Oversea-Chinese Banking Corp. (OCBC)’s Samuel Tsien, who became chief executive officer of Southeast Asia’s second-largest lender yesterday, aims to boost the company’s revenue from China and Indonesia.
“We can create a better presence there, we can do more business there, and we can achieve a high level of performance in those markets,” Tsien, who took over as CEO from David Conner, said in an interview. He declined to comment on what proportion of revenue he’s targeting from the countries or a timeframe.
The Singapore-based bank’s push to diversify revenue comes amid takeovers and investments in Asia by bigger domestic rival DBS Group Holdings Ltd. (DBS), including the bid for PT Bank Danamon Indonesia. (BDMN) Oversea-Chinese, which gets 85 percent of its pretax profit from Singapore and Malaysia, may also have to turn to acquisitions to compete across Asia, according to Desmond Ch’ng, a Kuala Lumpur-based analyst at Maybank Investment Bank Bhd.
“Operations are still small outside of Singapore and Malaysia,” he said. “Short of mergers and acquisitions, OCBC will have to expand its branches in China and Indonesia to compete with the local players who already have a wide network and a captive depositor base.”
China, Taiwan and Hong Kong accounted for 7 percent of the bank’s pretax profit last year, while Southeast Asia, excluding Singapore and Malaysia, made up for 4 percent, according to company data.
“There will be an increasing contribution on a proportionate basis” from the newer markets, said Tsien, 57, who has served as the bank’s global corporate banking chief since 2007 and takes the reins from Conner, who held the CEO post for a decade. Tsien has no plan to reduce the lender’s presence in its bigger markets, he said.
The stock rose 0.3 percent to S$8.86 at the close in Singapore, the highest in almost two weeks. DBS, the biggest of Singapore’s three banks, gained 0.1 percent to S$13.49 while smaller rival United Overseas Bank Ltd. (UOB) lost 1.1 percent to S$18.30.
China and Indonesia are the two fastest-growing economies among the 10 biggest in Asia, based on data compiled by Bloomberg. China’s gross domestic product expanded 8.1 percent in the last quarter, even as the pace slowed to the least in almost three years, the statistics bureau said on April 13. The Indonesian economy grew 6.46 percent last year, the fastest since before the 1997 Asian financial crisis.
First China Branch
Oversea-Chinese opened its first branch in China in 1925, and now operates 16 branches through its OCBC Bank China Ltd. subsidiary, according to the bank.
Shanghai-born Tsien spent 30 years with Bank of America Corp. (BAC:US) and associated companies before moving to Oversea-Chinese in 2007. He held the position of president and chief executive officer of China Construction Bank (Asia) Corp., formerly known as Bank of America (Asia), for more than a decade before joining the Singapore lender.
In Indonesia, the bank owns an 85 percent stake in PT Bank OCBC NISP (NISP) valued at about 7.2 trillion rupiah ($790 million), according to data compiled by Bloomberg. The subsidiary serves the country’s small- and medium-sized businesses and individuals.
DBS, Southeast Asia’s largest lender, offered to buy Jakarta-based Danamon for about $7.2 billion on April 2 in the biggest takeover by a lender in the region. It said last week it will invest 2.3 billion yuan ($365 million) in its Chinese unit, the first time since it invested 4 billion yuan when the subsidiary was set up five years ago.
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