OCBC scouting for acquisitions in Indonesia to speed up growth: CEO

OCBC Bank is hunting for acquisitions in Indonesia to speed up its growth, aiming to leverage a strong capital buffer built up in recent years, the head of South-east Asia's second-biggest bank said.

Ms Helen Wong, who took over as chief executive officer of the bank in April 2021, told Reuters: "We think our capital is now good for us to enter a quick phase of growth."

Ms Wong noted that OCBC's capital buffer received a further lift in 2022 from a 7 per cent rise in first-half net profit to a record $2.84 billion, adding to 2021's robust recovery from the Covid-19-related slump.

Analysts have said it would make sense for OCBC to use its capital for an acquisition and some expected it would instead target China, where it already has a substantial presence in the Greater Bay Area comprising Hong Kong, Macau and nine major cities of southern China's Guangdong province.

OCBC's biggest-ever acquisition was its HK$38.7 billion (S$7.1 billion) purchase of Hong Kong-based Wing Hang Bank in 2014, which gave it a gateway to Greater China.

While OCBC earned nearly half of its operating profit from Singapore, Greater China was the next-largest contributor, followed by Malaysia.

Ms Wong said potential targets had come up in Indonesia, South-east Asia's largest economy, and that her group would make an attractive suitor given its financial strength, especially compared with digital banks, which have a much smaller capital base and lack a physical presence.

Ms Wong said that OCBC benefited from having both a brick-and-mortar business and a strong digital footprint.

In recent years, acquisitions in Indonesia's banking sector have focused on consumer technology groups, including Grab Holdings and Sea, which bought stakes in small banks, and Gojek, now part of GoTo, which acquired a stake in a mid-sized bank.

Indonesia, the world's fourth-most populous country, remains relatively underserved by a fragmented network of 107 commercial banks spread across its sprawling archipelago.

The government is keen to spur consolidation, and OCBC already has an 85 per cent owned unit that, since its founding in 1997, has grown into one of the country's 10 largest banks, although Indonesia accounts for only 7 per cent of OCBC's operating profit.

The bank's domestic rivals, meanwhile, have been active in acquisitions this year.

UOB agreed to buy Citigroup's consumer business in four South-east Asian markets for about $5 billion, while DBS Group snapped up Citigroup's Taiwan retail unit for $956 million.

DBS has also in recent years bought a stake in a Chinese bank and acquired an Indian lender.

This has increased attention on OCBC, which has the strongest capital position among Singapore banks.

Sanford Bernstein analysts said in a report in June that OCBC had $4.8 billion that could be used for acquisitions without the need to raise capital.

REUTERS