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.

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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

Query about DCA and other Investment Stuff

Hi SGdividends, Greeting to you and your team, thanks for having such interesting blog to enlighten rookie like myself. Been following your blog for the past couple months, decide to write to you as i wish to hear more about DCA, currently i'm buying STI ETF via poems SBP at $200 mthly.Appreciate if you can give me more views on such, i'm not sure if i am doing the right thing, however the admin charge of $10.70 is definitely expensive. On top of STI ETF, i'm looking to get some penny stocks but only have limited capital. 3-4k Myself is a passive investor and since i'm young, time is to my advantage. I'm willing to buy and hold. Due to the recent bull rally, i can't help thinking if i really miss out the bottom. Rather than waiting and waiting for the uncertainty bottom, i got to be a little pro-active. I have shortlisted a couple of stocks, hope to hear from your views if you are comfortable. Bio-treat Boustead Cambridge Celestial Epure FJBen FSL trust Gen int Hyflux water trust Mercator lines Midas RafflesEdu Your comment is purely taken as suggestion and hold no responsible or liable to whatever that may arise. ( a reader) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Hi Dude, Based on the above, if you are only buying 1 counter ( STI ETF 100) at $200 monthly, then it should not be $10.70 charge. It should be $6.42, since your investment fall into the category of less than $1000 and less than or equal to 2 counters.If that’s the case, your “sales” charge is 3.21% monthly. The most optimal amount via SBL is $1000 monthly which comes up to 0.64% “ sales” charge in this category. So if you wanna do DCA , $1000per month is good if you have the necessary cash inflow monthly. For POEMS SBL using DCA, the next optimum is $5300. ( but don’t think most people can afford a monthly DCA of $5300 right and one can already buy a lot.)Having said that, think if $200 is all you can spare a month, then your current situation of investing $200 is the cheapest option available in the market now and you should continue doing it since STI is still pretty attractive. You should stop your DCA when you see yield curves getting flat.( See our post on "how to predict a recession" under the how to links. Scroll below for the link under Related Articles.) Just to let you know, our strategy now ( or rather for the past 5 months since) is to buy blue-chips which are collectively included in the portfolios of Fund Managers.(See our posts on "A Peek into Fund Manager's Holdings". Scroll below for the link under Related Articles.) We reasoned that funds faced much liquidation which contributed to the plunge. If and when they buy back, they will buy back such blue-chips again….since they generally have a set criteria of what kind of counters they are allowed to buy. Anyway, we don’t know the bottom and we should just plonk in some money every month. Just a short comment with some links on the following counters from a “fundamental” perspective, not “technical” perspective, we rather you see for yourself and decide =). It’s your money…not ours. You might also want to check out their debt profile. Bio-treat Cashflow Just feel that there are too many competitors doing waste treatment but they claim to have this BMS technology, don’t know what the heck is that.. Boustead Cash Flow You might want to hop over to this blog to look at the in-depth write up by MusicWhiz Cambridge Purely a dividend play. Celestial ( Thanks La Papillion for pointing the mistake) Check out Convertible Bonds warning It’s a soybean , food and beverage maker which means its exposed to commodity prices as a raw material. As a fundamental investor, this is a huge risk as people are bullish on commodity prices in the long term. Might face profit margin reduction. For example Jim Rogers bullishness. Epure Check out their Cashflow Another wastewater treatment!! FJBen Check out their Cashflow The cashflow don’t look good. The FREE cash flow looks abysmal. FSL trust Check out Market Uncle Gen int No comments. Hyflux water trust Check out Market Uncle Mercator lines Check out their Cashflow The cashflow don’t look good. The FREE cash flow looks abysmal. Fundamentally weak, personal opinion. Some people may reason that it would be a good idea to buy into cyclical stocks since the upturn will enhance the capital appreciation of such cyclical companies since it has a high beta. It’s your call…but we don’t buy into this reasoning Midas Check out their Cashflow Recently (around 30 march 2009), many financial analysts such as Kim Eng (target : S$0.68)and DMG ( target: S$0.73) say it’s a buy. Reasons being: 1) One of the four entities with a licence to assemble/produce Metro train cars in China. 2) Direct beneficiary of the China stimulus package. Approximately RMB2t is budgeted by the Ministry of Railways (MOR) for expansion of China’s existing railway system between FY09 and FY12, mostly for intercity train systems. The company has granted share options: Exercise price of options granted: S$0.517 per share and insiders who have accepted them are: 1)Chan Soo Sen 2)Raymond Tong Wei Min 3)Chew Chin Hua Validity period of the options: 9 February 2009 to 8 February 2014 which means they can exercise it anytime between. ( that’s how we interpret it). You might one to look at the insider trades at Midas Website Raffles Educations No comments. SGDividends Motto" Take us with a very very small pinch of salt" Caveat Emptor 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