UOB, DBS and OCBC Share Prices Head Up After Reporting Record Profits: Which Bank Should You Pick?

smart investor2022-11-10

It’s a sign of the times.A surge ininterest ratescaused by four consecutive rate hikes of 0.75 percentage points each from the US Federal Reserve has led to all three local banks reporting record ...

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Comments

OO_898
2022-11-11
OO_898
Like
Natnaiviv
2022-11-10
Natnaiviv
Dbs is the leader of the 3 banks but the price is also very high so room for growth is limited
Desmond669
2022-11-10
Desmond669
Jhj
Moonshot
2022-11-10
Moonshot
Becareful. If you have missed the boat then it is pointless trying to hop into one right now. Paying an inflated price for a trend that will reverse on the whim and fancy of fed is not a great idea.

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class=\"meta\">\n\n\n2022-11-10 10:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://thesmartinvestor.com.sg/uob-dbs-and-ocbc-share-prices-head-up-after-reporting-record-profits-which-bank-should-you-pick/><strong>smart investor</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It’s a sign of the times.A surge ininterest ratescaused by four consecutive rate hikes of 0.75 percentage points each from the US Federal Reserve has led to all three local banks reporting record ...</p>\n\n<a href=\"https://thesmartinvestor.com.sg/uob-dbs-and-ocbc-share-prices-head-up-after-reporting-record-profits-which-bank-should-you-pick/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"U11.SI","symbol_name":"大华银行","start_time":0,"source_url":"https://thesmartinvestor.com.sg/uob-dbs-and-ocbc-share-prices-head-up-after-reporting-record-profits-which-bank-should-you-pick/","article_id":"1147995076","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1147995076","pubTimestamp":1668045959,"sourceInfo":{"source_id":"lsy1602567310727","name":"The Smart Investor"},"weMediaInfo":null,"summary":"It’s a sign of the times.A surge ininterest ratescaused by four consecutive rate hikes of 0.75 perce","collect":0,"end_time":0,"defaultTopTitle":"thesmartinvestor.com.sg","property":[],"viewcount":null,"language":"en","relate_stocks":{"U11.SI":"大华银行","D05.SI":"星展集团控股","O39.SI":"华侨银行"},"translate_title":"大华银行、星展银行和华侨银行公布创纪录利润后股价上涨：你应该选择哪家银行？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"D05.SI":0.9,"O39.SI":0.9,"U11.SI":0.9},"content_text":"It’s a sign of the times.A surge ininterest ratescaused by four consecutive rate hikes of 0.75 percentage points each from the US Federal Reserve has led to all three local banks reporting record results for their fiscal 2022’s third quarter (3Q2022).United Overseas Bank Ltd(SGX: U11), or UOB, kicked off the banks’ earnings season by reporting anet profit of S$1.4 billion.Singapore’s largest bank, DBS Group(SGX: D05), also reported arecord net profitof S$2.24 billion for 3Q2022 while peer OCBC Ltd(SGX: O39) chalked up itshighest-ever net profitof S$1.6 billion.Investors are now faced with a happy dilemma.With the trio of banks reporting stellar sets of earnings, which should you pick to include in your buy watchlist?We break down the various components for all three banks to try to determine this.Income and net profitSource: Banks’ earnings, author’s compilationFirst, we look at the three banks’ financials.All three saw their total income shoot up as higher interest rates led to a surge in net interest income (NII).UOB is the winner when it comes to total income growth, chalking up a 29.8% year on year rise to S$3.2 billion, led by a surge in NII by 39% year on year to S$2.2 billion.DBS came in a close second with its NII jumping 44% year on year to S$3 billion, but this good performance was offset by weaker fee income, which declined by 13% year on year to S$771 million.After factoring in allowances, amortisation and results of associates, UOB came out tops with a 34.1% year on year rise in net profit to S$1.4 billion.Winner: UOBNIMs and loan bookSource: Banks’ earnings, author’s compilationNext, we look at each bank’s NIMs and loan book.As mentioned earlier, the sharp rise in interest rates benefitted all three banks, leading to a sharp rise in their NIM and, consequently, their NII.Of the three banks, OCBC saw the biggest year on year increase in NIMs, rising by 0.54 percentage points to 2.06%.The other two banks also saw large increases in NIM but DBS’ NIM ended 3Q2022 at 1.9% while UOB’s stood at 1.95%, below the 2% threshold.Hence, OCBC is the clear winner here as it managed to ride on the interest rate tailwind to generate a much higher NIM than its two peers.It’s interesting to note that back in 2Q2022, OCBC also had the highest NIM of the three banks.Moving on to loan growth, OCBC also emerges as the winner with a 6.6% year on year rise in its loan book to S$299.8 billion.All three banks reported healthy positive year on year growth in their loan books as the economic environment remains benign.Winner: OCBCCost-to-income ratioSource: Banks’ earnings, author’s compilationThe next aspect we look at is the banks’ cost-to-income ratio, which measures the