Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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The trio of STI banks have averaged 27% total returns in the 2021 YTD, in-line with global bank benchmarks. Earlier this month, the trio provided 3QFY21 (ended 30 Sep) and 9MFY21 updates, with DBS, OCBC and UOB reporting respective YoY net profit growth of 46%, 58% and 37% in 9MFY21. 
	 </li>
	<li>
Combined 3QFY21 NII of the trio was S$5.17 billion, up from S$5.13 billion in 2QFY21 and up from S$5.07 billion in 3QFY20. DBS, OCBC and UOB reported respective QoQ customer loan growth of 2%, 4% and 3% in 3QFY21, while for the 9MFY21, NII comprised 57%, 54% and 64% of DBS, OCBC and UOB’s total income. 
	 </li>
	<li>
DBS, OCBC and UOB Net Fee and Commission Income respectively rose 17%, 16% and 24% YoY for 9MFY21. Industry growth drivers include increased digitalisation, the broadening of wealth management services, and a continued focus on supply chains and growth markets. 
	 </li>
	<li>On 22 Nov, DBS formed a fresh all-time high at S$32.70, while UOB formed its 2021 YTD high on 9 Nov at S$28.17. OCBC formed its 2021 YTD high back on 10 May, at S$12.77. The trio have also been recipient to S$1.6 billion of net institutional inflows in the 2021 year to 19 Nov.</li>
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Last week, DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") averaged 0.5% gains, outpacing the 0.4% decline for regional banks, as global banks declined 1.8%. During the week, the trio booked S$70 million of net institutional buying, bringing the total net institutional inflow for all stocks over the week to S$32 million. 
Combined, DBS, OCBC and UOB make up 20% of the total market capitalisation of all stocks listed on SGX, in addition to 20% of the day-to-day turnover, and represent more than 40% of the Index weightage of the Straits Times Index (“STI”). The trio have averaged 23% price gains in the 2021 year to 19 Nov, with reinvested dividends boosting their average total return to 27%. By comparison the STI has generated a total return of 17%, while global banks also generated a 27% total return over the timeframe. For the majority of the year, the trio’s average gains have been more or less in-line with global bank benchmarks, while regional banks have trailed, with 14% total returns in the 2021 year through to 19 Nov. DBS, OCBC and UOB have also been recipient to S$1.6 billion of net institutional inflows in the 2021 year to 19 Nov. Recent Business Updates 
Earlier this month, the trio provided quarterly and 9MFY21 (ended 30 Sep) updates. DBS, OCBC and UOB reported respective 46%, 58% and 37% YoY net profit growth in 9MFY21. DBS highlighted that its first, second and third quarter net profits were the three highest in history (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/PRI9XOWKQ4AM9LAE/b6545c0cc65b082e3aadd57fc8b4d4806d2e4f426a03f78a4aa94f74389efc9f">here</a> for more). For 3QFY21, DBS, OCBC and UOB respectively reported customer loan growth of 2%, 4% and 3% from 2QFY21. OCBC attributed the 4% QoQ customer loan growth to both consumer and corporate lending, which was broad-based across geographies (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/CQBNZZ62ZZJ715UE/6d91db537a0b3232fe3aee6ef740f41942d1342eb0dacfe17eca299b7fccd3ea">here</a> for more). Combined 3QFY21 net interest income (‘NII”) at S$5.17 billion, up from S$5.13 billion in 2QFY21 and up from S$5.07 billion in 3QFY20. NII comprised 57%, 54% and 64% of DBS, OCBC and UOB’s total income in 9MFY21. 
The recent performances and net institutional flows of DBS, OCBC and UOB are tabled below.  

