Comparative Analyses of Dbs and Uob Banks

Comparative Analysis

of

DBS & UOB

Computer in Accounting (MAN0213M)

Assignment 2

Table of Content

Content Page

1. Executive Summary 1-2

2. Introduction 3-4

3. Financial Analysis

3.1. Important Investment Ratios

(i) P/E Ratio

(ii) Dividend Yield Ratio

(iii) Dividend Payout Ratio

(iv) Gearing Ratio

3.2. Profitability Ratio

(i) Net Profit Margin

(ii) Return On Shareholders' Equity

(iii) Return On Assets

(iv) Earnings Per Ordinary Share

3.3. Interest and Deposit

(i) Interest Income

(ii) Interest Expense

(iii) Net Interest Income

(iv) Customer Loans

(v) Customer Deposits

(vi) Loans / Deposits ratio 5

6

6

7

7-8

8

9

9-10

10-11

12

12-13

14

14-15

16

17

17-18

18-19

19-20

4. PESTEL Analysis for Banking Sector

4.1. Political

(i) Political Stability

(ii) Re-actions of the Government

4.2. Economic

(i) Financial Resources

(ii) Impact of US Economy

(iii) Pro-business Environment

4.3. Social

(i) Labour Force

(ii) Education system

4.4. Technological

(i) Internet Banking

4.5. Legal

(i) Bank Secrecy Laws

(ii) Exceptions to Secrecy Laws

21

21-22

22

23

24-25

25-26

26

27

27-28

28

29

Content Page

5. SWOT Analysis

5.1. DBS

5.1.1. Strengths

(i) Local Banking Subsidiary in China

(ii) Asia Treasures at Changi Airport

5.1.2. Weaknesses

(i) Series of Senior executives quitting

5.1.3. Opportunities

(i) Integrated Resort & Formula One

5.1.4. Threats

(i) US Sub-Prime Crisis

(ii) $500 credit card

5.2. UOB

5.2.1. Strengths

(i) UOB launches card with regional perks

(ii) Regional Bank

(iii) Free shares to retain talent

5.2.2. Weaknesses

(i) Subsidiary in China

5.2.3. Opportunities

(i) Cooperation with China Unionpay (CUP)

(ii) Integrated Resorts & Formula One

5.2.4. Threats

(i) US Sub-Prime Crisis

(ii) $500 credit card

30

30-31

31

31

32

32-33

33

34

34

35

35-36

36

36

37

6. Conclusion 38-39

7. References

8. Tables 1-2

9. Charts 1-4

10. Appendix 1-14

1. Executive summary

This report provides a comparative analysis and evaluation of the profitability of investment in United Overseas Bank Ltd (UOB) and DBS Group Holdings Ltd (DBS). Methods of analysis include using the comparison of Investment, Profitability and Liquidity. All analysis is supported by calculations found in the excel spreadsheets attached at the back of the report.

In the comparative analysis, UOB has a fairly stronger Stock Market Ratio when weighted against DBS. Its Price Earning Ratio of 13.68% is relatively higher than that of DBS's 12.16%, as well as the industry average of 13%. The investment ratios illustrated in the financial analysis have revealed that UOB is more favoured by investors. UOB also has a gearing ratio of 9.91% which suits