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Singapore banks report higher Q4 net profits

All three Singapore banks released their fourth quarter and full year results for 2013 on Friday, with OCBC and UOB reporting better-than-expected earnings, while DBS missed analysts' estimates.

SINGAPORE: All three Singapore banks released their fourth quarter and full year results for 2013 on Friday, with OCBC and UOB reporting better-than-expected earnings, while DBS missed analysts' estimates.

DBS’ earnings were below the average forecast of analysts polled by Reuters.

For the fourth quarter of 2013, DBS made a net profit of S$802 million, up 6 per cent from a year ago.

OCBC grew its fourth quarter net profit by 8 per cent to S$715 million, and UOB posted a net profit of S$773 million, an increase of 11.1 per cent from 2012.

Despite loan curbs on the property market, Singapore’s banks have also eked out double-digit increases in annual loan growth.

And that has helped DBS, which is Southeast Asia's largest bank by assets, to a record full-year net profit of S$3.5 billion, up 4 per cent from a year ago in 2013.

Meanwhile, OCBC’s core net profit dipped 2 per cent to S$2.8 billion, while UOB grew its net profit by 7.3 per cent to S$3.01 billion.

But the banks have also been looking to grow overseas in order to counter slower growth rates at home.

Samuel Tsien, CEO of OCBC Bank, said: "We continue to focus on both the domestic market in Singapore, as well as our key overseas markets, which is Malaysia, Indonesia, and Greater China.

“Those overseas markets also present higher economic growth, and therefore present more opportunities for us.

“We continue to be very positive on the outlook, and just on the loans side for example, we're expecting it to come in at the low-teens level, going forward."

UOB Group's deputy chairman and CEO Wee Ee Cheong said: "Despite recent uncertainties in a few countries, we remain positive on Asia's underlying economic fundamentals.

“We see our wealth management and wholesale banking businesses continue to grow as we help more customers take advantage of increasing intra-regional trade flows and rising wealth.”

In line with its overseas expansion strategy, OCBC has initiated a takeover of Hong Kong's Wing Hang Bank, while DBS is said to be eyeing French bank Societe Generale's Asian private bank.

Analysts said this puts pressure on UOB, the smallest of the three banks, to make strategic acquisitions in the region.

Cyrus Daruwala, managing director (Asia Pacific) at IDC Financial Insights, said: “To grow quicker and to keep pace, organic growth is completely out of the question for them (UOB) -- which leaves them the option of acquisitions, strategic acquisitions in Malaysia, Indonesia, Thailand, or even Hong Kong.”

DBS and UOB have raised the dividend payout to shareholders, compared to 2012.

DBS announced a final dividend of 30 cents per share, up from 28 cents, while UOB will give a final and special dividend totalling 55 cents, up from 50 cents.

OCBC's final dividend of 17 cents per share is unchanged from 2012.

At the same time, DBS announced that it is investing S$200 million over three years, on a new digital banking initiative that seeks to integrate banking into customers' digital lifestyle.

"Going forward, we will invest in intensifying our efforts to digitise the bank and redefine the customer experience. We remain committed to stakeholder value creation and to shaping the future of banking," said DBS CEO Piyush Gupta. 

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