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OCBC seeks $2.2 billion revenue growth from Greater China and Southeast Asia

Lanon Wee

On Monday, the second biggest bank in Southeast Asia declared it will be consolidating its brand name in its primary locations in Greater China - covering Hong Kong and Macao - and Southeast Asia. Chief Executive Officer Helen Wong informed CNBC, "If you study macro tendencies, Greater China and the ASEAN bloc will persist to be significant to the world's GDP growth." Oversea-Chinese Banking Corporation (OCBC) of Singapore has aspirations of "extended term prospects" in Greater China and Southeast Asia, CEO Helen Wong disclosing to CNBC on Monday that they anticipate these strategies to bring in around $2.2 billion additional revenue by 2025. On Monday, the second largest bank in Southeast Asia declared that it will be standardizing its brand throughout its predominant markets in ASEAN along with Greater China including Hong Kong and Macao.Mentioning the 10-nation Association of South East Asian Nations bloc, Wong told CNBC that "When you look at macro trends, Greater China and ASEAN are going to continue to contribute to the world's GDP growth." She added, "when you look at the trade numbers for the last four years, China and ASEAN – they're increasing at a CAGR of 13%," referring to the Compound Annual Growth Rate which is a measure of yearly returns for an investment over a period of time, depending on profits being reinvested at the end of each year.In a media release, Wong stated that "the effects of China's reopening after the pandemic, the rise of ASEAN for the China plus one strategy and other geopolitical factors" have amplified the prospective business dealings between the two regions. Despite the OCBC witnessing restricted economic growth in some countries in the region, Wong shared her optimism in the corporation’s ability to capture more growth as they "put their plan in action." She noted that OCBC will be improving its dealings with customers digitally, as well as the way it attracts customers and businesses. However, there were no further details provided. Additionally, OCBC services the top seven markets in ASEAN, boasting a presence in 17 cities in the Greater China region, including Hong Kong, Macao and Taiwan. This is all augmented by its partnership with the Bank of Ningbo. Wong suggested the bank's outlook for the second half of 2023 is probably stable, partly due to its high interest rate environment which has contributed to its interest income, despite a drop in income from fees due to the unpredictable economy. Furthermore, OCBC can benefit from other revenue sources such as insurance income. However, she acknowledged that if interest rates stay high or increase, the bank must pay attention to the implications this may have on its credit portfolio. Additionally, customers may be less inclined to move forward with investments because of sustained high rates, Wong noted. OCBC, Southeast Asia's second largest regional bank, saw an influx of funds resulting from the bankruptcy of U.S. banks earlier in the year. When commenting on this, Wong remarked that since OCBC is highly rated, investors tend to favour it in times of instability, resulting in capital influx. Nevertheless, the ultimate goal is not to just attract these funds, but to retain them. The bank has therefore been concentrating on understanding the implications on customers and making sure it is equipped to cater to customer needs. OCBC shares have appreciated by 9% in the last twelve months, closing at 12.30 Singapore Dollars on the 29th of June.

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