For anyone hunting for dividends in Singapore, the big three banks are usually the first stop.
Two of them, namely, DBS Group Holdings Limited (SGX: D05) and Oversea-Chinese Banking Corporation Limited (SGX: O39), had massive runs lately, riding the wave of high interest rates and a surprisingly resilient economy.
But now that the 2025 report cards are out, the real debate starts: which of DBS or OCBC looks better today?
Let’s find out.
Business Overview: How Similar Are They?
Both OCBC and DBS are regional banks with business exposures across Singapore, Southeast Asia, and Greater China.
They share similar core operating segments, competing for the same business across banking (consumer, corporate, and small and medium enterprises lending), wealth management, and trading.
The key difference between DBS and OCBC lies in their strategic focus: DBS has a higher concentration in wealth management while OCBC also operates an insurance subsidiary segment in Great Eastern.
Financial Performance Snapshot
Let’s examine both banks’ latest full-year 2025 results (FY2025).
DBS ended FY2025 with a net interest margin (NIM) of 2.34% for its commercial bank, compared to 2.80% in the previous year.
No surprise here, given that interest rates have been declining.
What’s surprising is that the net interest income (NII) for DBS’s commercial book only declined slightly, coming in at S$14.49 billion in FY2025 compared to FY2024’s S$15.04 billion.
Record deposit growth and proactive balance sheet hedging helped to mitigate the decline in the NIM.
Encouragingly, DBS continues to grow its non-interest income business: Fee income rose 15% to reach S$5.86 billion for FY2025.
This is due to the strong showing in wealth management, which came in at S$2.8 billion, up 28.9%.
The bank continues to boast an impressive return on equity (ROE) of 16.2%, helped by a low cost-to-income ratio of 40.4%.
DBS’s loans portfolio and balance sheet remains strong: The non-performing loan (NPL) ratio held steady at 1.0%, and the fully-phased in common equity tier 1 (CET-1) ratio was 15.0%.
The bank paid a total dividend of S$3.06 per share for FY2025, representing a trailing annualised yield of roughly 5.5%.
Similar to DBS, OCBC saw a decline in NII, coming in at S$9.15 billion for FY2025, down 6%.
The bank ended FY2025 with a NIM of 1.91%, down from 2.20% in 2024 because of easing interest rates.
OCBC’s non-interest income rose 16% to S$5.46 billion, thanks in part to wealth management growing 33% to S$1.23 billion.
Additionally, income from insurance held steady at S$1.1 billion.
Although OCBC’s cost-to-income ratio is comparable to DBS’s at 40.2%, it has a lower ROE of 12.6%.
In terms of OCBC’s loans portfolio and balance sheet, it has a good NPL ratio of 0.9% for FY2025, unchanged from 2024, and a robust CET1 ratio of 15.1%.
For FY2025, OCBC paid a total dividend of S$0.99 per share, giving it a trailing annualised yield of 4.7%.
DBS’s share price has been near a 52-week high lately at around S$56, giving the bank a market capitalisation of S$159 billion.
Likewise, OCBC’s share price is also near a 52-week high at S$21.20; at that price, OCBC’s market capitalisation is S$95.2 billion.
Dividend Comparison: Income Stability Matters
As I shared earlier, DBS currently offers a higher dividend yield of 5.5% compared to OCBC’s 4.7%.
Although OCBC has a lower payout ratio of 60% compared to DBS’s 79%, both banks’ dividends are sustainably covered by their earnings.
Both banks also have a good track record of maintaining or increasing their dividends over time – DBS in particular has increased its ordinary dividend by 40% from S$1.75 per share in 2023 to $2.60 per share in FY2025.
All things considered, for income investors, DBS might be the more appealing bank compared to OCBC.
Growth Outlook
Looking ahead, DBS’s growth drivers will come from its continued digitalisation and cost management initiatives, which should help keep a lid on costs.
On the income front, as the bank continues to expand its presence across the region, it should continue growing its wealth management franchise at a decent clip.
For OCBC, look at its insurance arm (Great Eastern) and wealth management segment for continued growth.
Risk Factors to Consider
The risks confronting both banks are similar: a slowdown in regional or global macroeconomic conditions could hamper earnings through credit defaults, and lower interest rates could put pressure on their NII.
Finally, a regulatory increase in capital requirements could also lead to lower dividends being paid.
Which Bank Fits Your Portfolio?
So which bank is better?
Both banks have displayed resiliency despite lower net interest income and margins.
DBS might be more suitable for investors seeking stronger growth and higher yield, while those looking for some insurance exposure can consider OCBC.
The decision comes down to what you’re looking for in your portfolio.
Get Smart: Know Your Portfolio Requirements and Risk Tolerance
Both DBS and OCBC are high-quality banks with strong balance sheets, while rewarding shareholders with consistent streams of dividends.
The better buy ultimately depends on what you’re looking for: if you’re seeking stronger growth, DBS is the horse for you, while those seeking some insurance stability can consider OCBC.
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Disclosure: Wilson.H does not own shares in any of the companies mentioned.
