SINGAPORE – OCBC Bank will be reviewing its office space requirements and may be cutting down on its number of branches, said chairman Ooi Sang Kuang on Thursday during the lender’s annual shareholder meeting that was held virtually.
This is in response to a shareholder query on whether OCBC will follow in the footsteps of banks around the world that are slashing their physical footprint.
Mr Ooi said it will “certainly be moving towards” a hybrid workspace where staff can have the flexibility to work from home and the office.
The Covid-19 pandemic has also led the lender to realise that not all staff need to be at the headquarters, and can be distributed nearer their homes as well as in the suburbs, he said.
With that, bank branches will also be reconfigured, said Mr Ooi. “We may not need so many branches servicing our customers, so certainly I think there will be a review in terms of our office requirements as we move forward.”
Among the lenders that are reviewing their physical footprint is DBS Bank, which is reportedly giving up a few floors in Marina Bay Financial Centre Tower 3, as well as in Hong Kong. Other banks that are trimming or making plans to trim office space in central locations around the world include Standard Chartered, UBS, Citigroup and Mizuho Financial Group.
During the live question and answer segment, several shareholders also raised the issue of dividends and when they will return to pre-pandemic levels.
OCBC’s new chief executive Helen Wong said it is awaiting guidance from the Monetary Authority of Singapore (MAS) on the lifting of the dividend cap, and that it remains committed to its policy of providing shareholders with a sustainable and progressive dividend that is consistent with long-term growth.
“Whether a scrip dividend will be offered, or at a discount, will depend on OCBC’s capital levels, the appropriate capital mix, and the requirements to support our business growth,” she said.
Mr Ooi added that this is being reviewed “very carefully”, and it will consider the normalisation of dividends.
Following that, a shareholder then asked about the optimum capital levels for the bank.
Mr Ooi said that it looks at capital from a number of angles. The first would be the common equity tier one (CET-1) ratio, and that is within its risk appetite statement of around 12 per cent to 13 per cent. The bank’s current CET-1 ratio is at 15.2 per cent – the highest among the three local lenders.
The composition of capital mix will also depend on OCBC’s demand for business expansion and the cost structure in terms of the composition of the different capital instruments, he said.
“It is not something that is fixed but is something that is dynamic in terms of how the operating environment will pan out,” he said.
When queried on whether OCBC intends to hop on the cryptocurrency bandwagon, Mr Ooi said it is “closely monitoring” the developments in the cryptocurrency space, noting that these digital instruments have “spread very widely”.
The bank is evaluating the value proposition of cryptocurrency, including the tokenisation of financial and real assets, and will assess the suitability of such products for customers before adopting digital currencies, he said.
DBS at the end of last year launched a digital exchange which consists of a cryptocurrency trading platform, making it the first local bank to venture into this space. The members-only exchange, accessible by institutional and accredited investors, includes a platform for the issuance and trading of tokenised assets and provision of digital custodial services.
The board was also asked by investors on whether OCBC intends to set up a standalone digital bank. “We will continue to drive our bank-wide transformation to deliver superior banking experience for customers, achieve operational efficiency and apply data science to grow new opportunities,” said Ms Wong. “To capture these opportunities, we will consider the best way to achieve the results, whether it is from within the bank itself, or through a separate digital bank.”
During the meeting, Ms Wong also laid out her areas of focus for the lender, which broadly include capitalising on Asean-Greater China flows, expansion of its wealth management franchise, accelerating digitalisation and building a regional sustainable bank.
OCBC will deepen its penetration into Asean markets, including Vietnam and Thailand, she said. She also pointed to Greater China as an area to focus on, as it sees “a lot of potential” in the Greater Bay Area on all fronts including manufacturing, export, trading, technology, wealth and banking.
To further boost its wealth management business, the bank intends to expand its family business unit as it is seeing increasing wealth transfers across Asia. The lender will also expand its regional premier and wealth management business to capture strong growth in onshore wealth across Asia such as in China, Taiwan, Indonesia and Malaysia, added Ms Wong.