Connect with us

Investing

Singapore Banks Report Card: Share Price And Dividend Yield Performance – DBS (SGX: D05); UOB (SGX: U11); OCBC (SGX: O39)

MAS has told the local banks to cap dividends in 2020 to 60% of that in 2019.


Singapore prides itself on being a financial hub with access to high quality banking and finance companies as well as talent within the space. Our local banks – DBS (SGX: D05); UOB (SGX: U11); and OCBC (SGX: O39) – are often cited as among the best, safest, strongest, or most innovative banks in the world as well.

Apart from boosting our banking and finance hub credentials, the three local banks are also the three largest companies listed on the Singapore Exchange (SGX). Currently, they comprise close to 42% of the Straits Times Index (STI) – our local benchmark index.

This makes it attractive to invest in such strong companies. Another thing the three local banks are known for is also paying relatively good and stable dividends to investors.

Bank Share Price Dividends In FY2020 (Dividends In FY2019) Dividend Yield
DBS (SGX: D05) $28.47 $0.87
($1.23)
3.1%
UOB (SGX: U11) $25.40 $0.78
($1.30)
3.1%
OCBC (SGX: O39) $11.73 $0.318
($0.53)
2.7%

* Information accurate as of 12 March 2021.

Bank Stocks Impacted By MAS Regulation In 2020

On top of being the biggest companies in Singapore, the banking sector is connected to virtually all other industries – providing vital payments, loans, investments, and other services to ensure the local economy continues to thrive.

As such, the Monetary Authority of Singapore (MAS) has taken the decision to cap their total dividends per share in 2020 to 60% of that in 2019 and to also consider the option of scrip dividends rather than cash. There is no such cap or recommendation for dividends in 2021.

Read Also: Guide To Understanding the Pros And Cons Of Opting For Scrip Dividends

DBS (SGX: D05)

DBS (SGX: D05) is the largest bank in Singapore and also Southeast Asia, with operations 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 $28.47. This gives DBS a market capitalisation of close to $72.4 billion. Like many companies, DBS’ share price went through a roller-coaster of ups and downs in 2020 – not just because of COVID-19, but also because interest rates and country-level announcements can impact their operations.

On the surface, DBS’ share price declined just 0.3% in 2020 – from $29.55 at the start to $29.15 at the end of 2020. In reality, it dropped more than 31.5% within less than a 7-week period in the first quarter of 2020. It then staged a surging recovery jumping nearly 10% to 20% within a span of 2 weeks on at least 4 occasions in the rest of the year. In the first quarter of 2021, DBS’ share price has risen more than 11.7% to $28.10.

Based on today’s share price of $28.10, DBS is trading at a dividend yield of about 3.1%. Note that its 2020 dividend payout of $0.87 was limited by the cap imposed by MAS. In 2019, it paid out $1.23 in dividends.

In its FY2020 earnings announcement, released on 10 February 2021,DBS reported a total income of $14.6 billion, which was marginally higher than what it achieved in FY2019. However, net profit declined 26% to $4.7 billion, mainly due to a 4-fold increase in allowances for credit and other losses.

Read Also: 10 Companies That Beat The Straits Times Index (STI) in 2020

UOB (SGX: U11)

UOB (SGX: U11) 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.

UOB is currently trading at $25.40, giving it a market capitalisation of $42.8 billion. Similar to DBS – and OCBC later on – UOB’s share price saw major volatility in 2020 for the same reasons – COVID-19, interest rate shifts, government-level announcements.

In 2020, UOB’s share price fell close to 14.5%. However, UOB’s share has gained some of this ground in 2021 with a 12.0% rise so far. As expected, UOB’s share price also tanked 28.9% within about a 2-month period between January to March 2020. Also, as expected, UOB’s shares continued to recover this lost ground during the remainder of the year – while still facing volatility in its ups and downs.

Based on today’s share price of $25.40, UOB’s dividend yield is about 3.1%. Again, as we know its 2020 dividends was tapered by by MAS. For FY2020, UOB paid out a total of $0.78 in dividends, compared to the $1.30 paid out in FY2019.

In UOB’s latest FY2020 results, its total income for the full year was 9% lower than the same period last year, at $9.2 billion. Its net profit was 33% lower comparatively, at $2.9 billion, again mainly due to almost 4-fold increase in allowances for credit and other losses.

Read Also: Complete Guide To Investing In the Straits Times Index (STI) ETFs In Singapore

OCBC (SGX: O39)

Of course, no list of Singapore banks is complete without discussing OCBC. 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.

OCBC is currently trading at $11.73, giving it a market capitalisation of $52.5 billion.

In 2020, OCBC’s shares dipped about 8.1%. It may be slightly redundant to mention it again, but its shares was also similarly volatile compared to DBS and UOB. So far in 2021, OCBC’s share price has risen about 16.1%

In FY2020, OCBC paid out a total of $0.318 in dividends, giving it a dividend yield of 2.7%. This is compared to the $0.53 it paid in FY2019 – without the MAS restrictions (and of course impacts to its operations) on its dividends because of COVID-19.

In OCBC’s FY2020 announcement, its total income declined close to 7% to $10.1 billion. OCBC’s net profit dropped by 26% to $3.6 billion, also mainly due to more than double the allowances set aside for loans and other assets for FY2020.

Read Also: Why 2020 Could Be The Best Time To Start  Your Investment Journey (Slowly)

Advertiser Message

Trade SGX Stocks/ETFs with a Flat Processing Fee of Only S$8.80 on FSMOne.com

When commission rates go low, your investments can go high. Enjoy a flat processing fee of only S$8.80 when you trade SGX stocks and ETFs on FSMOne.com. You can also enjoy a variety of more than 50 ETFs with bite-sized investments (Regular Savings Plan). Click here to find out more!

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.