OREANDA-NEWS. Last week, Singapore’s three listed banks – DBS Group Holdings (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) – reported their first-quarter earnings for 2015.

UOB posted the strongest quarter-on-quarter growth in net interest income for the first three months of 2015 – up 2.8% to \$1.2 billion, which also reflected an 8.3% year-on-year gain. OCBC saw a 2% quarter-on-quarter fall in 1Q15 net interest income to \$1.25 billion, but this was up 15% year-over-year. DBS’s 1Q net interest income of \$1.69 billion was an increase of 1% from the previous quarter and 14% from the year-ago period.

UOB also outperformed its peers in net interest margin (NIM) improvement. The bank’s NIM in 1Q rose 7 bps to 1.76% from the previous quarter, while DBS’s NIM fell 2 bps to 1.69%, and OCBC’s NIM declined 5 bps to 1.62% quarter-on-quarter. NIM is a measure of the difference between the interest income generated by banks and the amount of interest paid out to their lenders, relative to the amount of their interest-earning assets.

UOB’s head of investor relations Jimmy Koh told Bloomberg on 30 April the bank sees 2015 loans growing at mid- to high-single digits, after its net customer loans rose 7.8% to \$199.7 billion in the first quarter.

DBS CEO Piyush Gupta told CNBC on 27 April the bank will see most of the benefit from rising Singapore Interbank Offered Rates (SIBOR) in the second quarter, and it was “safe to say” that net interest margins will improve for the rest of the year. OCBC CEO Samuel Tsien also told a media briefing on 30 April the bank’s net interest margin is expected “to gradually improve” this year.

The SIBOR is a benchmark for interbank loans, mortgages and corporate loans. The three-month rate has more than doubled in the first quarter of 2015 to cross 1%, its highest in nearly seven years. 

Asset quality for the three banks in the first quarter of the year remained stable, with non-performing loan (NPL) levels little changed compared with the fourth quarter and the year-ago period.

OCBC and DBS maintained the best return on equity (ROE) ratio at 13.2% and 12.2% respectively, with these levels rising approximately 200-300 bps in 1Q this year from 4Q 2014. UOB’s ROE was roughly unchanged quarter-on-quarter at 11.1%.

  Net interest income (S\$ bln) YoY % change QoQ % change Net profit (S\$ bln) YoY % change QoQ % change
DBS Group Holdings 1.69 14 1.0 1.27 3.1 51
Oversea-Chinese Banking Corporation 1.25 15 -2.2 0.99 11 26
United Overseas Bank 1.20 8.3 2.8 0.8 1.6 1.9

Source: Company Data

Net Interest Margin (%)

  1Q15 4Q14 1Q14
DBS Group Holdings 1.69 1.71 1.66
Oversea-Chinese Banking Corporation 1.62 1.67 1.70
United Overseas Bank 1.76 1.69 1.70

Source: Company Data

Non-Performing Loans (NPLs) (%)

  1Q15 4Q14 1Q14
DBS Group Holdings 0.9 0.9 1.0
Oversea-Chinese Banking Corporation 0.6 0.6 0.7
United Overseas Bank 1.2 1.2 1.1

Source: Company Data

Return on Equity (ROE) (%)

  1Q15 4Q14 1Q14
DBS Group Holdings 12.2 9.0 12.3
Oversea-Chinese Banking Corporation 13.2 10.6 14.9
United Overseas Bank 11.10 11.3 12.4

Source: Company Data, * Singapore Financial Reporting Standards (SFRS) basis

DBS, OCBC, and UOB have a combined market capitalisation of S\$132.4 billion, making up more than one-quarter of the total market capitalisation of the Financials sector. In the year thus far, these three banks have averaged 2.7% dividend-adjusted returns, and maintain an average dividend yield of 3.0%. In terms of one-year and three-year returns, they have averaged 20.5% and 48.7% respectively.

The average dividend yield of the three banks is roughly on par with the Singapore Fixed Income (SFI) Index at 3.0% and the Straits Times Index’s (STI) dividend yield of around 3.3%, but well above renewed 12-month fixed deposit rates of approximately 1.4%.

