OCBC Bank is in no hurry to sell its stake in United Engineers (UE), one of Singapore's oldest listed companies, said chief executive Samuel Tsien at its annual general meeting yesterday.
He was responding to Mr Philip Smith, a shareholder, who grilled directors over the bank's intentions for engineering company UE, especially after the aborted sale of UE to Thai beer tycoon Charoen Sirivadhanabhakdi in February.
Mr Tsien noted that the bank has only a direct 4 per cent stake in UE, so it is a minority shareholder, while its insurance arm Great Eastern holds 16 per cent.
"UE is considered a non-core investment of OCBC Bank. We are not in hurry to dispose of this investment or to divest (ourselves of) it either," said Mr Tsien.
He added that a sale would not happen without an appropriate offer that reflects the "true value of our investment in UE".
More than 920 shareholders attended the 90-minute AGM and extraordinary general meeting held at Orchard Hotel.
Shareholders also quizzed directors on issues such as share buybacks, board diversity and branding. One of them also expressed an interest in learning more about Mr Ooi Sang Kuang, who became OCBC chairman in September last year.
Another shareholder asked about OCBC's mortgage portfolio.
Mr Tsien said: "New sales, as compared with two or three years ago, are down significantly. But our mortgage book continues to rise, primarily because of pre-committed loans which are being drawn down right now."
Another shareholder was concerned about the performance of OCBC's Indonesia and Malaysia arms.
Mr Ooi said: "If you look at the top line, we are growing the business. At the same time, we are also building the business in Indonesia, which is a very large country."
He explained that the costs in building the business there are large, and that was part of the reason for the flat results.
Concerns over credit quality, as interest rates gradually normalise, have also led to banks setting a higher amount of provisions for loans impairment.
Mr Tsien said of OCBC Malaysia: "It increased provisions for last year.
"In local currency terms, Malaysia's operating profit increased by 5 per cent."
While directors assured shareholders that OCBC continues to grow across the region, shareholder Paul Tan questioned its full-year payout of 36 cents a share, up two cents from 34 cents a year earlier.
Mr Ooi said OCBC's policy was of predictable, stable returns, and that the bank would not adopt a system of volatile dividends.
This article was first published on April 29, 2015.
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