Singapore banks are among the safest in the world. Collectively, the three local banks (UOB, OCBC and DBS) make up the largest percentage components in the local Straits Times Index.

They have an outsized impact on the STI compared to other sectors.

iShares MSCI Singapore ETF

Although most people are familiar with the banks, analyzing them as an investor is much more challenging. Banks work very differently from normal firms – and analyzing their financials is much more complicated than looking a normal firm.

Still, it is worthwhile to understand the basics of these banks simply because most Singaporeans are getting huge exposure to them whether they know it or not.

If you invest in a Singapore Unit Trust or a low cost Singapore index fund or ETF that tracks the STI – you are getting significant exposure to the banks whether you know it or not.

Furthermore, these banks …