United Overseas Bank Ltd vs. Oversea-Chinese Banking Corp Limited: Which Bank Grew Faster?

United Overseas Bank Ltd (SGX: U11) and Oversea-Chinese Banking Corp Limited (SGX: O39) are two well-known banks in Singapore. Both of them also play an important role in the Singapore economy given their heft (they have assets of over S$300 billion each) and their business of providing essential banking services.

I had recently penned an article in which I compared OCBC with DBS Group Holdings Ltd (SGX: D05) to see which bank managed to grow its business at a faster pace over the past five years. OCBC turned out to have had faster growth than DBS.

In a similar fashion, I’d like to pit UOB against OCBC to see which bank would come out on top. While investors should never invest by looking only at the rear-view mirror, a study of a company’s history is still important homework as it can help us form a basis for thinking about the future.

With that being said, the comparison of UOB and OCBC will be done over three different but important financial metrics: Their growth in total income (revenue for the bank), net profit, and book value per share.

As I have covered OCBC’s financials in my previous article I referenced above, I shall just state what I had previously shared about the bank:

  • Total income growth: A compound annual growth rate (CAGR) of 11.4% from S$5.66 billion in 2011 to S$8.72 billion in 2015.
  • Net profit growth: A CAGR of 14.7% from S$2.22 billion in 2011 to S$3.85 billion in 2015.
  • Book value per share growth: A CAGR of 6.7% from S$6.20 in 2011 to S$8.03 in 2015.

Let’s look at UOB next. The bank’s total income has stepped up by 9.0% annually from S$5.70 billion in 2011 to S$8.05 billion in 2015. It’s worth noting that both OCBC and UOB’s total income growth had come from increases in both interest as well as non-interest income. This goes to show that both banks have managed to grow their traditional lending business (the interest income) as well as other banking services such as wealth management (the non-interest income).

As for net profit to shareholders, the figure for UOB has climbed from S$2.22 billion in 2011 to S$3.10 billion in 2015, which works out to a CAGR of 8.7%.

Finally, we have the book value per share. UOB has grown its book value per share by 7.8% annually from S$13.23 in 2011 to S$17.84 in 2015.

To sum up all the numbers I have here, OCBC has come out on tops once again by growing its total income and net profit at a faster clip. UOB has a better showing when it comes to its book value per share.

While OCBC has managed to grow faster than its peers in the past, this does not mean it will be true in the future. It’s also worth pointing out that all we’ve seen here about UOB and OCBC should not be taken as the final word on their investing merits. There’s a lot more homework to do 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, Oversea-Chinese Banking Corp, and United Overseas Bank.