Comparison of DBS, OCBC and UOB – FY 2012

All three local banks had released their full year financial results. The table below shows comparisons using some key ratios and results.

  DBS OCBC UOB
Net Profit $3,809m $3,993m $2,803m
EPS $1.39 + $0.79 * $1.72
ROE 11.2% + 12.5% * 12.4%
ROA 0.97% + 1.19% * 1.18%
Dividend (Total) 56 cents 33 cents 70 cents
Dividend payout ratio 40.2% + 41.7% * 40.7%
       
Average Share price – 2012 $13.98 $9.00 $17.69
Dividend yield 4.00% 3.67% 3.96%
Net Asset Value per share $12.96 $7.95 ** $16.89 ^
Price Earnings Ratio 10.1 + 11.4 * 10.2
Price to Book ratio 1.07 1.13 1.04
       
Share Price – 31.12.2012 $14.84 $9.73 $19.81
Current share price 12.4.2013 $15.67 $10.63 $20.37

Notes:

+ Exclude one-time items and goodwill charges for DBS

* Based on core earnings of OCBC

** NAV of OCBC is after valuation surplus

^ based on revalued NAV for UOB

Dividend yield, Price Earnings ratio and Price to Book ratio are calculated using average share price for 2012.

For meaningful comparison across banks, only core earnings (excluding one-off or non-recurring items) are used. Net asset value per share is based on revalued assets.

Net Profits

Net profit for OCBC was the highest ($3,993 m) followed by DBS ($3,809 m) and UOB ($2,803 m).

Core net profit before divestment gains of OCBC rose 24% to $2,825 m. Divestment gains of OCBC amounted to $1,168 m. DBS increased its net profit by 26.0% and UOB increased its net profit by 20.5%. All three local banks performed well with more than 20% increase in net profit in 2012 compared to 2011.

DBS had the lowest Return on Equity (ROE) at 11.2%, UOB’s ROE was 12.4% and OCBC’s was 12.5%.

In terms of Return on Asset (ROA), DBS again had lowest return at 0.97% and UOB and OCBC were close to each other at 1.18% and 1.19% respectively.

Dividend

Dividend payout ratio for all three banks are in the region of 40% of core earnings per share. OCBC (41.7%), UOB (40.7%) and DBS (40.2%).

In terms of dividend yield based on average share price in 2012, DBS tops at 4.00% followed by UOB (3.96%) and OCBC (3.67%). OCBC did not pay out special dividend on account of one-time divestment gain. This gain will be used for future expansion plan of the bank.

Price Earnings Ratio and Price to Book ratio

Using average share price in 2012, the Price Earnings ratio and Price to Book ratio are computed. OCBC had the highest ratios compared to UOB and DBS.

Table below shows both ratios using latest share prices of three banks as at last Friday:

  DBS OCBC UOB
Current share price 12.4.2013 $15.67 $10.63 $20.37
Price Earnings Ratio 11.2 13.4 11.8
Price to Book ratio 1.20 1.33 1.20

After full year financial results were released and in anticipation of results of Quarter 1 of 2013, share prices of all banks had run up from year-end share prices. OCBC still had the highest ratios compared to UOB and DBS. Share investors are willing to pay more for OCBC.

Other Key Operating Ratios:

  DBS OCBC UOB
Net Interest Margin 1.70 1.77 1.87
Non-performing loan ratio 1.2% 0.8% 1.5%
Total Capital Adequacy Ratio 17.1% 18.5% 19.1%
Non interest income to total income 34.5% 43.6% 39.7%
Loans to deposits 86.6% 86.2% 84.0%
Cash & Cash equivalent $10.9 b $16.3 b $28.2 b

UOB has the best Net Interest Margin at 1.87%. DBS has the lowest.
UOB has the worst Non-performing loan ratio at 1.5%. OCBC has the lowest.
Total Capital Adequacy ratio (CAR) is the highest for UOB. DBS is the lowest.
OCBC generated most non-interest income compared to the other two banks. OCBC has the highest non-interest income as a proportion of total income (43.6%).
DBS Bank gave out most customer loans as a percentage of customer deposits (86.6%). OCBC is close second and UOB is the lowest.

UOB has the most cash and cash equivalent amount at $28.2 billion with DBS having the lowest ($10.9 b). UOB is flushed with cash and cash equivalent amount. How will these banks use their substantial cash & cash equivalent amounts in the future?

Copyright © 2013, limkimtong for Living Investment

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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