Operationally, UOB recorded the most gains in net interest income. This is reflected in its loan growth which is 9% higher y-o-y and 3% higher q-o-q. However, loan growth uses up capital. Hence, UOB’s risk-weighted assets (RWA) rose 5% q-o-q compared to DBS’s RWA which was 2.3% higher q-o-q and OCBC’s RWA which was 2.8% higher q-o-q. As a consequence, in 3QFY2021, UOB’s common equity tier 1 (CET1) ratio fell to 13.5% from 14.2% a quarter ago while OCBC’s CET1 ratio also declined to 15.5% from 16.1% a quarter ago.
Since the local banks announced their 3QFY2021 ended September results, the stock prices of DBS Group Holdings, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) have gone up by less than 1%, 1% and 3% respectively as at Nov 8.
The price movement is a reflection of how investors perceive the banks’ third-quarter results. Hence, if Covid-19 vaccination rates continue on their trajectory and regional economies recover, banks are the best proxy for a recovery.
