Pay falls and headcount flatlines as OCBC clamps down on costs

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Pay falls and headcount flatlines as OCBC clamps down on costs

Average pay for employees at OCBC inched down last year as the bank focused on cost control. Compensation per head at OCBC – total employee expenditure (such as salaries and bonuses) divided by total headcount – fell 3% year-on-year to S$89,986 in 2020, according to figures calculated from the bank’s earnings results released today.

OCBC’s headcount stayed flat at 30,538, so the decline in average pay was “driven by lower staff costs”. While rank-and-file OCBC employees haven’t suffered cuts to their base salaries, Singapore banks have frozen pay for some of their top managers. OCBC is likely to have trimmed bonuses (“discretionary” spending fell last year) and been cautious with the comp of new recruits. “With consumer sentiments and business confidence continuing to be affected by the ongoing Covid-19 health crisis, we have kept a firm grip on costs,” says OCBC’s financial report.

OCBC is not expected to suffer an exodus of talent because of its parsimony. Average pay also fell year-on-year at its main rival, DBS. Moreover, as we noted earlier this week, people tend to join and stay at Singapore banks because they are stable employers rather than exceptional paymasters. And there’s also the fact that several units within the firm enjoyed a strong 2020.

Among them is Bank of Singapore (BoS). As at 31 December 2020, assets under management at OCBC’s private banking subsidiary grew 4% from the previous quarter and 3% against last year to a record US$12bn, “driven by continued inflow of net new money and improved market valuations”.  BoS has been hiring private bankers over the past two years in a bid to boost its AUM and cement its position as a top-five player by assets in Asian private banking.

In regional terms, it was a boon year for OCBC’s Greater China business. Profit from that region rose 11% year-on-year to a record S$1.29bn, or 31% of overall group profit. In common with other local and global banks, OCBC’s traders had a good 2020. Profit in the bank’s treasury and markets unit was up 31% to S$896m, “largely contributed by higher net interest income and net trading income”.

OCBC’s technologists had their work cut out for them in 2020 as consumer and corporate clients turned to digital channels during the pandemic. Last year there were 2.3-fold and 3.6-fold rises in digital transactions made by digital-wealth clients, and small and medium-sized enterprises, respectively. The bank also launched several new tech platforms, including becoming the first foreign bank in China to offer customers the ability to connect to that country’s Single Window system to initiate cross-border payments for imported goods.

As it kept a lid on costs, OCBC’s hiring in 2020 was largely focused on replacing employees who left. Its net workforce only increased by one person in the year to end-December. DBS, by contrast, added 632 new staff (excluding those from an Indian acquisition) over the same period. OCBC did, however, keep its early 2020 promise that it would not make layoffs during the pandemic.

OCBC’s full-year net profit of S$3.59bn was 26% lower than a year ago, mainly due to higher credit loss allowances and lower interest rates. CEO Samuel Tsien sounded cautiously optimistic about 2021. “While economic conditions have started to show signs of stabilisation and we are seeing increased activities in some pockets of the economy, the recovery is not yet broad-based. The uncertainty of Covid-19 containment globally continued to weigh on business confidence and consumer sentiments. We will remain watchful of the headwinds, but we are also looking for opportunities to capitalise on signs of sectorial recovery,” he said earlier today.

On April 15, Tsien hands over the reins to Helen Wong, the bank’s deputy president and head of global wholesale banking. Wong will become the first female chief executive of a Singapore bank.

Image: unsplash

Have a confidential story, tip, or comment you’d like to share? Email: smortlock@efinancialcareers.com or Telegram: @simonmortlock. You can also follow me on LinkedIn.

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