Hong Kong’s economy has been down, with its GDP contracting by 1.2% in 2019 amid ongoing protests and worries over the global economy, according to a report by the SAR government.
With the coronavirus outbreak, the economy is expected to take a further hit.
While firms have sound reasons to be concerned about Hong Kong’s economy, Singapore-based OCBC Bank has continued to be optimistic on its business outlook in the SAR.
“You will notice that over the past year, when the [protests] happened, and up to this moment, when the [coronavirus] happened, Hong Kong’s financial market continues to be quite healthy,” Samuel Tsien, OCBC’s group CEO, said during the bank’s earnings call.
When asked whether OCBC is considering to withdraw from the Hong Kong market, Tsien reiterated during the call that the bank will not exit the SAR.
“We believe that the Hong Kong recovery will take at least two years to go back to its normal state. While it will take a long time to recover, the recovery should bring us to a state which is equal to what we used to enjoy before.
“So we would not be withdrawing from the Hong Kong market. On the contrary, we would like to reinforce our presence over there,” he said.
Huge private banking business
Tsien explained that OCBC’s operations in Hong Kong are huge, especially for Bank of Singapore, its private banking business.
“The contribution of Greater China in terms of AUM is the largest [when it comes to our private banking business]. So that continues to be [a huge] originator of business activities for us,” he said.
Tsien noted that Greater China AUM does not include onshore assets in the mainland.
“So what we are actually [focusing on is] an offshore business rather than a domestic business,” he said, noting that more mainland investors have been investing in offshore markets through Hong Kong.
Tsien was not able to give a geographical breakdown of Bank of Singapore’s assets, however. In total, BOS’ AUM increased 15% to $117bn in 2019 from $102bn in the previous year, “driven by sustained net new money inflows and positive market valuations”, according to OCBC’s fourth quarter financial results.
Bank of Singapore has made several hires covering Greater China in the past year. This month, it appointed Joanna Ho in the newly created role of head of wealth planning for Greater China and North Asia. In August, the bank hired Kelvin Teo from Credit Suisse to head bespoke investments for ultra-high net worth investors in Greater China and North Asia. Also in 2019, Richard Hu was appointed as Greater China market head to lead a team of relationship managers.
Overall, Greater China is the second largest contributor of OCBC group’s pre-tax profit, according to the bank’s financial report. In total, OCBC recorded a pre-tax profit of S$4.87bn ($3.48bn) in 2019, which is 8% higher than S$4.49bn in 2018. Its key markets are Singapore, Malaysia, Indonesia and Greater China.
OCBC’s financial results