Singapore’s three local banks: DBS, OCBC, and UOB, all reported earnings for Q2 2023. Let’s look at their earning results in more detail.
DBS Q2 2023 Earning Result
Who doesn’t know DBS Bank? We all have accounts with them. DBS is the largest bank by assets among the three. How did they perform last quarter? The short answer is outstanding. It is yet another record quarter for DBS.
Here is the summary of DBS’s financial performance comparison between 1st half of 2023 and 2022:
| In million $ | 1st Half 2023 | 1st Half 2022 | % Change |
|---|---|---|---|
| Total Income | 9,981 | 7,421 | 34% |
|
6,965 | 4,325 | 61% |
|
1,674 | 1,659 | 1% |
|
1,342 | 1,437 | -6.6% |
| Expenses | 3,813 | 3,302 | 15% |
| Net Profit | 5,200 | 3,616 | 44% |
Here is the summary of the quarter-by-quarter comparison between Q2 2023 and Q2 2022:
| In million $ | Q2 2023 | Q2 2022 | % Change |
|---|---|---|---|
| Total Income | 5,045 | 3,740 | 35% |
|
3,581 | 2,320 | 54% |
|
823 | 768 | 7% |
|
641 | 652 | -1.7% |
| Expenses | 1,931 | 1,658 | 16% |
| Net Profit | 2,629 | 1,815 | 45% |
DBS Q2 financial performance is just outstanding. The bank managed to grow its income by 35% YoY. This is attributed mainly to the net interest income, which jumped by 54% over the same period in 2022. With expenses only growing at 16% YoY, the net profit soared 45% YoY, reaching $2.63 billion last quarter. This Q2 net profit is higher than the previous quarter’s Q1 2023 net profit of $2.57 billion. DBS shareholders should be pleased with this yet another record-strong performance.
Let’s look at some key financial ratios reported by DBS:
| Q2 2023 | Q1 2023 | |
|---|---|---|
| Net interest margin % | 2.16 | 2.12 |
| Return on equity % | 19.2 | 18.6 |
| NPL ratio % | 1.1 | 1.1 |
We continue to see the trend of strong performance on these critical metrics. Net interest margin continues to climb, contributing to higher income in that segment. The bank’s return on equity (ROE) is particularly impressive, reaching a new record of 19.2%. Wow! Non-performing loan ratio stays at a very low level of 1.1%.
DBS declared a Q2 dividend payout of 48 cents/share, up 33% from last year’s same quarter. If you are a DBS shareholder or are interested in investing in DBS stocks, take note of the following dates:
Ex-dividend date: 11 August 2023
Record date: 14 August 2023
Payout date: 24 August 2023
You can refer to the DBS investor relations page for the detailed Q2 earnings.
OCBC Q2 2023 Earning Result
OCBC released its Q2 earnings results on 4 August 2023. How did they perform? Let’s see their 1H YoY performance summary:
| In million $ | 1st Half 2023 | 1st Half 2022 | % Change |
|---|---|---|---|
| Total Income | 6,805 | 5,223 | 30% |
|
4,727 | 3,203 | 48% |
|
883 | 999 | -12% |
|
1,195 | 1,021 | 17% |
| Expenses | 2,573 | 2,458 | 5% |
| Net Profit | 3,589 | 2,592 | 38% |
And this is the summary for Q2 2023 vs. Q2 2022:
| In million $ | Q2 2023 | Q2 2022 | % Change |
|---|---|---|---|
| Total Income | 3,455 | 2,664 | 30% |
|
2,389 | 1,700 | 40% |
|
430 | 477 | -10% |
|
636 | 487 | 31% |
| Expenses | 1,329 | 1,304 | 2% |
| Net Profit | 1,710 | 1,281 | 34% |
This is another solid result by OCBC. If you are an OCBC shareholder, you should be pleased with this Q2 result. The bank grew its total income by 30% YoY, contributed mainly by the net interest income, which jumped 40% from the same period last year. The bank’s total profit surged 34% YoY, with expenses remaining flat. The net profit of $1.71 billion is a slight decrease from last quarter’s net profit of $1.88 billion. However, it is still solid because the Q1 result was already excellent.
