DBS, OCBC and UOB: How did they perform in 3Q 2021?
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PUBLISHED ONNovember 15, 2021 5:32 AMBySudhan P
Financial updates for the 2021 third quarter (three months ended Sept 30, 2021) from Singapore's listed banks have been filed with the Singapore Exchange.
DBS, OCBC and UOB financial performance
For the uninitiated, those banks are - DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39) and United Overseas Bank Ltd (SGX: U11).
The banks, which make up around 43 per cent of the Straits Times Index, are certainly recovering from the economic headwinds brought about by the COVID-19 pandemic.
Here's a closer look at how the Singapore banking giants performed financially in the third quarter of 2021.
DBS, OCBC and UOB: How did they perform in 3Q 2021?
Despite ongoing challenges such as global supply chain disruptions, inflation fears, and COVID-19 virus resurgence, the three local banks posted better financial performance.
Singapore's biggest bank DBS saw its 2021 third-quarter net profit increase by 31 per cent to $1.7 billion, up from $1.3 billion a year ago.
Stable total income and resilient asset quality helped to improve DBS' business.
Overall, the three Singapore-listed banks continued to march on strongly, building on the momentum seen over the past few quarters.
| DBS | OCBC | UOB | ||||
|---|---|---|---|---|---|---|
| Figure | Change year-on-year (YoY) | Figure | Change year-on-year (YoY) | Figure | Change year-on-year (YoY) | |
| Total income | $3,561 million | – | $2,560 million | One per cent | $2,453 million | Eight per cent |
| Profit before allowance$ | 1,893 million | – Seven per cent | $1,372 million | – five per cent | $1,381 million | 10 per cent |
| Net profit | $1,700 million | 31 per cent | $1,224 million | 19 per cent | $1,046 million | 57 per cent |
| Net asset value per share | $21.43 | Seven per cent | $11.28 | Seven per cent | $23.56 | Five per cent |
| Net interest margin (NIM) | 1.43 per cent | – 0.1 percentage point | 1.52 per cent | – 0.02 percentage point | 1.55 per cent | – 0.02 percentage point |
| Return on equity | 12.1 per cent | 2.1 percentage points | 9.5 per cent | 0.8 percentage point | 10.4 per cent | 3.5 percentage points |
| Non-performing loan (NPL) ratio | 1.5 per cent | 0.1 percentage point | 1.5 per cent | 0.1 percentage point | 1.5 per cent | – |
| Common Equity Tier 1 capital adequacy ratio | 14.5 per cent | 0.6 percentage point | 15.5 per cent | 1.1 percentage points | 13.5 per cent | – 0.05 percentage point |
DBS, OCBC, and UOB recorded strong earnings growth mainly due to lower credit allowances.
In particular, UOB emerged as the best-performing bank.
UOB's bottom-line surged 57 per cent year-on-year to $1.0 billion compared to a year-ago figure of $668 million.
All three banks also saw stability in their non-performing loan (NPL) ratios.
The NPL ratio compares the amount of loan which borrowers are unable to pay off interest or the principal amount to the total loan book.
DBS, OCBC, and UOB continued to maintain robust Common Equity Tier 1 capital adequacy ratios of at least 13 per cent, which were double that of the regulatory limit of 6.5 per cent.
This ratio is a critical measure of a bank's financial strength.
It is encouraging to see the banking trio improve their return on equity (ROE) on a yearly basis.
The ROE ratio shows how effective a bank's management is in maximising the profits earned from shareholders' capital.
DBS came out on top with an ROE ratio of 12.1 per cent, up from 10 per cent in the previous year.
In terms of net interest margin (NIM), UOB was again the best-performing bank with a figure of 1.55 per cent.
The NIM is the average interest margin that a bank earns from its borrowing and lending activities.
DBS is the only bank that pays a quarterly dividend, and it declared an interim dividend of 33 cents per share, up from 18 cents per share in the 2020-third quarter period.
The scrip dividend scheme will not be applied to DBS' 2021 third-quarter interim dividend.
The bank will go ex-dividend on Nov 12, 2021 while the payment date for the dividend will be on Nov 26, 2021.
In July last year, the banks had to curb their dividend payout after the Monetary Authority of Singapore (MAS) called on the local banks to cap their total dividends per share for 2020 at 60 per cent of 2019's dividends.
But on July 28, 2021, the Singapore central bank lifted the dividend restrictions on local banks and finance companies.
The MAS said in a media release then that the global economic outlook has since improved.
This is indeed the case as seen from the banks' latest earnings results.
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To wrap things up, let's hear what OCBC's group chief executive Helen Wong has to say about her bank's 2021 third-quarter financial performance:
"Our third-quarter results were resilient, despite the challenging conditions associated with the Delta virus variant. This quarter, the momentum across our banking, wealth management and insurance business has continued to grow, as reflected by loan, net new money, fee and insurance sales growth.
"… Asset quality is stabilising as the economic situation improves and we remain committed to supporting our customers to tide over this difficult period."
She added that OCBC remains "positive on the long-term outlook but are watchful of the near-term headwinds from the pandemic".
This article was first published in Seedly.