Chin Yee

Creating long-term value for shareholders

Since I took office in 2022, capital management has been one of my key focus areas as it plays a crucial role in supporting our growth strategies and improving shareholder returns. We have a robust and forward-looking capital management framework set in place to optimise our resource allocation. This approach includes an ongoing evaluation of capital needs to support our strategic objectives and provide buffers for potential uncertainties.

If you recall, we first announced a clear and transparent dividend policy in early 2023, targeting to pay out 50% of our Group net profit to shareholders. We exceeded our target, paying out 53% in 2022 and 2023. This not only rewarded existing long-term shareholders for their confidence in OCBC but also new investors who shared our vision for long-term success.

I am pleased to share another positive development from our ongoing capital management initiatives, and that is the $2.5 billion two-year capital return plan announced in February 2025. We plan to distribute this through special dividends amounting to 10% of Group net profit for 2024 and 2025, with the remaining via share buybacks over two years, subject to market conditions and regulatory approvals. Alongside our target ordinary dividend payout ratio of 50%, the total dividend payout for 2024 and 2025 will amount to 60% annually, surpassing the 53% for the previous two years.

The capital return plan signifies our commitment to enhancing shareholder returns and is in line with our goal of improving our Return on Equity. This is established after thorough assessment of the capital required to support our business growth and investments, while also ensuring we maintain a strong credit rating for OCBC, with the 14% target for Common Equity Tier 1 capital adequacy ratio.

We anticipate that, as we continue to execute on our corporate strategy, earnings will continue to grow over the years. To achieve this, it is crucial that we remain nimble and agile, not only in harnessing opportunities, but also in navigating challenges, particularly given the ongoing geopolitical tensions and trade uncertainties. While our well-diversified business franchise has delivered resilient and well-balanced earnings through the cycles, our collaboration as One Group to drive synergies will foster growth across our business franchise.

Proactive balance sheet management is vital amid softening interest rates to support our net interest income growth. Maintaining strict cost discipline will be imperative as well.

Our total shareholder returns have been solid, with five-year total shareholder returns at 96%. We are confident that we can continue to create long-term value for you.

Powering growth, guided by our corporate strategy

I earlier mentioned the importance of capital management, which has enabled us to strategically deploy capital for organic growth opportunities. This applies to inorganic growth opportunities too, as guided by our corporate strategy and regional ambitions. Let me elaborate on two recent corporate actions that exemplify this.

First would be the $1.4 billion voluntary unconditional general offer that we made in May 2024 for the 11.56% stake in Great Eastern Holdings that we did not own then. As our Group CEO elaborated in her message, investing in Great Eastern Holdings has been a decades-long strategy for OCBC Group. The insurer has grown into a dominant force, holding the highest market share of life insurance sales in Singapore and Malaysia currently, as well as the largest combined agency force across these two markets. Following the offer, our shareholding is now at 93.72%. With that, we expect even better alignment and synergy between Great Eastern Holdings, OCBC and other entities within the Group.

The second example is our acquisition of PT Bank Commonwealth (PTBC) which was completed in May 2024. PTBC was fully integrated into OCBC Indonesia in September 2024. This was a complementary acquisition for us – it solidifies our position in Indonesia, which is one of our core markets with a huge population that holds great potential. PTBC's demonstrated capabilities in wealth management matched our priorities and their customer base had little overlap with ours. The acquisition both deepened our presence and strengthened our customer and talent base in Indonesia. Future opportunities will be similarly evaluated to ensure that our capital usage is optimised in line with our strategic intentions.

Reinforcing our strong and diversified funding position

Equally important as our strong capital position is the need to maintain a resilient and well-diversified funding base. This is crucial given our ambitious growth plans and the need for nimbleness in navigating today's macroeconomic uncertainties. Our strong deposit base anchors this strategy, and we supplement it with wholesale funding across currencies and issuances in the capital markets.

In May 2024 for instance, we priced US$500 million of fixed rate subordinated notes under our US$30 billion Global Medium Term Note Programme. Given our strong capital position, only a benchmark size was issued. Shortly after, in June, we re-tapped the covered bond market after a 6-year absence, with a EUR500 million issuance. Our covered bond programme is a multi-currency programme which allows us to access funding across different currencies including Euro, US dollar, Sterling and Australian dollar. As the covered bond market has proven to be resilient during market stress, it resonates with our intent that the programme can be used for contingent funding. We will continually assess the need for debt and capital instruments.

Leveraging on technology to transform our capabilities

Group Finance has been actively transforming for the future through our three-pronged approach that I shared in 2023. First, on our core systems, we have leveraged cloud technology to implement a unified global finance platform. This enables us to automate our finance operations, analytics and reporting. We also have a new planning, budgeting and management system in place for connected, continuous and integrated planning.

Next is our automation and integration of multiple processes. The Citizen Developer Programme is among the numerous ongoing robotics process automation (RPA) initiatives. Group Finance colleagues, with little or no prior knowledge of coding, were trained to be "Citizen Developers" over four months. With these newfound skillsets, multiple "robotics assistants" have been created to help Group Finance with tedious and manual tasks such as transferring data in various document formats and templates into spreadsheets. Thus far, the Citizen Developers have automated over 30 processes and tasks, saving or avoiding approximately 2,800 annual manhours.

Enhancing our analytics, artificial intelligence (AI) and GenAI capabilities is the third prong of our approach. For example, we are working with Group Data Office - AI Lab to use AI and data science to improve our operational efficiency and analytical effectiveness. We are also harnessing AI to enhance forecasting, scenario planning and simulation. The opportunities are vast, and we continue to build our data ecosystem and deployment of our analytics solutions to optimise the value of AI.

Appreciation and thoughts on the road ahead

OCBC Group's record results for 2024 are the culmination of everyone's hard work. I would like to congratulate everyone across OCBC and extend a special thank you to my colleagues in Group Finance for their strong support.

I also wish to extend my appreciation to the investment community, many of whom I had the pleasure of meeting in Singapore and overseas. We value this strong working relationship and look forward to engaging you even more closely in the future.

We aim to build on our good result from 2024. Yes, the immediate future is clouded with macroeconomic uncertainties. We will address these challenges systematically by monitoring developments and preparing for various scenarios to remain nimble and agile. At the same time, we continue to take a long-term view when mapping out our corporate strategy. This will enable us to achieve sustainable growth which, ultimately, contributes to our ability to give back to you, our shareholders.