Despite the ongoing protests in Hong Kong, OCBC Bank said it will be pushing ahead with its plans to grow in China’s Greater Bay Area.
Chief executive Samuel Tsien briefed external analysts in Hong Kong last Tuesday, saying the bank is on track to reach its target – previously cited as $1 billion in profit by 2023 – for the Greater Bay Area, which comprises 11 cities, including Hong Kong.
“Greater China (including the Greater Bay Area) will continue to be our largest market outside Singapore,” he said, adding that the bank’s profit before tax from the Greater Bay Area grew from $551 million in 2017 to $605 million last year.
Of its profit before tax, 54 per cent comes from Singapore while 19 per cent comes from the Greater China region, comprising hubs in Shanghai and Beijing, and the cities in the Greater Bay Area.
Loans in the Greater Bay Area increased from $42 billion in 2017 to $45 billion last year, with the bank eyeing a target of $80 billion by 2023, Mr Tsien said.
He added: “China will continue to be a major economic force for this part of the world, so a lot of economic activities will be driven out of China to other parts of our franchise. We believe we will be able to capture (the in and outflows).”
The bank’s operating profit from Greater China has more than tripled from $476 million to $1.63 billion between 2013 and last year, with OCBC’s acquisition of Hong Kong lender Wing Hang Bank in 2014 propping up profit.
The bank’s customer base has also increased 19 times from about 28,000 to more than 545,000, Mr Tsien said.
OCBC, which is Singapore’s second-biggest listed lender, also has operations in Malaysia and Indonesia, among other countries.
Mr Tsien said the bank believes that the protests will be resolved in the best interests of Hong Kong residents and the market.
“Once (the protests) are resolved, the medium-and long-term aspects of Hong Kong being a financial centre for this part of the world will continue,” he added.
Hong Kong, he said, will continue to provide the bank with the revenue opportunities that it is looking for.
On the sidelines of the meeting with analysts, Mr Tsien, speaking in Cantonese, said “the protests have had a small effect on the bank’s bottom line in the short term”.
He pointed out that the Hong Kong people’s deep knowledge of China and global trade and affairs gives the city its edge.
Last weekend marked the 11th consecutive weekend of pro-democracy protests in Hong Kong, an important node in the Greater Bay Area that includes other cities such as Guangzhou, Shenzhen and Macau. Scuffles between police and the protesters have led to various disruptions in the city, including a shutdown of the airport.
Mr Tsien said during the briefing at the Four Seasons Hotel that there has been “no noticeable increased (business) flows out of Hong Kong, or an increased flow as a result of recent events to other parts of our franchise”.
He added that the trade tensions between the United States and China have rippled throughout the world, and OCBC has not been spared.
Mr Tsien expects loan growth this year to be between 4 per cent and 5 per cent, down from the 9 per cent growth last year, as a result of the lack of a trade deal between the US and China.
Earlier this month, OCBC reported a net profit of $1.22 billion for the second quarter this year, up 1 per cent from $1.21 billion in the second quarter last year, mainly from record earnings from the group’s banking franchise.
It had attributed part of its 10 per cent rise in net interest income in the second quarter, from $1.45 billion a year ago to $1.59 billion this year, to increased asset yields in Singapore, Hong Kong and China.
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