Global Courant
Singaporean Overseas Chinese Banking Corporation has set its sights on “longer-term opportunities” in Greater China and Southeast Asia and expects the strategy to generate additional revenue of $2.2 billion by 2025, CEO Helen Wong told CNBC on Monday.
Southeast Asia’s second-largest bank announced on Monday that it will unify its brand in its core markets in Greater China — including Hong Kong and Macao — as well as Southeast Asia.
“If you look at macro trends, Greater China and ASEAN together will continue to contribute more to the growth of the world’s GDP,” Wong told CNBC, referring to the Association of Southeast Asian Nations’ bloc of 10 nations.
“If you look at the trade numbers over the past four years, China and ASEAN are growing at a CAGR of 13%,” she added. The compound annual growth rate is a measure of the annualized return on an investment over a period of time, assuming earnings are reinvested at the end of each year.
In a press release, Wong said that “the effects of China’s post-pandemic reopening, ASEAN’s emergence for the China plus one strategy and other geopolitical factors” have bolstered potential trade flows between the two regions.
While the OCBC has seen slowing economic growth in some countries in the region, Wong said she is confident it will be able to capture the growth if it “works us together.”
The signage of Oversea-Chinese Banking Corp. (OCBC) at the OCBC Center in Singapore, on Wednesday, August 3, 2022.
Edwin Ko | Bloomberg | Getty Images
This will be done by improving the way the bank engages with customers digitally, as well as improving the way the bank brings in customers and businesses, she said without giving more details.
She also pointed out that OCBC and its subsidiaries serve the seven major markets in ASEAN and can rely on a presence in 17 cities in the Greater China region, including Hong Kong, Macau and Taiwan, as well as their partnership with the Bank of Ningbo . .
Outlook for 2023
Asked about the bank’s outlook for the next half of 2023, Wong said it “is likely to be quite stable”.
She said the high interest rate environment has helped her interest income, even as fee income has declined as investors are reluctant to invest due to the uncertain economic environment.
But OCBC has other revenue streams that can contribute to growth, such as insurance revenue, Wong said.
However, she also acknowledged that there may be uncertainty as interest rates could potentially remain at current levels or be “slightly higher”.
As a result, OCBC will need to be aware of whether its loan portfolio could be impacted by sustained high interest rates. And if rates remain high, clients are likely to be “a little bit on the sidelines with respect to their investing activities,” Wong noted.
Stock Chart IconStock Chart IconAs a regional bank – Southeast Asia’s second largest – OCBC also saw some cash coming in from the collapse of regional banks in the US earlier this year.
“Whenever there’s some changes, a weakness in certain parts of the industry, there’s a flight to quality. So as a highly rated bank based in Asia, we see some of that new money coming in,” she said.
However, the goal is not only to get the money in, but also to keep the money with OCBC.
Wong emphasized that the bank should ask itself: “Has a lesson been learned? How does that actually affect customers? Are we equipped to serve the customers when money also comes in?”
OCBC shares are up nearly 9% over the past 12 months, closing at S$12.30 on Monday.
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