<table class="table table-striped"><tbody>
<tr>
<td>
			Stocks
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			Net Profit Growth 9MFY21
			</td>
			<td>
			YTD Net Insti Flow S$M
			</td>
			<td>
			Last Week Net Insti Flow S$M
			</td>
			<td>
			Last Week Price Change
			</td>
			<td>
			YTD Price Change
			</td>
			<td>
			YTD Total Return
			</td>
			<td>
			YTD Avg Daily T/O (S$M)
			</td>
			<td>
			10-year Total Return
			</td>
		</tr>
<tr>
<td>
			DBS
			</td>
			<td>
			D05
			</td>
			<td>
			83,419
			</td>
			<td>
			46%
			</td>
			<td>
			991.0
			</td>
			<td>
			37.3
			</td>
			<td>
			1.4%
			</td>
			<td>
			30%
			</td>
			<td>
			34%
			</td>
			<td>
			125.1
			</td>
			<td>
			291%
			</td>
		</tr>
<tr>
<td>
			OCBC Bank
			</td>
			<td>
			O39
			</td>
			<td>
			53,005
			</td>
			<td>
			58%
			</td>
			<td>
			191.0
			</td>
			<td>
			20.3
			</td>
			<td>
			-0.1%
			</td>
			<td>
			17%
			</td>
			<td>
			21%
			</td>
			<td>
			64.3
			</td>
			<td>
			115%
			</td>
		</tr>
<tr>
<td>
			UOB
			</td>
			<td>
			U11
			</td>
			<td>
			46,229
			</td>
			<td>
			37%
			</td>
			<td>
			424.0
			</td>
			<td>
			12.7
			</td>
			<td>
			0.2%
			</td>
			<td>
			22%
			</td>
			<td>
			27%
			</td>
			<td>
			66.4
			</td>
			<td>
			161%
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			47%
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			0.5%
			</td>
			<td>
			23%
			</td>
			<td>
			27%
			</td>
			<td>
			 
			</td>
			<td>
			189%
			</td>
		</tr>
<tr>
<td>
			Total
			</td>
			<td>
			 
			</td>
			<td>
			182,652
			</td>
			<td>
			 
			</td>
			<td>
			1,606.0
			</td>
			<td>
			70.3
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			255.7
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: SGX, Refinitiv, Bloomberg (Data as of 19 November 2021)

 

All three banks reported significant YoY declines in allowances for the nine months. DBS reported its 9MFY21 allowances declined 99% YoY to S$19 million, with specific provisions halving to S$432 million and a S$413 million general provision written back due to improved portfolio quality. OCBC also noted total allowances for 9MFY21 were also lower, down 68% YoY to S$555 million, while UOB reported its total allowances for 9MFY21 were down 53% YoY to S$546 million, with the credit outlook stabilising and the pre-emptive allowance from FY20 remaining adequate (click <a href="https://links.sgx.com/1.0.0/corporate-announcements/O43PVN81UOIO5IYR/63d036dfbc43996dd561a754b75be5bba98d03739ae0c78ab3b82c5e6a100462">here</a> for more). For the 9MFY21, DBS, OCBC and UOB Net Fee and Commission Income respectively rose 17%, 16% and 24% YoY. Total Net Fee and Commission Income for the trio for the 9MFY21 was S$6.25 billion. The combined non-interest income of the trio amounted to S$11.0 billion in 9MFY21, which was up 11% YoY and up 37% from five years ago in 9MFY16.   
On the results, the DBS CEO noted that a ‘progressive normalisation of interest rates in the coming quarters will be beneficial to earnings, while asset quality continues to be resilient and total allowances are likely to remain low.’ OCBC’s CEO also noted that in 3QFY21, the momentum across its banking, wealth management and insurance business ‘continued to grow, as reflected by loan, net new money, fee and insurance sales growth’. UOB’s CEO noted that amid near-term uncertainties, the gradual re-opening of borders bodes well for business flows and the bank remains positive of strong activities along the Great China-ASEAN trade corridors’, with ‘connectivity, digital innovation and sustainability areas set to drive Asia’s growth for the decades to come’. 
Finally, for 9MFY21, DBS, OCBC and UOB maintained respective annualised Return on Equity (“ROE’) ratios of 13.4%, 10.4%, and 10.2%. The trio also maintained higher ROEs than the last filings for the regional and global average for the bank sector according to Bloomberg Data. 
In July, the IMF <a href="https://www.imf.org/en/Publications/CR/Issues/2021/07/16/Singapore-2021-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-462216">noted</a> that the role of Singapore as a regional financial hub was not disrupted by the pandemic, adding that ‘cross-border interbank markets have been resilient during the pandemic, although the global economic slowdown entailed a moderation of trade finance volumes and net financing to the region’. The IMF also stated that the MAS-Federal Reserve US$60 billion swap line, announced in March 2020 and subsequently extended through end-December 2021, has played a critical role in boosting confidence and stabilising USD funding markets and lending to businesses both in Singapore and in the region. 
On 22 Nov, DBS formed a fresh all-time high at S$32.70, while UOB formed its 2021 year to date high on 9 Nov at S$28.17. OCBC formed its 2021 year to date high back on 10 May, at S$12.77. The average 27% total returns of the trio in the 2021 year to 19 Nov have brought their average total returns over the past 10 years to 189%. 
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The trio of STI banks have averaged 27% total returns in the 2021 YTD, in-line with global bank benchmarks. Earlier this month, the trio provided 3QFY21 (ended 30 Sep) and 9MFY21 updates, with DBS, OCBC and UOB reporting respective YoY net profit growth of 46%, 58% and 37% in 9MFY21.  
	 
