Comparison of the Big 3 Local Banks in Singapore

‘We try to stick with businesses we believe we understand. That means they must be relatively simple and stable in character. If a business is complex or subject to constant change we’re not smart enough to predict future cash flows. Incidentally that shortcoming doesn’t bother us.’ - Warren buffet

As we always believe in understanding what we invest in and absolutely subscribe to the quote by Warren Buffet above, we decided to start a project that seeks to understand the underlying business model of the different industries in Singapore. In this first post of this project, we are looking at the local banking industry in Singapore and compare among them, in the hope, to understand them better. As new information is picked up, we will just add into it. In time to come, we should be looking into Plantation industry , Oil and Gas related Industry in Singapore, Property Development industry,Waste treatment industry, Telecommunications industry e.t.c. As we learn, we share cos sharing is caring. Yeah like real....... Does anyone still believe this sissy crap?

Comparison of income sources between DBS, OCBC and UOB banks.

Net Interest Income - Money earned by banks from taking " low interest bearing" customers deposits to make "higher interest bearing" loans out and earning the interest spread.

Non Interest Income - Any income other than the above. See below

Generally, it has been mentioned that non-interest income adds to the stability of the bank due to diversification of income streams. OCBC is therefore considered more diversified. It is not unexpected as they own a very large proportion of Great Eastern which contributes to their Non-Interest Income portion.

Comparison of Fees and Commission Income ( a component of Non Interest income) between DBS, OCBC and UOB Bank.
Personally, UOB bank presented their breakdown differently from how both OCBC and DBS presented. What does "Investment related" mean? It can mean both "stock broking" and " "Investment Banking"? They also have this component called "Futures Broking" which should fall under "Stock Broking" in DBS or OCBC's way of break down. Maybe the regulators should ensure similar terms used so as to compare more easily.Does Trade-Related under UOB mean "Trade and remittances" under OCBC and DBS? Question Mark?Does "Services charges" under UOB mean "Deposit related" under OCBC and DBS?

Anyhow, look at the fees from UOB's Credit Card and Fund Management. Among the 3 banks, UOB earns the most.Under Loan-related fees, DBS earns the most.

Comparison of Loans to Customers By Geography

Aaaaargh! Can't find any such breakdown for UOB! Hey what's up man!Can you guys follow the crowd?

Anyway, from here it can be seen OCBC's strategy of venturing into Malaysia while DBS's strategy is to venture into Greater China ( includes HK). They have neglible loans to US or Europe, since "Rest of the world" constitutes a mere 5% for DBS and 4% for OCBC.

Comparison of Loans to Customers By Industry

Top 2 industries for DBS is Housing loans and Building and Construction

Top 2 industries for OCBC is Housing loans and Building and Construction.

Top2 industries for UOB is Housing loans and Financial Instuitions, investment & holding companies.

It seems among the 3 banks, UOB has lent out the most loans to Financial Instituitions in absolute amount $16 billion. Only OCBC lents to Agriculture, mining and quarrying ....

Comparison of Customer Deposits ( Cheap Financing for the Banks) Look at the savings deposit of DBS bank! Actually, its quite obvious. This table is a waste of our time. Shit.

Comparison of Non-Performing Assets among the 3 banks What is a non-performing asset?A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments.

For example, a mortgage in default would be considered non-performing. After a prolonged period of non-payment, the lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets were pledged, the lenders might write-off the asset as a bad debt and then sell it at a discount to a collections agency.

The percentage of total loans that are considered as non-performing is highest with UOB bank. Of these loans, the percentage that is > 180 days overdue is also the highest with UOB bank at 1.02%. Eh please don't run on bank ok....if you do..u are damn stupid cos Singapore Banks are super duper safe. This is just a comparison of high-class banks and of cos comparisons will bring out one less strong right? Maybe its easier to get a loan from UOB as they seem less stringent?

Comparison of Staff Headcount and expense of the 3 banks

It was pretty unexpected as we had always thought that DBS, being the biggest local bank would have the most number of employees. Surprisingly, it has the lowest, while UOB has the most number of employees. The total amount that is spent on DBS employees is the highest though and their mean "expense ( this could include other things other than salary)" is $85,541.1, nearly twice their 2 rivals.

OK this post is just to compare the 3 banks for a better understanding of their business. So we did not include Tier 1 ratios and the stuff.

If you like this blog, do help SGDividends by adding us as your favourites via this link,THANK YOU!:

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

Citigroup - Should we follow Abu Dhabi Investment Authority and GIC?

Our barber told us today that he recently bought 16 shares of Citigroup. He just said he felt inspired to buy Citigroup after watching their advertisements and that he just hope that this bank will not fail or else that chio eurasian girl he has been bioing would be out of job. We just love this barber for his cute way of thinking. Anyway, we decided to check it out. Let's use the GIC and Abu Dhabi Investment Authority (ADIA)'s investment as the basis of analysis, and not ratios, balance sheet, tier one ratio and stuff.

From Citigroups 2007 statements (Above)
From GIC's press release (Above)

Comparison (Above)

From the comparison table above, both ADIA and GIC would have the option to convert the Citigroup ( Citibank) share to a common stock at the price of around $31.83 - $37.24 ( around 2010 - 2011) and $31.2 respectively, given the assumptions and assuming no adjustments.

Therefore from the above, an inference can be made that GIC or ADIA could be expecting Citigroup's share price to be roughly at least $31-$37 by late 2010. The price of Citigroup share now is hovering around $11-$12. So, is this a good buy now since GIC and ADIA has already invested in it?

Well, having seen the saga of ABC Learning, it might be wise not to follow these entities blindly since who knows what their real motives are. "Transformers, more than meets the eye...doh da di da da...autobots..." Furthermore, ADIA and GIC made these investments in Jan 08 and Dec 07, where the full seriousness of the crisis was still not widely known. So do you think its a good buy? Sharing is caring!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team