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Which Singapore Bank Stock Should Investors Buy Now? (Part 1)

In Singapore, the three major listed banks 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, all three banks have seen their share price fall by more than 20% from their respective peaks.

The recent decline in the banks’ shares might draw some interest from investors. In particular, investors might want to know which bank among the three is the one they should consider investing in now. Unfortunately, there is no easy answer. As such, I would like put all three banks side-to-side for a direct comparison.

In this article, I will compare the recent quarterly earnings performance of the trio of banks. The objective is to find out which bank performed the best financially.

The showdown

Let’s begin with DBS.

For the third quarter ended 30 September 2018, DBS saw its income climb 10% from a year ago to S$3.4 billion. Net interest income went up 15% year-on-year to S$2.3 billion, driven by improvements in net interest margin and loan volume growth. Similarly, net fee income increased 1% to S$695 million, led by growth in most areas, but offset by a decline in investment banking fees. As a result, net profit jumped 72% to S$1.4 billion.

Overall, it was a strong performance from DBS.

Next, we have OCBC.

For its third quarter, OCBC reported that total income grew by 5% from a year ago to S$2.5 billion. Net interest income grew 9% year-on-year to S$1.5 billion due to broad-based growth in customer loans and an increase in net interest margin. Non-interest income, on the other hand, was flat at S$1.0 billion. Higher total income resulted in net profit going up by 12% year-on-year to a record S$1.2 billion.

Similarly, OCBC delivered a strong performance for the quarter. Yet, its growth in total income and net profit are lower than that of DBS.

Lastly, we will look at UOB’s performance.

For the third quarter ended 30 September 2018, UOB reported that total income grew by 8% from a year ago to S$2.3 billion. Net interest income (income from loans) grew 14% year-on-year to S$1.6 billion, driven by improvement in net interest margin and loan volume growth. Net fee income was up by 2% year-on-year to S$484 million. Higher total income, as well as lower allowances, resulted in higher net profit of 17% year-on-year to S$1.0 billion.

Similar to its peers, UOB has delivered an improved quarterly earnings update.

Conclusion

In sum, all three banks performed strongly in their latest quarters. Among the three, DBS came in ahead with its higher growth rates, both in terms of total income and net profit.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Holdings Ltd, Oversea-Chinese Banking Corporation Limited and United Overseas Bank Ltd.