Singapore Banks - RHB Invest 2023-08-17: Will Earnings Momentum Pick Up In 2H23?

Singapore Banks - Will Earnings Momentum Pick Up In 2H23?

Singapore Banks - RHB Investment Research | SGinvestors.ioDBS (SGX:D05) OVERSEA-CHINESE BANKING CORP (SGX:O39) UNITED OVERSEAS BANK LTD (SGX:U11)
  • Singapore banks’ (SG Banks) 2Q23 results were a slight beat, mainly on a stronger-than-expected performance by DBS (SGX:D05).
  • UOB (SGX:U11) is our sole BUY as:
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    • valuation appears undemanding at 0.96x FY24F P/B vs 12.6% ROE, and
    • relatively smaller exposure to Greater China.

2Q23: Higher loan provisions a dampener.

  • 2Q23 sector net profit was down 3% q-o-q mainly on a 56% q-o-q rise in loan allowances – pre-emptive provisions were booked in by OCBC (SGX:O39) and UOB, and the latter making full provision for a Thai corporate account.
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  • Y-o-y, 1H23 earnings surged 42% on NII growth and NIM expansions of 43% y-o-y and 61bps.


  • All 3 banks declared interim dividends. See
  • With the strong 1H y-o-y earnings growth and commitment to improve capital efficiencies, SG Banks boosted 1H23 absolute dividend by 25-43% y-o-y. Dividend payouts ranged from 45% for DBS to ~50% for OCBC and UOB. DBS also shared that it can return a further S$1.20 per share to shareholders in the coming years as part of its capital management plan.
  • We believe investors will view DBS’s clear pathway in a positive light, and wait for its peers to provide further clarity on their respective plans.
  • SG Banks currently offer more than 6% dividend yield, which will help support total shareholders’ returns.

Guidance largely unchanged.

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Singapore Research RHB Securities Research | 2023-08-17

More reports on banking & finance sector:
Analyst Reports on Singapore Banking & Finance Sector

Read also:
Analyst Reports on DBS Group
Analyst Reports on OCBC Bank
Analyst Reports on United Overseas Bank (UOB)


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