Shareholders naturally want to know why OCBC has been reluctant to dole out a dividend payout that is closer to that of its peers.DOES OCBC Bank need that much capital? What does it want to do with all that excess capital?To recap, the bank for 2018 paid a total full-year dividend of 43 Singapore cents a share, taking total dividend payout ratio to 40 per cent of its core 2018 net profit.
But a Citi report following the results briefing this month said that OCBC appeared interested to raise its 20 per cent stake in Bank of Ningbo over time as and when regulations allow. Last year, China loosened restrictions on foreign holdings in domestic banks, removing the previous 20-per-cent cap on foreign stakes in a single institution in a Chinese lender. Jefferies estimated that a 20 per cent incremental stake in Bank of Ningbo would cost OCBC roughly S$4 billion now.
In aiming to seize an expanding economic pie by tapping on the Greater Bay Area - set to become the world's largest bay area in GDP terms by 2030 - OCBC will continue to command the largest Southeast Asian presence of the top-four foreign banks in the Gre ater Bay Area. But to be clear, other factors must also come into play to ensure that capital and investment flows come through. M&A case studies have shown that the success of acquisitions does not merely come from ample funding, but also in aligning people of different work cultures and, particularly for banks, integrating different pieces of technology for better capturing of capital flows.
Source: News Formal (newsformal.com)
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