The second earnings season of 2025 is underway, and the spotlight is on the three major Singapore banks: DBS Group, United Overseas Bank (UOB), and OCBC Ltd. Investors are closely watching their first-quarter earnings, given the uncertainty surrounding the global economy and trade tensions. The banks have warned of potential challenges ahead, increasing their general provisions in anticipation of a possible trade war and weak economic sentiment.
To determine which bank is the best to invest in, we compared the three banks based on several attributes. DBS Group led in total income growth, with a 6.3% increase, driven by a rise in commercial book net interest income and non-interest income. UOB, however, reported the best operating profit improvement, with a 7.4% year-on-year increase.
In terms of net interest margin (NIM) and loan growth, DBS boasted the highest NIM at 2.12%, while OCBC saw the highest loan growth at 7.1% year-on-year. DBS also had the lowest cost-to-income (CIR) ratio, indicating efficient expense management. OCBC, on the other hand, had the lowest non-performing loans (NPL) ratio at 0.9%.
DBS also led in return on equity (ROE) at 17.3%, a key metric for measuring profitability. However, in terms of valuation, DBS is the most expensive, with a price-to-book ratio of 1.81 times, while UOB is the most affordable, with a price-to-book ratio below 1.2 times.
Overall, DBS wins in three out of six attributes, followed by UOB in two, and OCBC in one. However, investors should note that DBS also has the highest valuation. Additionally, the banks’ increasing general provisions and potential impact on dividends should be considered. DBS is the only bank among the trio to pay a quarterly dividend, with a total dividend of S$0.75 for the first quarter, 53% higher than the same period last year. Ultimately, the choice of which bank to invest in depends on individual investment goals and risk tolerance.