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NEWS UPDATES 22 February 2010

Malaysian bank bullish over prospects in Asean

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Malaysia’s CIMB Group Holdings Bhd, which aims to become South-East Asia’s universal bank, looks set to reap the rewards of its investment in Indonesia, the StarBiz reported.

CIMB Group’s 78.3 percent-owned subsidiary PT Bank CIMB Niaga Tbk recently announced a strong set of results for the financial year ended Dec 31 (FY09) despite the economic crisis which sent countries such as Malaysia and Singapore into recession.

CIMB Niaga saw its net profit for FY09 surging 131 percent to 1.57 trillion rupiah (580.66 million ringgit) from 678.2 billion rupiah a year earlier, translating into earnings per share of 65.52 rupiah from 28.14 rupiah.

The bank’s net profit was mainly boosted by higher interest income and gains on changes in fair value of marketable securities of 197.6 billion rupiah.

“Indonesia will be one of CIMB Group’s future growth areas. CIMB Niaga’s results have improved and I expect a better performance from it, going forward, as the economy picks up,” an analyst with a local stockbroking firm said.

CIMB was one of the early Malaysian entrants into the Indonesian banking sector, which is said to be under-penetrated but with high growth potential.

Global banks, including HSBC, have scrambled for a slice of the market there. Besides CIMB, Malaysia’s other top lenders – Malayan Banking Bhd and RHB Capital Bhd – have picked up assets in the republic as well.

Currently the fifth-largest bank in Indonesia in terms of assets, CIMB Niaga is the result of a merger between PT Bank Niaga Tbk and PT Bank Lippo Tbk last year to comply with the Indonesian central bank’s single-presence policy.

Analysts have turned more positive on CIMB Niaga’s earnings prospects and believe that the group is well-positioned to benefit from certain areas of the banking industry that are under-explored.

One research house is forecasting an average net profit growth of 38 percent per annum from 2009 to 2011 for CIMB Niaga and expects CIMB’s Indonesian operations to contribute 22 percent of group pre-tax profit by 2011.

CIMB group chief executive Datuk Seri Nazir Razak was quoted as saying in an earlier report: “I have said before that CIMB group is a regional organisation, and hence, our strategies and aspirations are regional in nature.”

Analysts expect CIMB group’s earnings from its overseas operations to pick up. So far, the results of CIMB’s operations in Indonesia and Thailand had exceeded expectations, an analyst said.

CIMB Thai Bank Plc, a 93.15 percent subsidiary of CIMB Group, registered a net profit of 1.7 million baht for FY09 compared with a two billion baht loss in FY08 as a result of two successive quarters of profitable operations.

“Based on the operational momentum, it appears that CIMB Thai could be much more profitable from 2010 onwards,” a research head said.


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