pp gain

Q1 FY2022:
1.4%
Q2 FY2022:
1.3%

My Observations: Just like its y-o-y results (which we’ve looked at in the previous section), it is a tie again between UOB and OCBC – while both banks saw the same percentage point of improvement in its return on assets (compared to the previous quarter), UOB edged out OCBC in terms of its growth in return on equity, and OCBC edged out in its improvement in non-performing loans ratio.

Which Bank Had the Most Resilient Set of Financial Results?

Looking at the comparison of results (both on a y-o-y as well as on a q-o-q) basis, its a tie between UOB and OCBC for both periods.

Dividend Payouts

Apart from DBS (where the management declares a dividend payout on a quarterly basis), the management of UOB and OCBC declares a dividend payout on a half-yearly basis.

For the first half of the year, DBS’ dividend payout saw a 41.2% jump to 72.0 cents/share, compared to its payout of 51.0 cents/share in the same time period last year (i.e. 1H FY2021) – this was due to the bank’s dividend payout for Q1 FY2021 still under the restriction of the Monetary Authority of Singapore (MAS) to pay out no more than 60.0% of the amount paid out in FY2019 due to the pandemic.

The management of OCBC also increased its dividend payout by 12.0% compared to last year, to 28.0 cents/share, compared to 25 cents/share declared in 1H FY2021.

Finally, UOB’s interim dividend payout remains the same at 60.0 cents/share in both 1H FY2021 as well as in 1H FY2022.

My Observations: In terms of improvement of dividend payouts for the first half of the current financial year (compared against the previous year), DBS’ dividend payout improved the most, followed by OCBC.

Which Singapore Bank is Currently the “Cheapest”?

The following table are the 3 banks’ share prices (as at market close on 04 August 2022), along with their valuations:

DBSUOBOCBC
Share Price$32.41$27.84$12.21
P/E Ratio12.6211.5811.26
P/B Ratio1.451.080.99
Dividend Yield**4.4%4.3%4.8%
** 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 that among the 3 Singapore-listed banks, OCBC is the “cheapest”, due to its P/E and P/B being the lowest, along with its dividend yield being the highest.

On the other end of the spectrum, DBS is currently the most “expensive” among the 3, due to its P/E and P/B ratios being the highest.

Closing Thoughts

Personally, OCBC’s very strong “report card” this time round came as a surprise to me. In terms of my comparison in improvements in its financial performance this time round, the bank is tied with UOB both on a y-o-y, as well as on a q-o-q basis.

As for DBS, while its results edged out slightly compared against UOB and OCBC this time round, but I feel its results is still a resilient one.

Finally, in terms of which bank is currently the “cheapest”, just like in the previous quarters, it is OCBC – due to the bank having the lowest P/E and P/B ratios, and at the same time, having the highest dividend yield among the 3 banks. On the other end, DBS (as usual) is the most “expensive” among the 3 banks, as its P/E and P/B ratios are highest among the 3 banks.

That said, this post is by no means a recommendation for you to go out and buy or sell shares of any of the 3 banks. Everything you’ve just read above is purely for educational purposes only, and as always, 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.

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