Following its financial year end on 31 December 2020, and the release of its fourth quarter and full-year financial results (you can check out my post about it here), Overseas-Chinese Banking Corporation Limited, or OCBC (SGX:O39), as we are more familiar with, released its annual report on Monday (05 April 2021), along with details about its upcoming annual general meeting (AGM).

Before I share the notes I have compiled (where it contains key pointers from the bank’s annual report), along with information relating to its upcoming AGM, there’s one thing I would like to highlight in case you are not already aware – the bank’s Group CEO Samuel N. Tsien will be retiring after spending 14 years with the bank (9 of which were as its Group CEO) on 14 April 2021. Ms Helen Wong, who is the former Chief Executive of HSBC in Greater China, will be the bank’s new CEO with effect from 15 April 2021 (she currently holds the position of the Deputy President and Head of Global Wholesale Banking with OCBC.) She will also become the first woman to head a Singapore bank with the latest appointment (you can read the news report by The Business Times on 08 January 2021 in full here.)

Message from Chairman Ooi Sang Kuang, and Group CEO Samuel N. Tsien

Impact of Covid-19 on the Bank, along with its Responses:

  • 2020 was an unprecedented year, where a global health crisis (in Covid-19) resulted in a sharp global economic contraction not seen since the last Great Depression of 1929/32.
  • According to the World Bank, the pandemic caused a 4.3% loss in global output in 2020. In the various countries which OCBC has a presence in, the annual GDP in Singapore, Malaysia, Indonesia, and Hong Kong declined between 2.1% and 6.1%. Only China saw a positive 2.3% growth.
  • In response, the bank immediately rendered their priorities and committed to provide full support to its employees, customers, and the community, as follows:
    • Employees: Facilitated a smooth transition to allow more than 20,000 of their staff to work from home, and at the same time, implemented protective protocols and provided additional support to ensure the safety of those in essential roles. The bank also launched a Covid-19 Care Package to support their employees and their immediate family members, along with Vaccination Support Programme for close to 100,000 employees in Singapore.
    • Customers: Financial assistance, including credit restructuring, bridging loans, moratorium reliefs, and government-assisted loans were extended to individuals, SMEs, and corporate customers.
    • Community: Apart from donations and volunteerism by the bank’s staffs to provide assistance for healthcare workers, migrant workers, and the vulnerable and disadvantaged in the society, OCBC also helped Singaporeans ride out this extremely difficult period by creating more than 3,500 job opportunities in 2020.

Outlook for 2021:

  • While there is cautious optimism that with the successful containment of the virus (through vaccination programmes), economic recovery will resume as the year progresses, great uncertainties remain with risks of setbacks arising from the emergence of new and more contagious virus variants, plus delays in the progress of vaccinations.
  • As such, recovery is expected to be uneven across countries and regions. However, Asia is expected to retain its lead as the fastest growth region, with China being the main engine of growth.

Building for the Future:

  • OCBC is ready to meet the opportunities and challenges posed by a rapidly evolving and transforming Asian region, particularly in:
    • Engaging its customers in new productive activities such as in supply chain transformation, advanced manufacturing, sustainability and renewable financing, digital services and business transformation
    • Capturing growth in the financing of trade and finance, where the bank had broadened their China Business Office coverage to all of the bank’s major markets in Southeast Asia
    • Looking into deepening their collaboration with partner banks, including Bank of Ningbo and regional banks to facilitate and deepen connectivity along the China-ASEAN corridor
  • Post-pandemic, OCBC is of the view that business operations will be reinvented, and ecosystems and engagement models will be towards digital platforms driven by real-time transactions and powered by big data, analytics, and artificial intelligence.
  • At the same time, the liberalisation of the banking sector and emergence of a broad spectrum of new financial service providers, encompassing digital banks, fintech, big tech, e-commerce, and social platforms, and the advent of open banking, open APIs and digital currencies will dramatically reshape the entire financial system. To this, the bank have been upskilling its employees, intensifying their digital offerings, and delivering industry-leading experiences to assist their customers in planning and enhancing their financial goals.
  • OCBC will be making more investments in its technology infrastructure to be more agile and responsive to meet new requirements, including building greater capacity to harness big data, analytics, AI and machine learning to better serve its customers.
  • At the same time, the bank will continue to buttress their cyber security defences and place responsible guidelines to strengthen their security roadmap in managing risks in data, IT systems, and cyber security across the Group’s businesses.

Group CEO’s Responses to Key Questions

  • How will OCBC fend off its digital challenges (particularly by the 4 new digital banks in Singapore in 2022)
    • OCBC have been investing significantly over the years to digitalise their frontend and backend
    • These investments have helped the bank roll out many first-to-market digital solutions for individuals (such as the ability to open new accounts online, voice banking, cardless ATM withdrawals using just QR code, along with a fully digitalised and online home loan process), as well as for businesses and corporates (such as the ability to immediately notify business owners when a PayNow payment is credited, allowing startups to open a bank account immediately upon incorporation, and a digital dashboard to allow their SME customers to better manage all aspects of their business – from banking to beyond banking)
    • While the bank can expect disruption and competition from the digital banks, it is something they anticipated and are prepared for.
  • How is OCBC integrating Environmental, Social, and Governance (ESG) considerations into its businesses
    • OCBC was the first bank in Southeast Asia to stop financing new coal-fired power plants and direct their focus to financing the development of renewable energy projects
    • By the end of 2020, their sustainable finance commitments have totalled S$20b, including clean and renewable energy projects using solar and wind, which far exceeded their initial target of S$10b by 2022
    • In June 2020, they have revised the target to provide S$25b of sustainable by 2025.

Details of OCBC’s Upcoming AGM

OCBC will be holding its AGM on Thursday, 29 April 2021, at 2.00pm. Due to the current safe distancing measures, the meeting will be held online, and you can sign up here (if you are a shareholder of the bank, and the deadline to register will be on 26 April 2021, at 2.00pm.)

If you have any questions, you can send them via email to the following email address: OCBCAGM2021@ocbc.com. Please note that you need to provide your full name, address, number of shares held, and the manner you hold shares of the bank (e.g. via CDP, CPF, SRS, or scrip based) together with your questions. There will be no live Q&A session during the meeting.

As a shareholder of the bank, I have signed up to attend its e-AGM, and will be providing a summary of it in due course.

Related Documents

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

 

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