SGX Market Updates

STI Banks to Pay S$11.5B in Dividends for FY23

Publish date: Thu, 29 Feb 2024, 04:45 PM
  • The STI Banks have proposed to pay final dividends (subject to shareholder approval) that take the total combined dividend amounts for the trio to S$11.5 billion, for their full 2023 Financial Year (FY23). Based on end of FY23 share prices, this generated a 6.0% average dividend yield for the trio.
  • While the trio are STI heavyweights, they also maintain a combined 15% weightage in the FTSE ASEAN Index. This combined weightage notches up to 18% for the FTSE ASEAN Target Dividend Index, which is designed to achieve 100% dividend yield increase compared to the FTSE ASEAN Index.
  • The trio’s combined 4Q23 Net Interest Income was S$8.3 billion, the fifth consecutive quarter of combined NII above S$8.0 billion, with Net Interest Margins driving the FY23 increases. The Fed Reserve began its hiking cycle in Mar 2022, with hikes continuing to Jul 2023. Present majority expectations are for the Fed to remain on hold until the Jun FOMC.

 DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") have averaged 43% total returns since the end of 2019, bringing their average 10-year annualised total returns to 9% as of 28 Feb. The trio maintain a combined 46% weightage within the Straits Times Index (“STI”). Since the end of 2019, the trio have respectively generated the fourth, fifth and sixth highest total returns among the current STI constituents.

The trio of STI banks also maintain a combined 15% weightage in the FTSE ASEAN Index. The combined weightage notches up to 18% for the FTSE ASEAN Target Dividend Index, which is designed to achieve 100% dividend yield increase compared to the FTSE ASEAN Index, while addressing concerns about turnover, yield trap, concentration, capacity, and diversification.

FY23 (ended 31 Dec) financial results have been released for DBS, OCBC and UOB, with all three banks reporting record net profits. For the full FY23, DBS is set to pay total dividends in the vicinity of S$4.95 billion, OCBC is set to pay dividends in the vicinity of S$3.69 billion and UOB is set to pay dividends in the vicinity of S$2.84 billion. Note the final dividend payments are subject to shareholder approvals at upcoming AGMs. Relative to the closing prices of the trio on 31 December, the distribution amounts generated a 6.0% average dividend yield for the trio.

STI Banks


FY23 Total Dividends [Final + interim(s)] per share S$

31 Dec 2023

Share Px S$

Indicative Yield for FY23 based on 31 Dec 2023 Share Px

Indicative Amount in Total Dividends for FY23 S$B



















Source: SGX, Company Announcements, Refinitiv (Data as of 28 Feb 2024). Note recently proposed final dividends are subject to shareholder approval.

The three STI banks currently maintain a combined market capitalisation of S$193 billion. As of 28 Feb, the trio averaged S$260 million a day in combined trading turnover for the 2024 year thus far. For FY23, the combined total income of the trio increased to S$48 billion, with the trio averaging Return on Equity (ROE) of 15.3%.

STI Banks


Mkt Cap (S$M)

31 Dec 2019 to 28 Feb 2024 Total Return (%)

FY23 ROE (%)

FY23 Total Income Growth (%)

FY23 Net Profit Growth (%)

Common Equity Tier 1 Capital Adequacy Ratio (%)

FY23 NPL Ratio (%)





































Source: SGX, Company Announcements, Refinitiv (Data as of 28 Feb 2024). Note OCBC’s Group insurance results are prepared under SFRS(I) 17 basis and comparatives were restated.

Breaking down the FY23 total income, the trio reported S$33 billion of Net Interest Income (NII) and S$15 billion of Non-Interest Income (NOII). The combined NII was up 22% from FY22, while the combined NOII of the trio was up 18% from FY22. Among the Sector highlights, both DBS and OCBC saw their FY23 NII gain 25% from FY22, and on the NOII side, UOB saw its FY23 NOII gain 32% from FY22. At the end of FY23, the non-performing loan (NPL) ratios stood at 1.1% for DBS, 1.0% for OCBC and 1.5% for UOB, with the trio averaging a Common Equity Tier 1 (CET-1) Capital Adequacy Ratio of 14.6%.

Net Interest Margins (NIMs) drove the trio’s NII increases in FY23. DBS reported a group-level annualised NIM above 2% in FY23 from below 2% in FY22, while OCBC and UOB also reported annualised NIMs above 2% in FY23 from below 2% in FY22. Note that NIM represents annualised NII as a percentage of total interest-bearing assets. For instance, in FY23, UOB recorded S$22 billion in interest from an average balance of S$463 billion in interest-bearing assets, while also seeing S$13 billion of interest requirements on its balance of interest-bearing liabilities. The net interest of S$9 billion for the year proportionate to the S$463 billion in the average balance of interest-bearing assets, represented a NIM of 2.09%.

