UOB Financial Results

UOB released its financial results for 2008 today, the last of the three local banks to do so.

 

UOB results are compared with DBS and OCBC results below.

 

                                    UOB            DBS            OCBC

Net Profit                     $1,937m    $1,929m    $1,749m

                                    (-8.2%)        (-15%)        (-16%)

 

Shareholders’ Funds  $15,573m    $24,003m    $18,560m

 

No. of ord shares      1,505m      2,281m1       3,126m 

 

Net Assets per share     $8.90         $10.14         $5.18

 

Share price                   $9.99         $7.84           $4.48

at 27 Feb

 

Off-balance sheet items:

Financial derivatives    $368b        $1,704b       $365b

 

                                                UOB     DBS      OCBC

Net Interest Margin                  2.45      2.04      2.47

Non-interest/total income        31.9      28.7      34.4

Cost/income ratio                   39.0      43.3      43.7

Loans/deposit                          84.5      74.5      84.8

NPL2 ratio                                 2.0        1.5        1.5

Returns on assets                      1.07%   0.84%   1.05%

Returns on equity                     12.2%   10.1%   9.9%

Tier 1 CAR3                               10.9      12.2 4    14.9

Total CAR                                15.3      16.2 4    15.1

 

Notes:

Figures in brackets are changes over previous year.

1 DBS shares after rights issued on 30 January 2009

2 Non-performing loans

3 Capital Adequacy Ratio

4 CAR of DBS after rights issued on 30 January 2009

 

Comments

 

Based on the financial indicators highlighted above, UOB fared better than the other two.  Net profit for 2008 for UOB only dropped 8.2% compared with 15% and 16% decline for DBS and OCBC respectively. The Returns on Assets ratio was strongest for UOB at 1.07% versus OCBC’s 1.05% and DBS’ 0.84%. Using Returns on Equity (ROE), UOB’s was highest at 12.2%. DBS’ was 10.1% and OCBC’s was 9.9%. UOB managed expenses best at 39% Cost to Income ratio against 43.3% for DBS and 43.7% for OCBC.

 

Net Interest Margin (interest spread between interest earned over interest paid) was highest for OCBC at 2.47% with UOB at 2.45% and lowest for DBS at 2.04%. OCBC earned the highest non-interest income relative to total income of 34.4%, UOB’s was 31.9% and DBS’was 28.7%.

 

In the case of Non-performing loans (NPL), UOB was the worst perfomer at ratio of 2.0%; higher than OCBC and DBS at 1.5% each. On capital adequacy, UOB was the weakest, but by no means a concern as all the 3 banks were well capitalised based on the stipulations laid down by the Monetary Authority of Singapore.

 

DBS had the highest off-balance sheet item with regard to exposure to financial derivatives at $1.7 trilion versus $368b for UOB and $365b for OCBC.

 

In terms of trading these stocks on SGX as at 27 February 2009, UOB was trading at 1.12 Price to Book; OCBC was 0.86 and DBS was 0.77.

 

Written on 2/27/2009 10:23 PM

 

Copyright © 2009, the author known as LKT in Singapore.

 

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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