If you’ve been checking your SGX portfolio recently, you’d know our local bank trio—DBS, OCBC, and UOB—have been absolutely flying. DBS alone hit around $76, which is uncharted territory.
Naturally, every Singaporean investor is asking the exact same question over kopi: “Is it too late to jump in? Should I take profit now, or just hold and keep collecting dividends?”
Finance creator Willie Keng shared a simple, no-nonsense two-rule framework to evaluate SG bank stocks, along with his honest take on how to handle them right now.
The 2-Rule Framework for SG Bank Stocks
Rule 1: Check the Fundamentals (Is the Business Actually Solid?)
When you buy a stock, you’re buying a piece of a real business, not playing a casino game. You want to see steady, predictable profit growth year after year.
- DBS Is Firing on All Cylinders: DBS posted record quarterly net profits of $3 billion (up 9% year-on-year) with a return on equity sitting around 18%. Management even upgraded their full-year expectations.
- The Wealth Management Boom: Why are bank profits so crazy high? Money is flooding into Singapore. With global market uncertainties and regional geopolitical tension, high-net-worth capital from across the globe is parking safely right here.
- Safe Haven Status: As the biggest player in town, DBS—along with OCBC and UOB—is swallowing up a huge chunk of this wealth management cash flow. They have a solid competitive moat; nobody is displacing our local banks anytime soon.
Rule 2: Check the Valuation (Are You Paying a Fair Price or Getting Burnt?)
Even the best company is a bad investment if you overpay. For financial institutions, the best metric to look at isn’t the standard P/E ratio, but the Price-to-Book (P/B) ratio.
Think of P/B like a thermometer taking the stock’s temperature. If it gets too hot, you risk getting burnt.
Why Use P/B Ratio? Even legendary investors like Warren Buffett rely on book value to value financial-heavy companies like Berkshire Hathaway. Banks aren’t high-growth tech firms—they run a traditional lending and deposit business. Paying a sensible multiple over net worth is the only thing that makes sense.
Here’s how the local bank trio looks right now:
- DBS: Historically, DBS trades at an average P/B of around 1.4x to 1.5x. Right now? It’s sitting near 3.0x P/B. With a book value of about $24 per share, paying $76 means investors are paying roughly three times its net assets. That’s running extremely hot.
- OCBC: OCBC’s historical average is around 1.3x P/B. Today, it’s trading near all-time highs, matching levels last seen during the Global Financial Crisis peak.
- UOB: UOB trades slightly closer to reality at around 1.4x P/B (against its historical average of 1.3x). Because UOB focuses more on traditional Asian corporate loans rather than massive wealth management, the market gives it a slightly lower multiple—making it less inflated than DBS or OCBC, though still on the higher side.
The Golden Question: Buy, Hold, or Sell?
So, what should you actually do with your hard-earned cash or existing holdings?
❌ Don’t BUY Right Now
The “temperature” for DBS and OCBC is scorching. Buying a traditional bank stock at 3x P/B leaves almost zero margin of safety. As retail investors, our single biggest advantage over institutional fund managers is patience—we don’t have quarterly client benchmarks to hit. Better to wait for a reasonable pullback or park your cash in undervalued sectors elsewhere while waiting.
❌ Don’t SELL If You Bought Cheap Years Ago
If you accumulated your bank shares during previous market slumps (like the 2015/2016 dip or the 2020 COVID crash), your dividend yield on cost is likely in the double digits by now. There’s zero reason to slaughter a golden goose that keeps pumping out passive income into your bank account every quarter.
✅ HOLD and Let It Compound
If you already hold shares at a cheap cost basis, just sit back, relax, and collect your dividend payouts. If you don’t own any shares yet, don’t let FOMO trick you into chasing record highs. Remember: capital always flows from the impatient to the patient.
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