These three banks are also part of the 30 constituents that make up the STI, and have recently rallied to a 52-week high. 

The recent performance of the three banks is detailed in the table below. Note that clicking directly on the stock name below will take you to the relevant profile page on SGX StockFacts.

Company Name SGX Code Mkt Cap S\$B % Price Change YTD % Change - Dividend Adj. YTD % Change - Dividend Adj. [1 Year] % Change - Dividend Adj. [3 Years] % Div Yld
DBS Group Holdings
 D05 51.3 1.1 2.5 27.2 65.2 2.8
Oversea-Chinese Banking Corporation
 O39 42.1 1.4 3.1 16.4 34.9 3.4
United Overseas Bank
 U11 39.0 0.3 2.5 18.0 46.1 2.9
Average     0.9 2.7 20.5 48.7 3.0

Source: SGX StockFacts (data as of 5 May 2015)

Company Name SGX Code Last Price (SGD) 30 Day Moving Average (SGD) 200 Day Moving Average (SGD) 52 Week High Price (SGD) 52-Week High Date 52 Week Low Price (SGD)
DBS Group Holdings
 D05 20.700 20.600 19.200 21.230 17/04/2015 16.600
Oversea-Chinese Banking Corporation
 O39 10.570 10.700 10.200 10.920 29/04/2015 9.380
United Overseas Bank
 U11 24.370 23.700 23.200 25.050 27/04/2015 21.400

Source: SGX StockFacts (data as of 5 May 2015)

DBS Group Holdings

DBS Group Holdings provides various commercial banking and financial services in Singapore, Hong Kong, rest of Greater China, South and Southeast Asia, and internationally. The company operates through Consumer Banking/Wealth Management, Institutional Banking, Treasury, and Others segments. DBS Group Holdings was founded in 1968 and is based in Singapore.

With the a market capitalisation of S\$51.3 billion, DBS Group Holdings is the largest capitalised bank in Singapore. The stock trades at a price-to-earnings ratio of 12.8 and price-to-book value of 1.3. DBS Group Holdings has a history of distributing dividends semi-annually. Shares in the stock went ex-dividend on 27 April, distributing 30 cents per share in dividends. The five substantial shareholders are Temasek Holdings (Private), Norges Bank Investment Management, BlackRock, Inc., Colonial First State Asset Management (Australia), and Franklin Resources, Inc.

Oversea-Chinese Banking Corporation

Oversea-Chinese Banking Corporation provides a range of financial services in Singapore, Malaysia, Indonesia, and Greater China. As of December 31, 2014, it had a network of approximately 630 branches and representative offices in 18 countries and territories. The company was founded in 1912 and is based in Singapore.

Oversea-Chinese Banking Corporation is the second largest capitalised bank in Singapore with a market capitalisation of S\$42.1 billion. The stock trades at a price-to-earnings ratio of 10.4 and price-to-book value of 1.3. Oversea-Chinese Banking Corporation has a history of distributing dividends semi-annually. Shares in the stock went ex-dividend on 30 April, distributing 18 cents per share in dividends. The five substantial shareholders are Selat (Pte), Aberdeen Asset Management PLC, Lee Foundation States Of Malaya, Singapore Investments (Pte.), and BNP Paribas Securities Corp.

United Overseas Bank

United Overseas Bank provides various financial products and services. As of December 31, 2014, the company had a network of approximately 500 branches and offices in 19 countries and territories in the Asia Pacific, Western Europe, and North America. United Overseas Bank was founded in 1935 and is headquartered in Singapore.

United Overseas Bank is the third largest capitalised bank with a market capitalisation of S\$39.0 billion. The stock trades at a price-to-earnings ratio of 12.4 and price-to-book value of 1.3. United Overseas Bank has a history of distributing dividends semi-annually. Shares in the stock went ex-dividend on 29 April, distributing 55 cents (50 cents + 5 cents) per share in dividends. The five substantial shareholders are Wee Cho Yaw, Wee Investments, Wah Hin & Co, Tai Tak Estates Sendirian Berhad, and BNP Paribas Securities Corp.