Can You Guess Which Bank Stock In Singapore Is The Cheapest At The Moment?

There are three big banks listed in Singapore and they are namely DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11).

For investors interested in the banking sector, it may be worthwhile to think of which of the trio’s the cheapest at the moment. An easy way to find out would be to compare the banks’ current price-to-book (PB) ratio.

Banks' valuation table (1)

Source: S&P Capital IQ

As the table above shows, UOB may be considered the cheapest of the lot on that basis. But, we can go one step further and compare each bank’s current valuation with their respective long-term historical averages.

Banks' valuation table (2)

Source: S&P Capital IQ

The results are displayed in the table just above and you can see that UOB comes up tops again. Its current PB ratio of 1.26 has the largest discount against its long-term average multiple to book of 1.50.

A Fool’s take

Given what we’ve seen, UOB may be the bank which pleases bargain hunters the most. But while a low valuation can be a signal for a potential investing opportunity, it’d still pay for investors to consider the bank’s future prospects as it’s a company’s business performance which ultimately dictates how well its shares does.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn't own shares in any companies mentioned.