	
Combined 3QFY21 NII of the trio was S$5.17 billion, up from S$5.13 billion in 2QFY21 and up from S$5.07 billion in 3QFY20. DBS, OCBC and UOB reported respective QoQ customer loan growth of 2%, 4% and 3% in 3QFY21, while for the 9MFY21, NII comprised 57%, 54% and 64% of DBS, OCBC and UOB’s total income.  
	 
	
DBS, OCBC and UOB Net Fee and Commission Income respectively rose 17%, 16% and 24% YoY for 9MFY21. Industry growth drivers include increased digitalisation, the broadening of wealth management services, and a continued focus on supply chains and growth markets. 
	 
	On 22 Nov, DBS formed a fresh all-time high at S$32.70, while UOB formed its 2021 YTD high on 9 Nov at S$28.17. OCBC formed its 2021 YTD high back on 10 May, at S$12.77. The trio have also been recipient to S$1.6 billion of net institutional inflows in the 2021 year to 19 Nov.

 

Last week, DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corp ("OCBC") and United Overseas Bank ("UOB") averaged 0.5% gains, outpacing the 0.4% decline for regional banks, as global banks declined 1.8%. During the week, the trio booked S$70 million of net institutional buying, bringing the total net institutional inflow for all stocks over the week to S$32 million.  
Combined, DBS, OCBC and UOB make up 20% of the total market capitalisation of all stocks listed on SGX, in addition to 20% of the day-to-day turnover, and represent more than 40% of the Index weightage of the Straits Times Index (“STI”). The trio have averaged 23% price gains in the 2021 year to 19 Nov, with reinvested dividends boosting their average total return to 27%. By comparison the STI has generated a total return of 17%, while global banks also generated a 27% total return over the timeframe. For the majority of the year, the trio’s average gains have been more or less in-line with global bank benchmarks, while regional banks have trailed, with 14% total returns in the 2021 year through to 19 Nov. DBS, OCBC and UOB have also been recipient to S$1.6 billion of net institutional inflows in the 2021 year to 19 Nov.  Recent Business Updates  
Earlier this month, the trio provided quarterly and 9MFY21 (ended 30 Sep) updates. DBS, OCBC and UOB reported respective 46%, 58% and 37% YoY net profit growth in 9MFY21. DBS highlighted that its first, second and third quarter net profits were the three highest in history (click here for more). For 3QFY21, DBS, OCBC and UOB respectively reported customer loan growth of 2%, 4% and 3% from 2QFY21. OCBC attributed the 4% QoQ customer loan growth to both consumer and corporate lending, which was broad-based across geographies (click here for more). Combined 3QFY21 net interest income (‘NII”) at S$5.17 billion, up from S$5.13 billion in 2QFY21 and up from S$5.07 billion in 3QFY20. NII comprised 57%, 54% and 64% of DBS, OCBC and UOB’s total income in 9MFY21.  
The recent performances and net institutional flows of DBS, OCBC and UOB are tabled below.  




