3 Things Investors Should Know That Singapore’s Three Bank Stocks Have In Common Now

In Singapore’s stock market, there are really only three choices for investors when it comes to bank stocks. The trio would be DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11),

The three banks have their differences (for example, OCBC has a very sizeable insurance arm whereas the other two don’t), but being banks, there are also some important similarities they share. Here are three:

1. Consistently profitable over the last decade

One of the defining moments in finance over the last decade was the Great Financial Crisis of 2007/09. It was a period which saw many financial institutions around the world crumble, with some simply going bankrupt.

But for Singapore’s three banks, they managed to survive the episode admirably. Here’s a chart showing how their profits have changed from 2005 to 2015:

DBS, OCBC and UOB net income from 2006 to 2015
Source: S&P Global Market Intelligence

As you can see, the three banks in Singapore were still turning in a healthy level of profit even during the crisis period.

2. A history of consistently paying a dividend

Here’s a chart showing the three banks’ ordinary annual dividends from 2005 to 2015:

DBS, OCBC and UOB annual ordinary dividend from 2006 to 2015
Source: S&P Global Market Intelligence

In a similar picture to the first chart seen earlier, DBS, OCBC, and UOB have logged up a track record of consistently paying an annual dividend.

3. Low valuations relative to history

All three banks also currently have price-to-book (PB) ratios which are at the lower end of their respective valuation ranges over the last five years. This is shown clearly in the chart below:

image (12)
Source: S&P Global Market Intelligence

At the moment, DBS, OCBC, and UOB have PB ratios of 0.91, 1.01, and 0.97 respectively.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.