Singapore prides itself on being a financial hub with access to high-quality banking, finance, investment, insurance, and Fintech companies and talent. Our trio of local banks—DBS (SGX: D05), UOB (SGX: U11), and OCBC (SGX: O39)—are also the biggest banks in Southeast Asia. Our local banks are often cited as among the world’s best, safest, strongest, and most innovative banks.
Apart from boosting Singapore’s banking and finance hub credentials, our local banks – DBS, UOB and OCBC – are also among the largest companies listed on the Singapore Exchange (SGX). Together, they comprise over 50% of the Straits Times Index (STI) – Singapore’s benchmark index.
Banks
Market Cap
DBS (SGX: D05)
$101.2 billion
OCBC (SGX: O39)
$66.4 billion
UOB (SGX: U11)
$51.5 billion
Total
$219.1 billion
(As of 23 August 2024)
This means that when we invest in the STI today, more than half of our portfolio would be exposed to just the three local banks. The three local banks are also known for paying relatively good and stable dividends to investors.
An increase in market interest rates over the past two years appears favourable for the three local banks and will likely increase their net interest margins. As interest rates rise, banks can charge more for lending and financing. Of course, it also means they may have to pay higher interest on deposits. The additional income they get from lending should be higher than the interest they pay on money deposited in their bank accounts.
Banks
Share Price (as of 1 March 2024)
Dividends Per Share In FY2023 & FY2024
Dividend Yield Based On Current Share Price
DBS (SGX: D05)
$35.89
FY2023: $1.92
1Q2023: $0.42
2Q2023: $0.48
3Q2023: $0.48
4Q 2023: $0.541Q2024: $0.54
2Q2024: $0.54
6.0% (forward dividend yield)
OCBC (SGX: O39)
$14.38
FY2023: $0.82
1H2023: $0.40
2H2023: $0.42
1H2024: $0.44
6.1% (forward dividend yield)
UOB (SGX: U11)
$30.78
FY2023: $1.70
1H2023: $0.85
2H2023: $0.85
1H2024: $0.88
5.7%(forward dividend yield)
Information is accurate as of 23 August 2024. DBS pays quarterly dividends, while OCBC & UOB pay dividends semi-annually.
Read Also: Complete Guide To Investing In The Straits Times Index (STI) ETFs In Singapore
DBS (SGX: D05)
DBS (SGX: D05) is the largest bank in Singapore and Southeast Asia. It operates in 18 markets, including Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Myanmar, Philippines, Taiwan, Thailand, UEA, UK, USA and Vietnam.
Currently, DBS is trading at $35.89, giving it a market capitalisation of about $101.2 billion.
In FY2023, DBS achieved a net profit of $10.3 billion and a return on equity of 18.0%, a record high. Total income grew 22%, exceeding $20 billion for the first time, driven by a higher net interest margin, a rebound in fee income and record treasury customer sales.
For 1H2024, DBS’s net profit rose 9% to a new high of $5.76 billion, with return on equity at 18.8%. Total income increased 11% to SGD 11.0 billion from broad-based growth in net interest income, fee income and treasury customer sales. The cost-income ratio was 39% and profit before allowances rose 10% to a record SGD 6.79 billion.
On 7 August 2024, DBS announced that its current CEO, Piyush Gupta, would step down from his position and be replaced by Tan Su Shan at its next AGM on 28 March 2025.
OCBC (SGX: O39)
OCBC also has a strong regional and global presence in Australia, China, Hong Kong, Indonesia, Japan, Myanmar, South Korea, Taiwan, Thailand, UK, USA and Vietnam.
Currently trading at $14.38, OCBC has a market capitalisation of $66.4 billion.
For FY2023, OCBC reported that its net profit grew 27% to a new high of $7.02 billion. This was largely driven by higher net interest income and lower allowances. Total income for FY23 rose to a new high of S$13.5 billion, lifted by growth across the Group’s diversified income streams, with net interest income at a record high. OCBC’s ROE is at 13.7%.
For 1H2024, OCBC reported a net profit of $3.93 billion, 9% higher than in the same period last year. OCBC shared that its strong first-half performance was underpinned by broad-based income growth, which surpassed $7 billion for the first time, lifted by higher net interest income and non-interest income.
OCBC also declared an interim dividend of 44 cents, up 10% or 4 cents from a year ago. This represents a payout ratio of 50% of the Group’s 1H2024 net profit.
Read Also: Why Regular Savings Plans (RSP) Makes Sense If You Are Starting Your Investment Journey In 2024
UOB (SGX: U11)
UOB (SGX: U11) also operates regionally and in major global financial centres, including Australia, Brunei, Canada, China, France, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, Philippines, South Korea, Taiwan, Thailand, UK, USA and Vietnam.
Currently trading at $30.78, UOB has a market capitalisation of about $51.5 billion.
For FY2023, UOB reported a record core net profit of $6.1 billion, an 18% increase compared to the year before. Including the one-off Citigroup integration costs, the net profit was at $5.7 billion, which was also a record high. Net interest income rose 16% to $9.7 billion, on the back of strong margin expansion of 23 basis points and a loan growth of 2% in constant currency.
For 1H2024, UOB reported a core net profit of $3.1 billion for the first half of 2024 (1H24), stable year on year, supported by double-digit fee income growth and lower credit allowances. Including the one-off Citigroup integration expenses, net profit was at $2.9 billion. The Board declared an interim dividend of 88 cents per ordinary share, representing a payout ratio of approximately 51%.
Read Also: History Of Banking In Singapore: How We Ended Up With The 3 “Big” Banks For Consumers
The post DBS (D05); UOB (U11); OCBC (O39): Singapore Banks Dividend Yield And Share Price Performance appeared first on DollarsAndSense.sg.
