Should OCBC’s incoming CEO pursue a transformative acquisition?

[SINGAPORE] Helen Wong made waves when she was appointed group chief executive of OCBC in April 2021 – becoming the first female to lead a major local bank.

Wong leaves her role at the end of this year. Her stint at the helm will be just over four-and-a-half years by then – shorter than past CEOs Samuel Tsien and David Conner, who served for about nine years and 10 years, respectively. 

At rival DBS, Piyush Gupta was CEO for more than 15 years before handing over to Tan Su Shan earlier this year. Wee Ee Cheong has been CEO at the other major local bank, UOB, since April 2007.

OCBC’s performance

During Wong’s tenure to date, OCBC, like its peers, has done well. Nonetheless, OCBC’s performance trails market leader DBS’.

Versus pre-Covid pandemic in 2019, DBS’ net profit rose 77 per cent to S$11.3 billion in 2024, while OCBC’s net profit climbed 56 per cent to S$7.6 billion in 2024.

Over each of 2022, 2023 and 2024, OCBC’s return on equity (ROE) lagged DBS’. During the three years, the simple average ROE for OCBC and DBS were 12.8 per cent and 17 per cent, respectively.

In 2022, DBS and UOB announced deals to buy Citigroup’s consumer banking business, with DBS acquiring the Taiwan business and UOB buying Citigroup’s consumer banking franchise in Indonesia, Malaysia, Thailand and Vietnam. These deals have since been successfully completed. Should OCBC have taken a bite as well?

On the other hand, 2024 and 2025 were for OCBC marked by its attempt to get insurance subsidiary Great Eastern Holdings (GEH) privatised, a goal that remained unrealised.

OCBC is the longest established Singapore bank, formed in 1932 from the merger of three local banks, the oldest of which was founded in 1912. Over time, OCBC has weathered numerous major geopolitical upheavals and financial crises. 

Last week, OCBC reported that net profit for the second quarter fell 7 per cent from a year ago to S$1.8 billion amid a drop in net interest income due to lower net interest margin. 

Wong noted continued headwinds from tariffs and geopolitical tensions, and that global as well as regional growth could be slower from the second half.

Incoming CEO’s challenges

Tan Teck Long will take over as CEO on Jan 1, 2026, at a challenging time for OCBC.

Looking ahead, economic conditions are choppy in OCBC’s home market of Singapore, whose economy is heavily trade-reliant. Local businesses that OCBC services might struggle with the US’ imposition of higher trade tariffs.

The group has a large exposure to Greater China, and the Chinese economy is undergoing a period of painful economic adjustment. 

Other key markets of OCBC’s, namely Malaysia and Indonesia, might see their growth badly hampered by the tariffs that the US is levying on imports from these countries.

Could earnings and dividend payments come under pressure from potentially slower loan growth, soft net interest margin and deteriorating credit quality?

Nevertheless, Tan, who is deputy CEO as well as head of global wholesale banking and has more than 30 years of banking experience, will take over a strong financial services group.

OCBC is well-capitalised and has robust credit ratings of “Aa1” from Moody’s and “AA-” from both Fitch and S&P. The group offers a broad range of financial services and is anchored in Asia, where the long-term economic outlook is positive. It is well-positioned to capture opportunities from expanding Asean-Greater China connectivity.

Among others, OCBC is well-placed in private banking through its wholly owned subsidiary Bank of Singapore, life insurance in Singapore and Malaysia via GEH, and asset management through Lion Global Investors, which is one of South-east Asia’s leading asset management companies.

Last year, at DBS, then-incoming CEO Tan Su Shan admitted there were “big shoes to fill” with the departure of the long-serving and much admired Gupta.

While Wong has done a commendable job at the helm of OCBC, she was not there long enough to stamp her mark as Gupta had done. Thus, Tan may find it relatively easy to win over internal and external stakeholders. 

Wong has championed the “One Group” approach to boost growth and synergy. Tan looks set to continue banking on reaping synergies from different parts of OCBC group working together in closer collaboration.

M&A

Sure, size is not everything in the financial services business. And acquisitions present challenges whether from over-stretching the balance sheet or difficulties in integration.

Nonetheless, might an OCBC led by Tan look to deploy some of its capital on acquisitions?

After all, executing well on acquisitions can add skillsets to a business and at times provide the requisite scale for a business to be more competitive.

German insurer Allianz’s failed offer to buy a majority stake in Singapore’s Income Insurance disappointed many of Income’s minority shareholders. Might OCBC’s GEH have an opportunity to buy into Income?

Elsewhere, OCBC could look to deepen its Malaysian presence, perhaps by investing in a locally owned banking franchise there or buying a foreign bank’s Malaysian business. In June, OCBC said that it has committed more than RM11 billion (S$3.3 billion) in financing to support businesses in the Johor-Singapore Special Economic Zone since 2024.

While OCBC is in good shape and has a proud history, it is critical for the group to close the gap on key performance metrics with DBS and be competitive across its various business lines and geographic markets.  

Perhaps, Tan will not only get various parts of the OCBC group to work well as one and manage risk effectively, but also do a transformative acquisition to give OCBC an extra edge.