OCBC Bank (M) Bhd plans to spend at least RM100mil to upgrade its banking system and information technology as well as open new branches and revamp existing ones.
It is also targeting between 10% and 15% bottom-line and top-line growth for the current financial year ending Dec 31, 2011 (FY11), driven by the growth in the business, consumer and Islamic banking segments.
OCBC Malaysia director and chief executive officer Jeffrey Chew said that the bank planned to open five OCBC Al-Amin branches and four conventional branches this year, adding to its current five Islamic and 29 conventional branches.
“The investment range is between RM2mil and RM6mil per branch, depending on the locations,” he said at a press briefing on the bank's financial result, adding that profit contribution from the new branches would probably come in from the second year of operations.
The total investment in the new branches could range from RM18mil to RM54mil, depending on the amount spent on each branch. It is also looking to revamp its existing branches.
Moving forward, he said the bank was looking to move beyond its traditional business banking strength to also further develop its growing consumer banking and Islamic banking presence.
“Currently, business banking contributes about 57% to the top line, followed by 27% from the consumer business and the remaining 17% from treasury,” Chew said. “We are working towards a more balance ratio, ideally at 40% business banking, 40% consumer and 20% from treasury in five to seven years.”
In 2011, he said, the bank planned to increase the traction of OCBC Al-Amin in its Islamic banking business especially in the areas of personal financing, mortgages and wealth management through deeper engagement with the urban mass affluent and bumiputra segments.
“Accordingly, we are expecting high double-digit growth in our Islamic banking this year,” he said., adding that its Islamic banking subsidiary OCBC Al-Amin Bank Bhd registered a 10% growth in revenue to RM158mil for FY10.
On the outlook for the local banking sector, Chew said the domestic consumption and demand were still healthy and strong while the Government Economic Transformation Programme would spur the demand for loans, which was positive for the banking sector.
OCBC Malaysia's operating profit for FY10 grew 8% to RM1.1bil despite higher overheads. Its overheads increased by 10% to RM656mil due to infrastructure development initiatives involving branches and information technology.
Its revenue grew 9% to RM1.7bil while net profit increased 16% to RM706mil. Its cost-to-income ratio, one of the lowest in the industry, stood at 38%.
Net interest income grew 9% to RM1.1bil while non-interest income increased 8% to RM448mil mainly due to an increase in trading, commercial FX and fee-based activities.
Article from Global Islamic Finance Magazine
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