Singapore’s OCBC Bank Chief Executive Helen Wong told CNBC on Monday that the company has set its sights on “long-term opportunities” in greater China and Southeast Asia, with the strategy expected to generate an additional $2.2 billion in revenue by 2025.
Southeast Asia’s second-largest bank announced on Monday that it will unify its brand across Greater China, which includes Hong Kong and Macau, as well as its core markets in Southeast Asia.
“If you look at the macro trends, Greater China and ASEAN will continue to contribute more to world GDP growth,” Huang told CNBC, referring to the 10-nation Association of Southeast Asian Nations.
“If you look at the trade data over the past four years, China and ASEAN have grown at a compound annual growth rate of 13 percent,” she added. CAGR is a measure of the annualized return on an investment over a period of time, assuming profits are reinvested at the end of each year.
“The post-pandemic reopening of China, the impact of ASEAN’s rise on China’s +1 strategy, and other geopolitical factors” amplify potential business flows between the two regions, Huang said in a media release.
So while OCBC is seeing slower economic growth in some countries in the region, Wong said she is confident that with “all forces working together”, OCBC will be able to deliver growth.
The Overseas Chinese Bank (OCBC) signage is seen at the OCBC Center in Singapore, Wednesday, Aug. 3, 2022.
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This will be achieved by improving the way customers are handled digitally and by improving the way banks acquire customers and business, she said, without giving further details.
She also noted that OCBC and its subsidiaries serve the top seven ASEAN markets and can rely on operations in 17 cities in Greater China, including Hong Kong, Macau and Taiwan, as well as a partnership with Bank of Ningbo. .
Outlook for 2023
Asked about the bank’s outlook for the second half of 2023, Wong said “it’s likely to be fairly stable”.
She said the high interest rate environment helped its interest income, although fee income fell as investors pulled back on investments due to an uncertain economic environment.
But Wong said OCBC has other revenue streams that could contribute to growth, such as insurance income.
However, she also acknowledged that there could be uncertainty as interest rates could remain at current levels or be “a little bit higher”.
As such, OCBC will have to watch whether its credit portfolio may be affected by prolonged periods of high interest rates. Additionally, Huang noted that clients may be “on the sidelines” about investment activities if interest rates remain high.
OCBC, the second-largest regional bank in Southeast Asia, also received some funding from the failure of a U.S. regional bank earlier this year.
“Whenever there is some change in some part of the industry, some weakness, there is a shift to quality banks. So, as a highly rated bank based in Asia, we do see some new inflows,” she said .
However, our aim is not just to let money in, but to keep money in OCBC.
In response, Huang stressed, banks have to ask themselves: “Have any lessons been learned? How does this actually affect customers? Do we have the ability to serve customers when funds come in?”
OCBC shares have risen nearly 9 percent in the past 12 months, closing at S$12.30 on Monday.
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