DBS, OCBC & UOB Book S$500M YTD Net Institutional Inflows

DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May. The trio also averaged 16% total returns for the period, bringing their average total returns since the end of 2019, to 67% and combined weight in the STI to 51%. OCBC also posted its highest ever close price on 23 May.
Combined net interest income (NII) for the trio was S$8.3 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.0 billion, and up 46% from the combined S$5.7 billion in 4QFY19. While higher rates and margins drove much of the recent NII growth, DBS highlighted a pick-up in loan growth in 1QFY24, while OCBC and UOB maintained their confidence in achieving low single-digit loan growth in FY24.
Other SGX-listed stocks relevant to the Financial Sector that have posted gains and booked net institutional inflow in the 2024 year to 23 May, include Yangzijiang Financial, Great Eastern and UOB Kay Hian. Yangzijiang Financial and UOB Kay Hian both reported y-o-y attributable net profit growth in FY23, while OCBC has made a voluntary unconditional general offer for Great Eastern shares it does not own.

DBS (SGX:D05), OCBC (SGX:O39) and UOB (SGX:U11) maintain a combined market capitalisation of S$218 billion, with the trio ranking as the most traded stocks in Singapore.

According to Bloomberg, the past six months have also seen the trio of STI banks (DBS, OCBC, UOB) rank among the five most traded stocks by average daily turnover (ADT) listed across ASEAN Exchanges.

Performance of DBS OCBC UOB
STI Banks	SGX Code	Market Cap S$M	YTD Average Daily Turnover S$M	YTD Net Institutional Inflow S$M	YTD Total Return %	31Dec2019 - 23May2024 Total Return %	ROE %	P/B (x)	5-Year Average P/B (x)	Dividend Yield %
DBS	D05	101,961	143.8	37.9	22	91	17	1.64	1.34	5.3
UOB	U11	51,154	87.6	248.1	10	44	12	1.11	1.05	5.6
OCBC	O39	65,202	73.0	214.2	15	65	13	1.20	1.02	5.7
Total		218,318	304.4	500.3
Average					16	67	14	1.32	1.14	5.5

Financial and Valuation Metrics based on methods used in SGX Stock Screener.
Source: SGX, Refinitiv (Data as of 23 May 2024).

The trio of DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May. This has coincided with the trio averaging 15.6% total returns for the period. This compares to the trio averaging 5.8% total returns for the full 2023 year, with S$2.5 billion of combined net institutional outflow.

Institutional fund flows are motivated by multiple factors including pro-forma strategies and frequent rebalancing on account of multi-country exposure and exchange rate movements. For instance, local net institutional flows were potentially impacted by the latter in 2023 with the SGD appreciating to the HKD, INR, TWD, AUD & KRW which together comprise 85% of the counters of the FTSE Asia Pacific Ex-Japan Index. The past 21 weeks have seen the S$ more mixed to these five currencies.

Averaging 67% total returns since the end of 2019, the trio of STI Banks now comprise 51% of the STI weights (up from 40% in Dec 2019) and 50% of the MSCI Singapore Index weights (up from 45% in Dec 2019).

Around two-thirds of the trio of STI Bank’s total income is generated from Net Interest Income (NII). The combined NII was S$8.30 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.00 billion. The 1QFY24 combined NII was also up 46% from the combined S$5.67 billion in 4QFY19.

While higher interest rates and margins drove much of the recent NII growth, DBS highlighted a pick-up in loan growth in 1QFY24, while OCBC and UOB maintained their confidence in achieving low single-digit low growth in FY24.

Singapore Banks (DBS, OCBC, UOB) Net-Interest Income Trend

Source: SGX, Company reports (Data as of 31 March 2024)

The other approximate third of the trio’s total income is Non-Interest Income (NOII). Combined NOII for the trio came to S$4.4 billion in 1QFY24, also up 40% from S$3.1 billion in 4QFY19. NOII includes fee and trading income derived from activities such as investment banking, wealth management, insurance and transaction services.

The 2024 year began with majority expectations that the Fed Funds Rate would be 75bps lower by the end of 1H24, rather than unchanged which is the current status quo. UOB maintains in its most recent investor presentation that the Fed will maintain its terminal Fed Funds level of 5.25-5.50% for a longer beyond June, where it now prices in 50 bps of rate cuts for 2024 (i.e. two 25-bps cuts, in Sep-24 and Dec-24). The banks adds that the risk is still tilted for the Fed Reserve to delay cuts even further, nudged by a difficult inflation descent. A US soft landing remains UOB’s central scenario andthus it does not expect an aggressive series of Fed cuts ahead.

Other SGX-listed stocks relevant to the Financial Sector that have posted gains and booked net institutional inflow in the 2024 year to 23 May, include Yangzijiang Financial (SGX:YF8), Great Eastern (SGX:G07) Holdings and UOB Kay Hian (SGX:U10).

Yangzijiang Financial Holding (SGX:YF8)

Yangzijiang Financial has booked S$64,676 of net institutional inflow in the 2024 year to 23 May while also generating a 6.9% total return. For its FY23 (ended 31 Dec), net profit to equity holders of the company increased 25% to S$201.8 million from FY22. As of December 2023, the Group had S$4.0 billion of assets under management. According to SGX StockFacts, the stock maintains an ROE of 5.2%, dividend yield of 6.8% and price-to-book (P/B) ratio of 0.3x as of 23 May.

Great Eastern (SGX:G07)

Great Eastern has booked S$222,316 of net institutional inflow in the 2024 year to 23 May while also generating a 50.5% total return.On 10 May, OCBC announced a voluntary unconditional general offer for all the issued ordinary shares in the capital of Great Eastern Holdings other than those shares it already owned at S$25.60 per offer share. The objective of the S$1.4 billion offer for the 11.56% stake is to strengthen OCBC’s business pillars of banking, wealth management and insurance, and optimise its capital to enhance shareholder returns. The offer price of S$25.60 represented a 36.9% premium over Great Eastern’s last traded price of S$18.70 as of 9 May. Prior to the offer, on 29 April, Great Eastern Holdings reported its 1QFY24 (ended 31 Mar) gross profit attributed to shareholders increased by 26% from 1QFY23, to S$306.7 million, driven by higher profit from the insurance business as well as favourable investment performance in its shareholders fund.

UOB Kay Hian (SGX:U10)

UOB Kay Hian has booked S$24,530 of net institutional inflow in the 2024 year to 23 May while also generating a 6.1% total return. In FY23 (ended 31 Dec), the Group’s comprehensive income attributable to the owners of the Company increased 75% from FY22, to S$144 million. According to SGX StockFacts, the stock maintains an ROE of 9.3%, dividend yield of 6.9% and price-to-book (P/B) ratio of 0.6x as of 23 May.

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