OCBC Bank Does Not Expect Further CDO Impairments

Source : Channel NewsAsia, 17 April 2008

OCBC Bank said it does not expect further impairments on its exposure to collaterised debt obligations (CDOs).

Chief Executive David Connor made that comment at the bank's annual general meeting on Thursday.

So far, 85 percent of the bank's CDOs have been marked-to-market, with provisions made for. OCBC said it does not expect any impairment losses from the remaining 15 percent.

Concerns were raised over whether the lender might suffer a greater impact from the fallout from the US housing credit crisis in the coming months. But OCBC said the majority of its asset-backed CDOs are already yielding returns, and it expects half of them to mature in the next two years.

OCBC's aggressive expansion in Indonesia last year also came under the spotlight. Shareholders raised concerns over what they called "fairly substantial allowances" made by OCBC in 2007, and asked if the aggressive expansion would continue.

"What we were told by the chief executive is that they'll probably slow down a little bit in 2008, and consolidate. (This) is good news because Indonesia is a good market but they should perhaps step back a little," said Philip Smith, an OCBC Bank shareholder.

OCBC said profits in its investment in Indonesia's Bank NISP have increased dramatically. It expects each of its branches in Indonesia to break-even within two years.

OCBC also announced the retirement of two of its directors, Michael Wong and Tan Sri Dato Nasruddin, at the AGM. - CNA /ls