Oversea-Chinese Banking Corporation (or OCBC) conducted its 83rd annual general meeting (AGM) for the financial year 2019 ended 31 December 2019 on 18 May 2020 at 2pm.

Due to the circuit breaker measures implemented by the Singapore government to contain the community spread of Covid-19, this year’s AGM was held online. As a shareholder of the bank, I have attended the meeting to receive updates directly from the its top management.

In this post, you’ll find a key summary of the AGM (which I have compiled from the notes I’ve taken during the meeting for the benefit of those who did not attend it):

Presentation on the Macro-Economic Environment by Chairman Mr Ooi Sang Kang

  • The ongoing Covid-19 pandemic have caused a sharp contraction in output and trade, and global GDP is expected to contract by 3.0% in the year 2020 (from a growth of 2.9% in 2019.)
  • Core markets which OCBC have a business presence in are also expected to see their GDPs contract in the year 2020 as well, where:
    • Singapore’s GDP is expected to contract by 6.0% in 2020 (compared to a 0.7% growth in 2019),
    • Malaysia’s GDP is expected to contract by 1.0% in 2020 (compared to a 4.3% growth in 2019),
    • Indonesia’s GDP is expected to grow by just 1.0% (compared to a 5.0% growth in 2019),
    • and Hong Kong’s GDP is expected to contract further by another 5.0% (compared to a 1.2% contraction in 2019.)
  • In the near-term, Mr Ooi cautioned that the current situation remains uncertain, with worries about a possible second wave of infection a cause for concern. He opined that the economy may only see a gradual recovery from the second half of 2021.
  • Despite of that, he re-assured shareholders that because of the bank’s strong capital, funding, and liquidity position, it is well-equipped to face the challenges and navigate through the crisis.

Presentation about OCBC’s Response to Covid-19, Performance Highlights for FY2019, and Outlook in the Year Ahead by CEO Mr Samuel Tsien

(i) OCBC’s Response to Covid-19:


  • Mr Tsien shared that the bank have no plans for retrenchment amid this outbreak.
  • More than 20,000 of the bank’s staffs are currently working from home, with online trainings under its Future Smart Workforce Programme being conducted to help them navigate through changes.
  • The bank have also provided a Covid-19 Care Package for all of its employees.


  • Targeted support have been provided to both individuals as well as to their retail and corporate customers.
  • In Singapore, Mr Tsien updated that a total of S$4b of loan moratorium have been approved to individuals so far, mostly for home loans. He added that the bank have also reached out to provide support to 90% of its SME customer base.

Going Digital:

  • During the current circuit breaker period, the bank have temporarily shut 22 out of 46 branches islandwide (with the other 24 branches remaining open with safe distancing measures in place.) On when the branches will reopen, Mr Tsien said it will depend on the containment of the virus. Also, Mr Tsien updated that there were no cost savings from the temporary branch closures as all the affected employees have their full pay intact.
  • Mr Tsien also shared that the bank have been encouraging its customers during this period to make use of the its digital services available fulfil their banking needs, and help was provided to the less tech-savvy individuals.
  • With the increase in customer adoption of digital services, Mr Tsien expects this to translate into higher net operating profit for the bank in the future, from reduced manpower cost, and fewer physical branches and offices. He added that the bank will continue to invest in technology and digitalisation efforts in the areas of customer interaction, customer experience, internal processing, and infrastructure built.


  • OCBC, along with their staffs, have donated S$2.2m to help needy Singaporean families, migrant workers in Singapore, along with frontline healthcare workers.
  • Its subsidiary, Great Eastern, have also pledged S$1m of Covid-19 Customer Care Fund for its policyholders.


  • In order to allow the bank to deliver long-term sustainable value to its shareholders, Mr Tsien stressed on the need to protect its franchise, comprising of its customers, employees, as well as the community.

(ii) Performance Highlights for FY2019:

Key Statistics:

  • FY2019 was the third consecutive year where the bank saw an improvement in its net profit – where it went up by 8% to S$4.87b (FY2018: S$4.49b.)
  • OCBC’s total income saw a 12% year-on-year improvement to S$10.87b (FY2018: S$9.70b), and its operating profit before allowances was up by 14% in the same time period to S$6.79b (FY2018: S$5.94b.)
  • The bank’s profit before tax by geographical locations in FY2019 is as follows:
    • Singapore – 55%
    • Greater China – 20%
    • Malaysia – 14%
    • Others – 6%
    • Indonesia – 5%

Banking Franchise:

  • OCBC’s banking operations’ net profit crossed S$4b for the first time in 2019, with loans well-diversified across geographies. At the same time, Mr Tsien added that the bank’s customer bases and deposits have grew steadily over the years.