Let’s look at the key financial ratios for OCBC this quarter (compared to the previous quarter):
| Q2 2023 | Q1 2023 | |
|---|---|---|
| Net interest margin % | 2.26 | 2.30 |
| Return on equity % | 13.5 | 14.7 |
| NPL ratio % | 1.1 | 1.1 |
We started to see the net interest margin reversing after an impressive run in the past several quarters. This Q2 2023 saw the net interest margin dip to 2.26. Regardless, it is still high, considering the NIM was at 1.7% in the same period last year. The company’s return on equity (ROE) decreased slightly to 13.5% this quarter, as net profit dipped to $1.7 billion from $1.88 billion in Q1 2023.
OCBC declared 40 cents per share dividend payout for the first half of 2023, up 43% or 12 cents from the same period a year ago. For OCBC shareholders, take note of the following dates:
Ex-dividend date: 14 August 2023
Record date: 15 August 2023
Payout date: 25 August 2023
Please refer to OCBC financial results page for more details on this Q2 earning results.
UOB Q2 2023 Earning Result
UOB Bank just released its Q2 earning result on 27 July 2023. How did they perform last quarter? Let’s look at the summary.
Here is the first half year-over-year performance summary:
| In million $ | 1st Half 2023 | 1st Half 2022 | % Change |
|---|---|---|---|
| Total Income | 7,065 | 5,061 | 40% |
|
4,846 | 3,549 | 37% |
|
1,075 | 1,139 | -6% |
|
1,144 | 374 | >100% |
| Expenses | 2,889 | 2,241 | 29% |
| Net Profit | 2,925 | 2,018 | 45% |
Here is the summary for quarter-by-quarter comparison Q2 2023 vs. Q2 2022:
| In million $ | Q2 2023 | Q2 2022 | % Change |
|---|---|---|---|
| Total Income | 3,542 | 2,702 | 31% |
|
2,437 | 1,863 | 31% |
|
524 | 567 | -8% |
|
581 | 273 | >100% |
| Expenses | 1,448 | 1,184 | 22% |
| Net Profit | 1,415 | 1,113 | 27% |
Another strong quarterly result from UOB. In Q2 2023, they increased their total income by 31% YoY. Net interest income, the most significant contributor to the bank’s income, increased by 31%. The higher percentage increase in total income relative to the total expenses contributed to the 27% increase in net profit reaching $1.415 billion. UOB shareholders should be happy with this quarter’s earnings report.
Here is the summary of the key financial ratios for UOB:
| Q2 2023 | Q1 2023 | |
|---|---|---|
| Net interest margin % | 2.12 | 2.14 |
| Return on equity % | 14.1 | 14.9 |
| NPL ratio % | 1.6 | 1.6 |
After peaking in Q4 2022, the net interest margin (NIM) continues slightly declining this quarter. But regardless, at 2.12%, it’s still at one of the highest levels. The return on equity (ROE) also declined this quarter to 14.1%, down from 14.9% in Q1 2023. Again, although we are seeing a decline here, this number is still considered very healthy.
UOB declared a dividend payout of 85 cents per share for the first half of 2023, up 42% from last year. For UOB shareholders, please note the following dates:
Ex-dividend date: 4 August 2023
Record date: 7 August 2023
Payout date: 18 August 2023
You may refer to the UOB financial results page for more details on this Q2 earning results.
Peaking Net Interest Margin?
The trend we are seeing from the latest earning reports from the three banks: net interest margin (NIM) may be peaking. DBS was the only bank among the three to see its net interest margin (NIM) grows this quarter, while OCBC and UOB saw their NIMs decline.
Because net interest income is a significant contributor to income for the three banks, it would be interesting to see how the lower NIM growth may impact the banks’ bottom line going forward.
With the Fed expected to pause its rate hike cycle and reverse sometime next year, the chances of NIM peaking soon are pretty high. The good news is that the decrease should be gradual and may take an extended period. From their last FOMC meeting, the Fed still projected the 2024 rates to be above 4%.
Summary
The three local Singapore banks, DBS OCBC UOB, reported solid earnings in Q2 2023. DBS’ earning result, in particular, is outstanding as it managed to grow its income even higher following an already strong Q1 performance. Shareholders for all three banks should be pleased with this quarter’s earnings.
With the interest rates likely to peak soon and reverse next year, it would be interesting to see how this will impact the bank’s net interest margin going forward.