			Stocks
			
			
			SGX Code
			
			
			Mkt Cap S$M
			
			
			Net Profit Growth 9MFY21
			
			
			YTD Net Insti Flow S$M
			
			
			Last Week Net Insti Flow S$M
			
			
			Last Week Price Change
			
			
			YTD Price Change
			
			
			YTD Total Return
			
			
			YTD Avg Daily T/O (S$M)
			
			
			10-year Total Return
			
		


			DBS
			
			
			D05
			
			
			83,419
			
			
			46%
			
			
			991.0
			
			
			37.3
			
			
			1.4%
			
			
			30%
			
			
			34%
			
			
			125.1
			
			
			291%
			
		


			OCBC Bank
			
			
			O39
			
			
			53,005
			
			
			58%
			
			
			191.0
			
			
			20.3
			
			
			-0.1%
			
			
			17%
			
			
			21%
			
			
			64.3
			
			
			115%
			
		


			UOB
			
			
			U11
			
			
			46,229
			
			
			37%
			
			
			424.0
			
			
			12.7
			
			
			0.2%
			
			
			22%
			
			
			27%
			
			
			66.4
			
			
			161%
			
		


			Average
			
			
			 
			
			
			 
			
			
			47%
			
			
			 
			
			
			 
			
			
			0.5%
			
			
			23%
			
			
			27%
			
			
			 
			
			
			189%
			
		


			Total
			
			
			 
			
			
			182,652
			
			
			 
			
			
			1,606.0
			
			
			70.3
			
			
			 
			
			
			 
			
			
			 
			
			
			255.7
			
			
			 
			
		

 Source: SGX, Refinitiv, Bloomberg (Data as of 19 November 2021)

 

All three banks reported significant YoY declines in allowances for the nine months. DBS reported its 9MFY21 allowances declined 99% YoY to S$19 million, with specific provisions halving to S$432 million and a S$413 million general provision written back due to improved portfolio quality. OCBC also noted total allowances for 9MFY21 were also lower, down 68% YoY to S$555 million, while UOB reported its total allowances for 9MFY21 were down 53% YoY to S$546 million, with the credit outlook stabilising and the pre-emptive allowance from FY20 remaining adequate (click here for more).  For the 9MFY21, DBS, OCBC and UOB Net Fee and Commission Income respectively rose 17%, 16% and 24% YoY. Total Net Fee and Commission Income for the trio for the 9MFY21 was S$6.25 billion. The combined non-interest income of the trio amounted to S$11.0 billion in 9MFY21, which was up 11% YoY and up 37% from five years ago in 9MFY16.    
On the results, the DBS CEO noted that a ‘progressive normalisation of interest rates in the coming quarters will be beneficial to earnings, while asset quality continues to be resilient and total allowances are likely to remain low.’ OCBC’s CEO also noted that in 3QFY21, the momentum across its banking, wealth management and insurance business ‘continued to grow, as reflected by loan, net new money, fee and insurance sales growth’. UOB’s CEO noted that amid near-term uncertainties, the gradual re-opening of borders bodes well for business flows and the bank remains positive of strong activities along the Great China-ASEAN trade corridors’, with ‘connectivity, digital innovation and sustainability areas set to drive Asia’s growth for the decades to come’.  
Finally, for 9MFY21, DBS, OCBC and UOB maintained respective annualised Return on Equity (“ROE’) ratios of 13.4%, 10.4%, and 10.2%. The trio also maintained higher ROEs than the last filings for the regional and global average for the bank sector according to Bloomberg Data.  
In July, the IMF noted that the role of Singapore as a regional financial hub was not disrupted by the pandemic, adding that ‘cross-border interbank markets have been resilient during the pandemic, although the global economic slowdown entailed a moderation of trade finance volumes and net financing to the region’. The IMF also stated that the MAS-Federal Reserve US$60 billion swap line, announced in March 2020 and subsequently extended through end-December 2021, has played a critical role in boosting confidence and stabilising USD funding markets and lending to businesses both in Singapore and in the region.  
On 22 Nov, DBS formed a fresh all-time high at S$32.70, while UOB formed its 2021 year to date high on 9 Nov at S$28.17. OCBC formed its 2021 year to date high back on 10 May, at S$12.77. The average 27% total returns of the trio in the 2021 year to 19 Nov have brought their average total returns over the past 10 years to 189%. 



DBS, OCBC & UOB Averaged 47% Net Profit Growth in 9MFY21 