SINGAPORE (May 15): Maybank Kim Eng is maintaining its “hold” call on OCBC bank with a target price of $9.85 after the latter’s customer-centric approach is starting to show results.
In 2015, OCBC Bank changed its approach from product-centric to customer-centric. Eighteen months ago, 20% of sales came from the goal-based advisory process, now 36% of sales come from OCBC Life Goals, which is a customised programme to help customers reach their financial goals for retirement, children’s education, and wealth transfer. In the next 12-18 months, 50% of sales is expected to come from this process.
“We believe OCBC’s wealth platform is well-positioned for cross-selling efforts and product tie-ups across its franchise,” says analyst Ng Li Hiang in a Monday report. “ For example, some Bank of Singapore’s (OCBC’s private banking arm) products could also flow to the bank’s premier and consumer banking segments.”
OCBC has also invested in technology, such as voice biometrics and artificial intelligence in order to engage customers more efficiently. These investments can result in productivity gains and cost efficiencies. However, Ng estimates costs to increase by 3-4% from FY17 to 19E.
OCBC shares are trading 7 cents higher at $10.62.
