DBS Group Holdings Ltd vs. Oversea-Chinese Banking Corp Limited: The Bank With The Faster Growth

Local banks DBS Group Holdings Ltd (SGX: D05) and Oversea-Chinese Banking Corp Limited (SGX: O39) are among the largest banks in the region by assets, so this speaks to their heft in Singapore’s economy.

They each also make up approximately 12% of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI), and are thus important business entities in the stock market.

Last week, I wrote about both banks and looked at them through a value investor’s lens – these articles can be found here and here. This article though, will look at how DBS and OCBC’s banking business have grown over the past five years from 2011 to 2015 to see which has displayed faster growth.

The comparison of the two banks will be done with the use of the following figures: Growth in total income (revenue for the bank), net profit, and book value per share.

DBS has seen its total income increase from S$7.63 billion in 2011 to S$10.92 billion in 2015. This signifies a compound annual growth rate (CAGR) of 9.4% over that timeframe. In comparison, OCBC has seen its total income rise from S$5.66 billion to S$8.72 billion over the same period, which gives a CAGR of 11.4%. From these figures it can be seen that OCBC has come in ahead of DBS in terms of historical revenue growth.

Moving on to net profit, DBS saw its net profit to shareholders (after adjusting for dividends to other equity investments) grow by an average of 10.1% annually from 2011 to 2015; the bank’s profit figure had climbed from S$3.0 billion to S$4.42 billion. OCBC on the other hand, saw its net profit to shareholders (again after adjusting for dividends to preferred shares) climb by 14.7% per year from S$2.22 billion in 2011 to S$3.85 billion in 2015. So, OCBC has once again emerged ahead of DBS by growing its net profit at a faster clip.

Lastly, let’s take a look at both banks’ growth rates in their book values per share. DBS has displayed faster growth here – its reported book value per share has increased from S$11.99 in 2011 to S$15.82 in 2015, equating to a CAGR of 7.2%. Meanwhile, OCBC’s reported book value per share has climbed at a CAGR of ‘just’ 6.7% from S$6.20 to S$8.03 over the same period.

To sum it up, OCBC is the bank with the faster revenue and net profit growth while DBS has done better when it comes to book value growth.

While OCBC has grown at a faster pace than DBS over the past five years in certain aspects and both banks have displayed growth, these might not be the case in the future. Investors should dig deeper into the banks’ strategies and plans for the future before any investing decision can be made.

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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 contributor Esjay owns shares in DBS Group Holdings and Oversea-Chinese Banking Corp.