To The Moon

Despite the fact that banking stocks are facing headwinds from fintech companies, our SG banking sector remain robust base on earning releases. Besides, all our SG banks easily meet the Tier 1 capital ratio under the watchful eye of MAS (Monetary Authority of Singapore).

Of the 3 SG banks, I would recommend $OVERSEA-CHINESE BANKING CORP(O39.SI)$over $DBS GROUP HOLDINGS LTD(D05.SI)$and $UNITED OVERSEAS BANK LIMITED(U11.SI)$ to my tiger friends. Why?

1) Let's compare PB ratio

OCBC has a PB ratio of 1.01 (courtesy from tiger)

DBS has a PB ratio of 1.4 ( courtesy from tiger)

UOB has a PB ratio of 1.2 ( courtesy from tiger)

From this quick glance, OCBC easily look the most attractive. To ensure this is not a one-off, let's deep dive further into average PB since 2007-2022 to get better clarity. From the data (courtesy from the fifth person), DBS has an average PB of 1.23, UOB has an average of 1.32 and OCBC has an average of 1.3

This means DBS is slightly overvalued as compare to its average PB where as UOB and OCBC remain attractive with OCBC being a better value buy among the 3 banks.

2) Warren Buffett's factor

As with many value investors, our investment decisions are biased towards the greatest investor - the legendary Warren Buffett. There's no denial we all want to replicate his success. According to investopedia, 27% of Berkshire Hathaway's business are in insurance. He had mentioned numerous times that he loves this business. To put it plain and simple, insurance companies are cash generating machine with pricing power - a vital trait especially during periods of higher inflation. Much of Berkshire Hathaway's long term success can be credited to its various insurance businesses. Insurance stocks can be a great source of income and stability for one's portfolio.

So what has it got to do with OCBC? Well, OCBC own 87.8% of Great Eastern Holdings. Great Eastern is the largest insurance group in Singapore and Malaysia in term of assets and market share.

By buying OCBC, you have the best of both worlds in banking and insurance.

3) Freebies

Beside bank and insurance, OCBC also own many subsidiaries such as

-OCBC securities

-Great Eastern Holdings (as advised above under point 2)

-Lion Global Investors 

-Bank of Singapore 

-Singapore Island Bank

-Bank OCBC NISP

-OCBC Al-Amin Bank Berhad

- OCBC Bank China

-OCBC Wing Hang Bank

-Select Securities Limited Hong Kong

So if you ain't vested yet in this great business, what are you waiting for? [Cool]