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OCBC to optimise Indonesian expansion

OCBC to optimise Indonesian expansion

(21 February 2013 – Singapore) Singapore’s longest established bank, OCBC Group, now has 350 branches in Indonesia and has plans to aggressively boost growth in Indonesia as well as China. According to a source, management has identified Indonesia and Greater China as markets that they would be more aggressively growing in. This is due to the higher rates of economic growth, and business opportunities that it sees in these markets.

Management intends to commit resources, in the form of capital, management time, and transfer of knowledge to these markets. An increasing sales force would help front growth on these markets.

The source said: "In Indonesia, while OCBC has a stronger presence in the mass segment, management reiterated its strategy to grow the SME and Corporate banking segments. OCBC now has 350 branches in Indonesia, up from 200 previously.

"It is now focused on enhancing revenue stream from these branches, while slowing down the opening of more branches. While Cost to Income ratio remains higher than those of the Group, this is expected to improve moving forward as it optimizes its operations.

"While net income margins (NIMs) pressure is expected to continue as competition stays intense, yields continue to be very attractive, at levels higher than those of the Group.

"In Greater China, OCBC’s current strength is in the high end corporations. OCBC is looking towards expanding in the other areas, leveraging on its ASEAN exposure.
While competition with domestic banks would be hard, its capabilities in helping companies expand overseas, especially in countries where OCBC has a presence in, gives it an edge over the domestic banks.

"OCBC is therefore focused only on major cities, seeking companies looking to expand overseas, and therefore establishing onshore and offshore banking relationships."
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