OCBC, riding growth wave, targets S$25b sustainable finance portfolio by 2025

Singapore

OCBC Bank says it is aiming to expand its sustainable finance portfolio to S$25 billion by 2025, riding growth momentum that is expected to continue over the next few years despite Covid-19.

The bank recently said that its sustainable finance portfolio has surpassed S$10 billion in size, a goal that it was targeting to achieve by 2022.

The accelerated pace of growth was attributed to a "significant increase" in the demand for sustainable financing in recent years due to greater awareness and heightened efforts to combat climate change, OCBC said in a statement.

Reduced pollution and clearer skies as a result of scaled-down business activities in the wake of Covid-19 have also helped to draw attention to the environment, said the bank.

In order to reach its "25 by 25" goal, the bank will focus on industry diversification and geographical diversification to find growth opportunities.

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While the property sector remains a leader in the sustainable finance space across the region, the bank sees promise in industries such as renewable energy, clean transportation, education, water and waste management, with government support playing a big role.

In January 2020, for instance, the bank provided an A$25 million green loan to ComfortDelGro Corporation for the financing of 50 hybrid buses in Victoria, Australia.

According to OCBC, businesses from economies around the region - including Myanmar, Malaysia, Taiwan, Hong Kong, South Korea, Japan and Australia - are increasingly looking to tap Singapore's expertise, given its growing reputation as a sustainable finance hub.

In May this year, OCBC partnered telecommunications company Axiata Group Berhad on the first sustainability-linked Islamic financing undertaken in Malaysia worth US$800 million.

Mike Ng, OCBC Bank's head of structured finance and sustainable finance, said: "The awareness and interest in sustainable projects has been increasing over the last few years, and Covid-19 has helped to draw attention to wider sustainability issues, including social ones."

In the wake of the Covid-19 pandemic, collective action taken by the public and private sectors can help to rebuild economies in a more sustainable fashion, he added.

In 2019, the bank participated in more than 20 green and sustainability-linked loans. It acted as sustainability adviser or coordinator for more than 10 of them.

Over S$5 billion in commitments were added to its sustainable finance portfolio last year, which included more than S$3 billion in green and sustainability-linked loans.

The bank said that "good progress" was also made in the financing of renewable energy projects, following its announcement in April 2019 that it would no longer finance new coal-fired power plants. DBS and United Overseas Bank have done the same.

OCBC came in tops for two Asia Pacific (excluding Japan) sustainable finance league tables in 2019 - Bloomberg's 2019 Mandated Lead Arranger (MLA) league table for green loans and renewable energy loans, as well as the 2019 MLA league table for green loans and sustainability-linked loans by intelligence service Debtwire.