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Singapore banks averaged 4.2% total returns in August: SGX

LOCAL lenders DBS, OCBC and United Overseas Bank (UOB) averaged 4.2 per cent total returns in August 2020, outpacing the median total return of the top quartile of global banking stocks by market value.

All three banks distributed dividends in the month and saw their average 2.6 per cent price return for the month extended to a 4.2 per cent total return, according to the Singapore Exchange's (SGX) market update on Friday.

By comparison, the top quartile of global banking stocks by market value generated a median total return of 1.6 per cent over the month.

SGX said the banks have gradually increased quarterly net interest income to above S$4 billion in the second quarter of fiscal 2015 and above S$5 billion in the second quarter of fiscal 2018, maintaining a combined net interest income of S$5.4 billion in the second quarter of fiscal 2020.

DBS and OCBC remained among the top 10 constituents of the FTSE Developed Asia Pacific ex-Japan Sustainable Yield Index in the month. UOB, along with Hong Kong-listed CK Hutchison Holdings, were displaced by Hyundai Motor and Sun Hung Kai Properties.

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Constituents meet financial and operating strength criteria, with emphasis on strong balance sheets and the ability to generate cash flow.

Potential fiscal 2020 dividend yields for DBS, OCBC and UOB could be as high as between 3.5 per cent and 4 per cent based on current market prices, according to SGX.

The Monetary Authority of Singapore recently directed the three banks to cap dividends at 60 per cent of fiscal 2019 levels to bolster the ability to continue to support the credit needs of businesses and consumers, as well as absorb economic shocks.

As at 4.06pm, DBS shares were trading down S$0.14 or 0.7 per cent to S$20.62, UOB fell S$0.12 or 0.6 per cent to S$19.47, while OCBC dropped S$0.06 or 0.7 per cent to S$8.57.

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