Weekly Recap: UOB & OCBC report decent earnings while T-bill yield falls

In case you missed the news this week, Singapore is now the 4^th wealthiest city in the world!

Around 4 out of 100 residents here are millionaires according to a report, putting us just behind New York City and the Bay Area in the US, as well as Tokyo, Japan.

While the media was focused on the eye-popping number of millionaires around us, what caught my eye was the driver of wealth creation.

The authors of the report attributed the growth in wealth to the strong performance of financial markets in recent years. In particular, the S&P 500’s 24% gain and the Nasdaq’s 43% surge in 2023 lifted the fortunes of wealthy investors. 

Thankfully, these avenues of wealth creation are not exclusive to the ultra-rich. 

As we shared in last week’s newsletter, the key is to start investing as soon as we can.

If you are looking for safe investments, the cut-off yield for the 6-month T-bill fell slightly to 3.7% in the latest auction. The latest Singapore Savings Bonds offer a 10-year average return of 3.33%. 

For those looking to build your income portfolio, we share 4 retail REITs that offer a dividend yield of above 5.5%, as well as ways to choose the best REIT ETF for your portfolio. 

We will also be hosting a webinar on 14 May (Tues) to discuss how to identify income opportunities in the Singapore stock market. 

If you are looking to learn more about ETF investing, join us at the upcoming FSM ETFestival on 18 May (Sat) and be equipped with the most up-to-date ETF investing ideas. 

I hope to see you there!

Gerald, Founder of Beansprout

🏦 SINGAPORE BANKS IN FOCUS

What happened? 

Singapore banks were in focus amongst local investors as UOB and OCBC reported their first quarter earnings. 

Following the record profit reported by DBS last week, UOB and OCBC also reported decent earnings, supported by strong interest income and robust wealth management fee income.

What does this mean?

Apart from earnings, investors were focused on the dividend prospects and outlook provided by Singapore banks. 

While DBS raised its earnings guidance for 2024, both UOB and OCBC largely kept their earnings guidance unchanged. 

Why should I care? 

The share prices of Singapore banks have been strong so far this year as investors increasingly expect that higher-for-longer interest rates will help to support their earnings and dividend payouts. 

This is in contrast to Singapore REITs, which face headwinds from elevated interest rates.

Across the three banks, DBS still offers the highest dividend yield of 6.1%, compared to 6.0% for OCBC and 5.6% for UOB as of 10 May 2024. 

Read our analysis of UOB's first quarter earnings and prospects here.

Read our analysis of OCBC's first quarter earnings and prospects here. 

🚗  MOVING THIS WEEK

• OCBC has announced a $1.4 billion voluntary unconditional general offer for the 11.56% stake in Great Eastern Holdings (GEH) that it does not currently own at $25.60 per share, a 36.9% premium over GEH’s last traded price prior to the offer.
• DBS CEO Piyush Gupta sold 75,000 shares in the bank at S$35.70 per share, according to a filing on the SGX. After the sale, Gupta still owns 0.095% or over 2.7 million of the bank’s ordinary shares. 
• Seatrium consolidated 20 shares into 1 share that are held by shareholders. The total number of outstanding shares in Seatrium will reduce from 68,217 million to 3,410 million after the exercise. Here's what you need to know about Seatrium's share consolidation as a shareholder. 
• Local telco operators Starhub and M1 are reported to be back to exploring a potential merger of their businesses, according to TMT Finance, citing sources familiar to the matter. Discussions on this matter is understood to be in the early stages, and there is no guarantee that a deal will surface. 
• AEM Holdings reported net profit of S$2.4 million for the first quarter of 2024, a 85% decline year-on-year. The company’s revenue declined due to the slower than expected recovery of its key customer. However, AEM noted that two of its recent contract wins would help grow its revenue in YF2025 to “triple-digit millions”.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

T-bill yield falls to 3.7%. Here’s why the yield is lower

The cut-off yield on the latest 6-month Singapore T-bill auction on 9 May fell to 3.7%.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Tuesday, 14 May: Beansprout Webinar: Finding income opportunities in the Singapore stock market, Alibaba Earnings
• Wednesday, 15 May: SIA earnings, Grab earnings, US Consumer Price Index (CPI) data
• Saturday, 18 May: FSM ETFestival 

Source: SGX, Bloomberg, Refinitiv

Get the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

📅 UPCOMING EVENT

Join us at the FSM ETFestival 2024, Singapore’s largest dedicated ETF investing event! Be equipped with the most up-to-date ETF investing ideas with presentations on the following topics:

• Gold is breaking through new record high prices. What’s next?
• Is it time to re-look into Singapore REITs?
• A world of higher yields is here to stay. What should bond investors do? 

We will also be sharing our thoughts on asset classes to look out for at the event.

Expect more than S$4,000 worth of lucky draw prizes to be won! Also, enjoy exclusive perks and promotions for FSM Debit Card and Account Opening in-person at FSM ETFestival 2024.

Sign up for free here.

Join the Beansprout Telegram group  for the latest insights on Singapore stocks, REITs, bonds and ETFs.