5 Simple Charts To Summarize Oversea-Chinese Banking Corp Limited’s Business Performance In The Last 5 Years

Oversea-Chinese Banking Corp Limited (SGX: O39) is one of the three main banks in Singapore. It is also one of Southeast Asia’s largest banks with total assets of S$429.6 billion currently.

We can’t invest solely by looking at the rear-view mirror. But, it’s still important to look into a company’s historical performance to gain some perspective on the growth potential of the company.

Here are five simple charts that will give us a good overview of OCBC’s business performance over the last five years.

1. On total income

Total income for a bank is analogous to revenue for companies in other industries. In OCBC’s case, its total income is made up of net interest income (which comes from its lending activities), and non-interest income (which comes from a wide variety of financial services, such as brokerage, wealth management, credit cards, investment banking, and more).

Source: OCBC 2016 annual report

As the chart above shows, OCBC’s total income in 2016 was 7% higher than in 2012.

2. On operating expenses

Banks also have operating expenses, and OCBC is no exception. Here’s a chart showing OCBC’s operating expenses from 2012 to 2016:

Source: OCBC 2016 annual report

We can see that OCBC’s operating expenses have been creeping up. In fact, it has grown in each year for the timeframe under observation, and has increased a total of 41% from 2012 to 2016.

3. On earnings per share

The chart below shows OCBC’s earnings per share:

Source: OCBC 2016 annual report

OCBC’s earnings per share has dwindled by a total of 25% in the last five years. This is hardly surprising, given that operating expenses were up by 40% but total income grew by only 7%.

4. On the return on equity

The return on equity gives us important insight on a company’s ability to generate a profit using the shareholders’ capital it has.

Source: OCBC 2016 annual report

Given the decline in OCBC’s earnings per share from 2012 to 2016, its return on equity will likely trend in the same direction too. This is clearly shown in the chart just above. OCBC’s return on equity has fallen from 17.9% in 2012 to 10% in 2016.

5. On dividends

This is a chart showing OCBC’s dividend per share:

Source: OCBC 2016 annual report

Despite OCBC’s  earnings per share declining from 2012 to 2016, the bank’s dividend has increased from 33 cents to 36 cents over the same period.

In the absence of a significant decline in its earnings per share, OCBC should be able to at least sustain its dividend at the 2016 level, since its payout ratio (dividends as a percentage of earnings) was only 44% in that year.

In sum, we can see that OCBC’s financial performance has been trending down in the last five years. Yet, the bank is still in a good position to sustain its dividend given the currently low payout ratio.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's 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.