The mild euphoria over the local banks’ results is probably over. For instance, even adjusted for UOB’s generous interim dividend of 85 cents, prices are lower ex-dividend. This scenario may be repeated with both DBS and OCBC which reported results - and generous dividends- on Aug 3 and 4 respectively.
The banks’ annualised dividends have their translated into attractive yields. For instance, OCBC’s 80 cents annualised dividends translate into a yield of 6.2%, as attractive as any REIT, yet coupled with growth, and retained earnings. The banks only pay out 50% of their net profit.
UOB’s annualised dividend of $1.80 translates into a yield of 5.9%, and DBS’ new 48 cents per quarter dividend provides its shareholders a yield of 5.5%. Among the banks, analysts have suggested that DBS had the strongest results with UOB and OCBC about even.
Since UOB announced results on July 27, its share price is likely to approach the mean of its price to book ratio. The oversold suppor low of this indicator appears at around 1.01x book.
See also: STI may retreat on strong overbought pressures but REIT Index may break out