level of expenses in relation to each bank’s total income.The lower this cost, the more efficiently a bank operates.DBS and OCBC are pretty close on this metric as the former has a cost-to-income ratio of 40.2% while the latter’s stood at 40.3%.If we look back at 3Q2021 and 2Q2022, DBS was lagging behind OCBC slightly while UOB was the clear winner in 3Q2021 with the lowest cost-to-income ratio.Hence, the conclusion is that DBS has seen the largest improvement in its cost-to-income ratio among the three banks.Winner: DBSReturn on equitySource: Banks’ earnings, author’s compilationNext, we look at the banks’ return on equity or ROE.ROE is a measure of profitability and demonstrates how efficiently shareholders’ capital is used to generate a net profit.For this financial metric, DBS stands above the rest with its ROE for 3Q2022 exceeding 16%.From the table above, we can also note that historically, DBS has always had the highest ROE among the three banks.As NII rises and leads to a boost in net profit, all three banks’ ROE should also rise correspondingly.Winner: DBSValuationSource: Banks’ earnings, author’s compilationFinally, we look at each bank’s valuation as measured by its price-to-book (PB) ratio.As in previous quarters, DBS once again emerges as the most expensive bank of the trio with a PB ratio of 1.67 times.OCBC, on the other hand, is the cheapest and is trading just above its book value of S$11.29.DBS is trading at the highest premium to its book value probably because it is also generating the highest ROE among the three banks.Investors should also note that DBS pays a quarterly dividend compared with the other two banks that pay out half-yearly dividends.For 3Q2022, DBS’ interim dividend declared stood at S$0.36 per share.Winner: OCBCGet Smart: A good mix of attributesThere is no clear winner for this round as each bank has won in at least one of the categories.The good news is that you can always include all three banks as part of your buy watchlist if you cannot decide which is the best.With rising interest rates as a tailwind, all three should likely continue to do well.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9960629165,"gmtCreate":1668144848157,"gmtModify":1676538020264,"author":{"id":"3582969710070724","authorId":"3582969710070724","authorIdStr":"3582969710070724","name":"OO_898","avatar":"https://static.tigerbbs.com/9fb3c360d5d7711641a868a144192fc7","vip":1,"crmLevel":4,"crmLevelSwitch":1,"idStr":"3582969710070724"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960629165","repostId":1147995076,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960398021,"gmtCreate":1668058577463,"gmtModify":1676538006248,"author":{"id":"4090401758904120","authorId":"4090401758904120","authorIdStr":"4090401758904120","name":"Natnaiviv","avatar":"https://static.tigerbbs.com/b08a7a47abb67da49886dbcc8bc5b0c1","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"4090401758904120"},"htmlText":"Dbs is the leader of the 3 banks but the price is also very high so room for growth is limited","listText":"Dbs is the leader of the 3 banks but the price is also very high so room for growth is limited","text":"Dbs is the leader of the 3 banks but the price is also very high so room for growth is limited","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960398021","repostId":1147995076,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960951750,"gmtCreate":1668048987970,"gmtModify":1676538004605,"author":{"id":"3562118563279867","authorId":"3562118563279867","authorIdStr":"3562118563279867","name":"Desmond669","avatar":"https://static.tigerbbs.com/e2484115c94d3471cb46f20ea7598b4a","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3562118563279867"},"htmlText":"Jhj","listText":"Jhj","text":"Jhj","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960951750","repostId":1147995076,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9960927531,"gmtCreate":1668048515323,"gmtModify":1676538004395,"author":{"id":"4087182159149440","authorId":"4087182159149440","authorIdStr":"4087182159149440","name":"Moonshot","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"4087182159149440"},"htmlText":"Becareful. If you have missed the boat then it is pointless trying to hop into one right now. Paying an inflated price for a trend that will reverse on the whim and fancy of fed is not a great idea.&nbsp;","listText":"Becareful. If you have missed the boat then it is pointless trying to hop into one right now. Paying an inflated price for a trend that will reverse on the whim and fancy of fed is not a great idea.&nbsp;","text":"Becareful. If you have missed the boat then it is pointless trying to hop into one right now. Paying an inflated price for a trend that will reverse on the whim and fancy of fed is not a great idea.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9960927531","repostId":1147995076,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":69,"commentSize":4,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.1","shortVersion":"4.28.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1147995076"}