facebookWhy are the operating cash flows of local banks negative, yet our local bank stocks are still considered good buys? - Seedly

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Anonymous

10 Jun 2019

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Why are the operating cash flows of local banks negative, yet our local bank stocks are still considered good buys?

Taken from Yahoo Finance, the operating cash flow of the banks:
DBS: -18.91B
UOB: -32.09B
OCBC: -1.1B

Discussion (1)

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Banks primarily profit through lending (money goes out so it's an outflow). Borrowers do not repay (inflow) full sum at one go, but smaller portions over time. So outflow will be more than inflow, hence negative.

Negative cash flows shows that people are borrowing from these banks and in turn the banks will profit.

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