Wealth Management Franchise:

  • Mr Tsien highlighted that the bank’s wealth management income was up by 20% compared to last year to S$3.4b.
  • Between 2010 and 2019, its wealth management fees saw a compound annual growth rate (CAGR) of 19% where it rose from S$200m in 2010 to S$949m in 2019.
  • Finally, in terms of the bank’s asset under management, it saw a CAGR of 18% between 2010 and 2019, where it climbed from US$26b in 2010 to US$117b in 2019.

Insurance Franchise:

  • Mr Tsien shared that Great Eastern’s contribution increased by 38% on a y-o-y basis to S$832m in FY2019, with its Embedded Value and New Business Embedded Value both up by 15% on a y-o-y basis to S$15.5b and S$616m respectively.

Portfolio Quality:

  • Mr Tsien said that the bank’s portfolio quality continues to be satisfactory over the years.
  • Pertaining to concerns regarding to the bank’s exposure to the oil and gas sector, Mr Tsien assured that the bank will remain vigilant and prudent in its credit risk management.

Dividend Payout:

  • A final dividend payout of 28 Singapore cents/share is declared, which will be paid out on 05 June 2020, with the ex-dividend date on 22 May, and record date on 26 May.
  • Together with its interim dividend payout of 25.0 Singapore cents/share, the total dividend payout of 53.0 Singapore cents/share represented a dividend payout ratio of 47%.
  • With regard to the bank’s dividend payout in the year 2020 ahead, Mr Tsien shared that the bank will maintain a dividend payout ratio of 50%.

(iii) Outlook in the Year Ahead:

  • Mr Tsien opined that the economy is unlikely to recover before the year 2021.
  • Loan growth in the year ahead is likely to be muted, and the bank will continue to provide support to its customers pro-actively.
  • Net Interest Margin compression is expected in subsequent quarters from the full effect of rate cuts. Having said that, Mr Tsien added that the bank will be focusing on asset composition as well as current and saving account deposits.
  • Costs of the bank will be controlled in-line with revenue expectations.
  • Moving forward, Mr Tsien shared that the bank will continue to focus on their core markets in Singapore, Malaysia, Indonesia, as well as in the Greater China region.
  • Focusing on Greater China region, Mr Tsien updated that, despite the uncertainties from the trade war between China and the United States of America, the bank have made a very good progress in the region, with its growth tripled since 2014. He added that in FY2019, the Greater China region is the largest contributor to the bank’s profit before tax after Singapore. Moving forward, Mr Tsien shared that the Greater China region has also been identified as a high growth market, and it will be the main driver of activities in ASEAN as well as across Asia, and OCBC stands to benefit from the growth in this region.
  • As far as the impact of the anti-government protests in Hong Kong on the bank’s operations for the mid- to long-term is concerned, Mr Tsien responded that the stakeholders in the country are working on resolving the issues in the best interest of Hong Kong residents and the market, and this requires time.
  • To conclude, Mr Tsien said that the bank is well-positioned to navigate through the key global megatrends shaping Asia’s growth, and that the bank will continue to do well by delivering consistent and sustainable business performance, and do good by always employing fair and socially responsible business practices.

My Personal Thoughts

First and foremost, I’m sure many shareholders are concerned about the bank’s dividend payouts in FY2020 ahead (myself included) – Personally, as a shareholder, I am braced for the bank cutting its interim and final dividend payout if the payout ratio is tied to 50% (instead of an absolute value), as this year’s results will be a weaker one (compared to last year) due to the various headwinds from the Covid-19 pandemic, and its dividend payouts will be affected. I personally think it will be a bonus if the bank is able to maintain its payout made in FY2019.

Looking at its operations in the year ahead, I am of the opinion that OCBC will benefit from China’s recovery from Covid-19, with the country slowly resuming its normal business activities. However, its bottom-line this year will be negatively affected by the insurance business (should Great Eastern continue to see a huge drop in its net profit in the subsequent quarters like the first quarter – where its net profit plunged by 90% on a y-o-y basis), and also if more allowances have to be provisioned to cope with the uncertainties relating to Covid-19.

No doubt there are headwinds for the bank in the year ahead, but I remain confident of the its management’s ability to navigate through the crisis and emerge stronger at the end of it.

Download Related Documents for the AGM Below

Disclaimer: At the time of writing, I am a shareholder of Oversea-Chinese Banking Corporation Limited.

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