Combined NII for the trio in 4QFY23 was S$8.3 billion, representing the fifth consecutive quarter that combined NII was above S$8.0 billion. As illustrated below, prior to 2QFY22, the three banks had reported as many as 17 consecutive quarters of combined NII between S$4.0 billion and S$5.0 billion, before higher interest rates saw the combined quarterly NII increase to above S$6.0 billion in 2Q22, above S$7.0 billion in 3Q22, and surpassing S$8.0 billion in 4Q22.

market update

The Federal Reserve began the current Fed Funds Rate hiking cycle in March 2022, with rate hikes continuing to July 2023. Current market expectations are that the FOMC will almost certainly keep the Fed Funds Rate unchanged when it meets on 20 March, in addition to greater expectations for the FOMC to begin cutting rates at the latter 12 June FOMC, rather than the earlier 1 May FOMC.

The FY23 results also revealed customer loans were relatively stable in FY23. Expressed in constant currency terms, gross loans at the end of FY23 were up 2% for OCBC and UOB, and up 1% for DBS. OCBC noted that FY23 loan growth was driven by ‘both non-trade corporate and housing loans, which compensated for weak trade loan demand’. Meanwhile, DBS noted in the media briefing (available on the DBS Investor Relations website) that ‘while trade loans and housing loans grew by slightly over $1 billion combined, the growth was offset by a decline in non-trade corporate loans from increased repayments due to the high interest rate environment’. 

DBS reported its FY23 net profit rose 26% to a record S$10.3 billion, with its FY23 ROE rising to a new high of 18.0%. Its total income exceeded S$20 billion for the first time, setting a record of S$20.2 billion for FY23, a 22% increase from FY22. Commercial Book total income rose 27% to S$19.5 billion as the Commercial Book NIM expanded 65bps to 2.76% from higher interest rates. The Commercial Book’s FY23 net fee and commission income increased 9% from FY22, led by higher fees from cards and wealth management. CEO Piyush Gupta maintained guidance for FY24 NII to be around FY23 levels, citing NII to be supported by the full-year impact of Citi Taiwan’s consolidation, while he again relayed the expected trade-off between NIM and loan growth. The CEO presentation can be found here.

OCBC reported its FY23 net profit rose 27% from FY22 to a record S$7.02 billion. The Group’s ROE for FY23 improved to 13.7%, from 11.1% in FY22. Total income also rose by 20% from FY22 to a new high of S$13.5 billion, lifted by growth across the Group’s diversified income streams. NII was also at a record high, up 25% from FY22 to S$9.65 billion, and trading and investment income also higher. OCBC’s FY23 NOII rose 7% from FY22, to S$3.86 billion, largely attributed to improved trading income and investment gains. Net fee income fell 3% to S$1.80 billion from S$1.85 billion in FY22 as OCBC noted “higher fees from credit card and loan-related activities were more than offset by lower wealth-related fees as customer activities remained subdued amid global risk-off investment sentiments”. CEO Helene Wong noted the bank was targeting an ROE between 13% and 14% in FY24, and while a global growth slowdown is anticipated this year, OCBC expects Asia to perform better. The CEO presentation can be found here.

UOB reported its FY23 core net profit grew 26% from FY22, to a record S$6.1 billion, driven by strong income growth and an enlarged customer franchise. While the core net profit excluded the one-off expenses related to the acquisition of Citigroup’s Malaysia, Thailand, Vietnam and Indonesia consumer banking business, including these expenses also saw net profit set a record high at S$5.7 billion. Core ROE which excludes the aforementioned expenses came to 14.2% in FY23. NII rose 16% to S$9.7 billion on the back of the 23bps expansion to NIM. Net fee income grew 4% to S$2.2 billion led by higher credit card and wealth fees, although UOB noted this was moderated by softer loan-related fees. The bank also highlighted that FY23 Group Wholesale Banking income grew 14% to S$7.1 billion, led by strong growth in the transaction banking business, which now accounts for more than half of the Group Wholesale Banking income. UOB’s FY23 cross-border income increased 9% from FY22 levels, which means revenue reported to outside of Singapore contributed 42.9% of FY23 overall core operating profit, up from 41.7% in FY22. UOB CEO Wee Ee Cheong maintained that he is optimistic about ASEAN’s potential, driven by improved domestic demand, robust tourism recovery and strong investment flows into the manufacturing sector as companies reconfigure their supply chains. The CEO presentation can be found here.

STI Banks are also tradable as Daily Leveraged Certificates (DLCs). Investors have to be SIP-qualified to trade DLCs, and more on the characteristics and risks of these portfolio products can be found here. For the month of Feb, DLCs that have STI banks as their underlying stock have seen a pick-up in retail trading activity. Feb-to-date retail trading turnover in OCBC-based DLCs is up 18% from Jan, chalking up the highest trading turnover in OCBC-based DLCs since Dec 2022, with OCBC 5xLongSG250226 (DIOW) being the most actively traded counter. Retail trading turnover in DBS-based DLCs is also up 17% in the Feb month-to-date from Jan levels, with DBS 5xLongSG250226 (DENW) being the most actively traded counter.

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