Thanks to OCBC AGM, I visited MBS Convention Centre which is a nice place to hold exhibitions and meetings. Before I go into what I took away from the AGM, I would like to briefly share the nice experience in attending the AGM.
The group had pre-AGM management presentation which I think is a good move as this provides a another platform for more Q&A. After registering, I was ushered to collect the refreshment and a venue with tables was provided for the shareholders to have their food and drinks before the presentation or AGM. While I always allude that shareholders are not there for the food (ok, maybe some are), providing refreshments is a gesture of appreciation for shareholders who took time to attend the AGM.
In terms of presentation, there is clarity in which the information is shared. I would say CEO Helen knows her stuff and she could articulate her thinking clearly and replied with composure. Of course there are certain details that could not be shared and I fully respect that. Oh, I love how the new Chairman Andrew conducted the meeting. Patient and with a sense of humour, he kept the meeting flowing, consolidated the related questions and shared his perspective to relevant queries.
The following are some points which I remembered from various questions. Again, the following are my interpretation and NOT a verbatim.
On CET1
Amid the current ambiguous time, the group decided to keep it at 15%. Chairman shared that this layer of liquidity will be useful if there is any crisis as it will be tough to raise any cash during a crisis. Also, this will come in handy if any opportunity arises.
On GEH and Acquisition
The group is looking forward to work with new GEH chairman and engage them from perspective of major shareholder. They are looking at having more representatives at the board. On the table is a planned discussion for GEH to have a higher dividend payout. But the final decision lies with GEH and not OCBC as both are separated listed entities.
The intent to acquire is always there but it depends on what is availability and regulatory. For example, the group has maximum 20% stake in Ningbo bank. As for acquiring GEH which brought out some cheer from the shareholders, they are opened to the possibility.
Off my head, I can imagine how tough it could be for those who have both OCBC and GEH shares. Would you want the offer to be high or low? Personally, I think the best might still be getting GEH to increase their dividend payout, then it will be win-win.
On Share Buyback
The management shared the purpose of share buyback is to fulfil the obligation of issuing shares to employees as part of renumeration and not for other purposes. A few shareholders suggested to buyback at lower price. While it make sense from an investor perspective, I think it is not easy to do that from a management perspective.
On Dividend
Dividend policy of 50% provided a clearer indication as compared to previous years’ dividend statement. As for if the interim and final dividend will be the same, Chairman said that it is better to leave it ambiguous, so that they retain some flexibility. I concur to that and like what the CEO mentioned (I think or my own imagination), the focus should be ensuring growth and that will result in increasing dividend. The following three numbers are on one of the slides she shared during the pre-AGM presentation. I cannot remember exactly what she said but these are number for next year.
- NIM of 2.1%
- Credit cost between 15-20 bps
- Mid single digit loan growth
I reckon that if the group can achieve the above, then the dividend could be sustained.
Seeing how the group has organised the AGM, and how Chairman and CEO responded to the questions, I am confident to hold on to my current holdings and am considering adding more.