In Singapore’s stock market, the three major bank shares are DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11). After peaking in April this year, the three banks have seen their share prices decline by around 20% each from their respective highs.
The recent fall in DBS Group, OCBC, and UOB’s share prices may have led to some investors wondering which bank they should consider investing in now. There’s no easy answer, but I want to directly compare the important business and valuation aspects of the three banks in a mini article-series.
This article is the second in the series and it compares the long-term track record of growth of the banking trio; the objective is to find out which bank did a better job in growing its business over a five-year period. The first article in this series compared the most recent quarterly earnings updates of the three banks.
DBS Group shall go first. From 2013 to 2017, DBS’s total income grew from S$8.9 billion in 2013 to S$11.9 billion in 2017, up a total of 34%. Its net profit attributable to shareholders performed similarly, climbing by 27% from S$3.7 billion to S$4.4 billion over the same timeframe.
Next up is OCBC. For the same period as DBS, OCBC’s total income and net profit attributable to shareholders grew by very similar magnitudes. The former increased by 45% from S$6.6 billion in 2013 to S$9.6 billion in 2017, while the latter increased by 46% from S$2.8 billion to S$4.1 billion.
Then, we have UOB. In the five years from 2013 to 2017, UOB’s total income was up 33% from S$6.7 billion to S$8.9 billion. But, its net profit attributable to shareholders had stepped up by just 13% in that period, from S$3.0 billion to S$3.4 billion.
The Foolish conclusion
It’s fair to say that all three banks managed to deliver long-term growth. But among the three, it is OCBC that produced the highest growth rates in total income and net profit attributable to shareholders from 2013 to 2017. Interestingly, it was UOB that had the best performance when I compared the three banks’ most recent quarterly earnings updates in my first article in the series.
With that, stay tuned for the next installment of my series as I try to discover which bank share investors should consider investing in now – the latest piece will be coming soon! [Editor’s note: The third and final article in this series has been published. It can be found here.]
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommendations for DBS Group, Oversea-Chinese Banking Corporation, and United Overseas Bank.