OCBC vs DBS vs UOB Singapore's Leading Bank Stocks for 2025

Singapore’s banking heavyweights—DBS Group (SGX: D05), United Overseas Bank (SGX: U11), and OCBC Ltd (SGX: O39)—are capturing attention as their stock prices soar to new highs. Their robust earnings, driven by elevated interest rates, have put them in the spotlight.

However, with the US Federal Reserve hinting at a potential interest rate cut, the dynamics could shift. Investors are left asking: which of these blue-chip banks is best positioned to navigate the changing landscape and deliver sustainable growth? A closer look at their recent performances and financial metrics might provide the answer.

Total income and net profit growth

Each bank posted solid financial results for the third quarter of 2024, with strong year-on-year growth across key metrics.

A high-interest-rate environment continued to drive net interest income, while non-interest income saw a significant boost, supported by increased wealth management fees and higher credit card spending.

Total income grew at a similar rate for all three banks, with both OCBC and UOB recording a 10.9% YoY growth, while DBS followed closely at 10.8%. When it came to profit before allowances, OCBC led with a 12% increase, outpacing DBS’s 11.1% and UOB’s 9.9%.

However, DBS outperformed in net profit growth, surging by 16.7%, with UOB closely behind at 16.5%. OCBC recorded a more modest increase of 9.1%. These figures showcase the competitive landscape among the trio, with each bank excelling in different areas.

Net interest margins (NIM) and loan growth

Loan growth showed contrasting trends, with UOB leading the way at 5% year-on-year, while OCBC posted a modest 2.4% increase. DBS, however, experienced a slight contraction, with its loan book shrinking by 0.4%.

When it comes to NIM, OCBC recorded the highest at 2.18% for the quarter but also faced the steepest year-on-year decline, down 0.09 percentage points from 2.27% in 3Q 2023. DBS followed with a NIM of 2.11%, a drop of 0.08 percentage points year-on-year, and also saw the largest quarter-on-quarter dip of 0.03 percentage points.

UOB maintained the lowest NIM of 2.05% among the trio but demonstrated resilience, with the smallest year-on-year decline of just 0.04 percentage points and no change quarter-on-quarter.

This data highlights UOB's strength in loan growth and stability in NIM, while OCBC retains the highest margin despite facing the sharpest decline. DBS, on the other hand, shows weaker loan growth and a more pronounced drop in NIM.

Cost-to-income ratio (CIR)

The cost-to-income ratio (CIR) measures how efficiently a bank manages its expenses relative to its income. A lower CIR indicates better efficiency.

OCBC was the most efficient among the three banks in 3Q 2024, achieving the lowest CIR at 38.5%. It also recorded the largest year-on-year improvement, with its CIR dropping by 0.6 percentage points.

DBS followed with a CIR of 39.1%, reflecting a slight year-on-year decrease of 0.2 percentage points, demonstrating stable expense control. UOB, on the other hand, had the highest CIR at 41.5%, marking an increase of 0.5 percentage points compared to the same period last year.

This comparison highlights OCBC’s superior efficiency, with DBS maintaining steady performance, while UOB appears to face challenges in controlling its expenses relative to income.

Return on equity (ROE)

Return on equity (ROE) is a key metric for assessing how efficiently a bank generates profit relative to its shareholders’ equity. A higher ROE indicates greater profitability.

DBS stood out with the highest ROE of 18.7% in 3Q 2024, reflecting an improvement from 18.2% in the same period last year and maintaining its strong position quarter-on-quarter.

UOB showed notable progress by increasing its ROE to 14.3%, up from 13.3% in the previous quarter and 13.9% in 3Q 2023. This marked the largest quarter-on-quarter improvement among the three banks.

OCBC, while trailing slightly, posted an ROE of 14.1%, a marginal increase from 14% in 3Q 2023 but a slight dip from 14.2% in the previous quarter.

This metric highlights DBS's clear leadership in profitability, with UOB demonstrating significant improvement and OCBC maintaining stable returns.

Non-performing loans (NPL) ratio

The non-performing loans (NPL) ratio is a key indicator of the quality of a bank's loan book. It measures the proportion of loans that are unlikely to be repaid, with a lower NPL ratio reflecting better credit quality.

OCBC emerged as the leader in this category, maintaining the lowest NPL ratio of 0.9% in 3Q 2024. It has consistently kept its NPL ratio between 0.9% and 1%, demonstrating strong credit management.

DBS recorded an NPL ratio of 1.0%, a notable improvement from 1.2% a year ago, showing progress in reducing its proportion of risky loans.

UOB, while having the highest NPL ratio at 1.5%, managed to maintain it steady compared to the previous quarter, though it remains unchanged from the same period last year.

This metric underscores OCBC’s consistent credit quality, with DBS showing improvements and UOB needing to address its relatively higher level of non-performing loans.

Dividend yield

Dividend yield is a critical metric for income-focused investors, as it reflects the annual return from dividends relative to the stock price.

Among the three banks, OCBC offers the highest trailing 12-month (TTM) dividend yield at 5.16%, followed by UOB at 4.75% and DBS at 4.93%. This makes OCBC the most attractive option for investors prioritizing yield.

In terms of trailing 12-month dividend amounts, DBS leads with an impressive payout of S$2.16 per share, significantly higher than OCBC’s S$0.86 and UOB’s S$1.73.

It’s worth noting that DBS pays dividends quarterly, providing more frequent cash flow to investors, while OCBC and UOB distribute dividends on a semi-annual basis. This could make DBS more appealing to those who value a steady and regular income stream.

Valuation

Finally, we turn to the valuation metrics to assess how the market values each bank.

DBS is trading at the highest price-to-book (P/B) ratio of 1.84, reflecting its premium valuation due to its market leadership and strong financial performance.

OCBC and UOB are closely matched in terms of P/B, with UOB slightly edging out OCBC at 1.33 compared to OCBC’s 1.32, making UOB the most attractively valued in this category.

Looking at the price-to-sales (P/S) ratio, UOB again stands out with the lowest ratio of 4.50, indicating that it is the least expensive relative to its revenue. DBS has the highest P/S ratio at 5.69, while OCBC sits in the middle at 5.39.

In terms of forward price-to-earnings (P/E), UOB also leads with the lowest ratio of 9.70, followed by OCBC at 9.92. DBS, despite its strong performance, is the most expensive with a forward P/E of 10.96.

This data underscores UOB’s relative affordability across multiple valuation metrics, making it a compelling choice for value-focused investors, while DBS continues to command a premium due to its market dominance.

What do analysts say

Analyst opinions and target prices provide another layer of insight into how these banks are viewed in the market.

UOB stands out with the highest potential upside, showing an 7.97% difference between its current price of S$37.25 and the average analyst target price of S$40.22. This reflects strong confidence in its future prospects.

DBS follows with a 5.4% potential upside, as its current price of S$43.51 trails the target price of S$45.86. OCBC, however has the smallest upside at 4.39%, with a current price of S$17.07 and a target price of S$17.82.

In terms of recommendations, UOB garners the most optimistic sentiment, with six analysts rating it a "Strong Buy" and eight recommending a "Buy." Both OCBC and DBS have a mixed four and three "Strong Buy" rating but with seven and nine "Hold" analysts rating respectively.

These figures emphasize UOB’s position as a value pick with the most room for price growth.

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