SINGAPORE - OCBC Bank's board of directors have reiterated their confidence in China's growth in explaining the Singapore lender's acquisition of Hong Kong's Wing Hang Bank.
At the bank's annual general meeting on Thursday, the first question posed by a shareholder was whether the bank could have grown organically in Greater China without acquiring another lender.
The shareholder also asked whether an ongoing economic slowdown in China would affect Wing Hang's financial health.
In response, OCBC non-executive chairman Cheong Choong Kong said the bank has confidence in the future of Greater China.
"We take a long-term view. We have confidence in the growth and future of China. Whatever short-term challenges there may be, we are confident that the CEO and his management team will be able to handle and respond and overcome effectively," he said.
CEO Samuel Tsien added that Wing Hang offered OCBC a leg up in certain businesses in Greater China where OCBC may not be so strong.
Wing Hang, for example, has a strong yuan or renminbi business.
"The renminbi currency is now becoming an increasingly important trade currency and it is likely to become an investment currency as well. Without access to a strong RMB base, we will not be able to expand into that area which is becoming a dominant area particularly for Asia," he noted.
"Wing Hang provides us with that opportunity which will be the driving force for incremental business going forward."
Another shareholder asked if Wing Hang's proportion of non-performing loans could rise as China's credit bubble bursts.
Mr Tsien noted that Wing Hang's ratio of non-performing loans stands at just 0.44 per cent - less than OCBC's 0.7 per cent - which shows that it has been prudent in its risk management.
"The target market segments that it focuses on are segments that they understand and are able to manage, just like OCBC Bank does. It is our intention to maintain the type of portfolio control that we have as we expand into Greater China for the future combined entity."