Singapore prides itself on being a financial hub with access to high-quality banking, finance and Fintech companies as well as talent within the space. Our trio of local banks – DBS (SGX: D05); UOB (SGX: U11); and OCBC (SGX: O39) – are also some of the biggest banks in South East Asia. They are also often cited as among the best, safest, strongest, or most innovative banks in the world as well.
Apart from boosting Singapore’s banking and finance hub credentials, DBS, UOB and OCBC are also among the largest companies listed on the Singapore Exchange (SGX). Together, they comprise about 46% of the Straits Times Index (STI) – Singapore’s benchmark index.
| Banks | Market Cap |
| DBS (SGX: D05) | $79.7 billion |
| OCBC (SGX: O39) | $55.5 billion |
| UOB (SGX: U11) | $47.0 billion |
| Total | $182.4 billion |
(As of 12 May 2023)
This means that when we invest in the STI, nearly half of our portfolio would be exposed to just the three local banks. Another thing is that the three local banks are known for also paying relatively good and stable dividends to investors.
An increase in market interest rates appears to be positive for the three local banks and will likely increase their net interest margins. That’s because as interest rates increase, banks are able to charge more for lending and financing. Of course, it also means they may have to pay higher interest on the amount they borrow. However, in general, the additional income they get from lending should be higher than the interest costs they pay for borrowing.
| Banks | Share Price (as of 12 May 2023) | Dividends Per Share In FY2022 | Dividend Yield Based On Current Share Price |
| DBS (SGX: D05) | $30.66 | FY2022: $2.00
1Q2022: $0.36 1Q2023: $0.42 |
5.5% (assuming quarterly dividends of $0.42) |
| OCBC (SGX: O39) | $12.25 | FY2022: $0.68
1H2022: $0.28 |
5.5% |
| UOB (SGX: U11) | $27.77 | FY2022: $1.35
1H2022: $0.60 |
4.8% |
Information is accurate as of 12 May 2023. Do note that DBS pays quarterly dividends while OCBC & UOB pay dividends semi-annually. The dividend yield calculation for DBS assumes quarterly dividends of $0.42.
Read Also: Complete Guide To Investing In The Straits Times Index (STI) ETFs In Singapore
DBS (SGX: D05)
DBS (SGX: D05) is the largest bank in Singapore and also Southeast Asia. It has operations in 18 markets including Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Myanmar, Philippines, Taiwan, Thailand, UEA, UK, USA and Vietnam.
Currently, DBS is trading at $30.66, giving it a market capitalisation of about $79.7 billion.
In FY2022, DBS achieved a net profit of $8.2 billion and a return on equity of 15.0%, a record high. Total income grew 16% to $16.5 billion as the net interest margin was boosted by higher interest rates and a decline in offset non-interest income due to market volatility.
1Q2023 net profit increased to a record $2.5 billion, 43% higher than a year ago. Total income in 1Q2023 also rose 34% to $4.9 billion on the back of a higher net interest margin and healthy business momentum. In line with its strong performance, DBS announced a quarterly dividend of $0.42 in 1Q2023. It also highlighted that its ROE for 1Q2023 is at a record high of 18.6%.
At the start of last year, in January 2022, DBS announced that it will be acquiring the consumer banking business of Citigroup in Taiwan, and will pay Citi cash for the net assets of Citi Consumer Taiwan plus a premium of $956 million.
OCBC (SGX: O39)
OCBC also has a strong regional and global presence, in Australia, China, Hong Kong, Indonesia, Japan, Myanmar, South Korea, Taiwan, Thailand, UK, USA and Vietnam.
Currently trading at $12.25, OCBC has a market capitalisation of $55.5 billion.
For FY2022, OCBC reported a net profit grew 18% to a new high of $5.8 billion. This was largely driven by higher net interest income and lower allowances.
For 1Q2023, OCBC also recorded a net profit of $1.88 billion, 39% higher compared to the same period last year and 44% more compared to 4Q2022. Total income was up 27% to $3.35 billion compared to the same period last year. This is attributed to a rise in non-interest income and lower allowance. OCBC’s ROE is at 14.7%.
Read Also: Step-By-Step Guide To Investing Using Regular Shares Savings (RSS) Plan In 2022
UOB (SGX: U11)
UOB (SGX: U11) also operates regionally and in major global financial centres including Australia, Brunei, Canada, China, France, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, Philippines, South Korea, Taiwan, Thailand, UK, USA and Vietnam.
Currently trading at $27.77, UOB has a market capitalisation of about $47.0 billion.
For FY2022, UOB reported a record net profit of $4.6 billion, an 18% increase compared to the year before. Net interest income leaped 31% due to a 30 basis points improvement in net interest margin and 3% loan growth rate.
For 1Q2023, UOB posted another record net profit of $1.6 billion for the quarter, 60% more than the same period last year.
Net interest margin expanded 56 basis points driving net interest income up by 43%. Non-interest income surged on record high trading and investment income, which more than offset the decline in net fee and commission income. The total income for 1Q2023 is $3.52 billion, an increase of 49% compared to the same period last year.
The big news for UOB investors in 2022 is that UOB will be acquiring Citigroup’s consumer business in Indonesia, Malaysia, Thailand and Vietnam for about $4.915 billion. Excluding one-off transaction costs, UOB believes the acquisition will be expected to be immediately accretive to UOB’s earnings per share (EPS) and return on equity (ROE).
The post DBS (D05); UOB (U11); OCBC (O39): Singapore Banks Dividend Yield And Share Price Performance appeared first on DollarsAndSense.sg.
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