Business

Tuesday March 24, 2009

Maybank's BII investment to break even in 5 years


Its earnings will have to grow at least 25% per year for Maybank to achieve this

KUALA LUMPUR: Malayan Banking Bhd (Maybank) targets to break even on its investment in PT Bank Internasional Indonesia (BII) in about five years, but BII’s earnings will have to grow at least 25% per year for this to happen, its head honcho said.

“BII needs to grow its earnings as fast as possible, so that we can break even by year five,” president and chief executive officer Datuk Seri Abdul Wahid Omar said after the company EGM yesterday.

Maybank owns 97.5% of BII and the entire acquisition of the Indonesian bank, deemed expensive by the market, was completed last year. The acquisition together with two other acquisitions in Asia cost Maybank some RM11bil.

Wahid said BII would start contributing to the earnings of the country’s biggest lender if its return on investments increased from the current 2% to at least 6%.

Datuk Seri Abdul Wahid Omar (left) and Malayan Banking Berhad"s chief financial officer Khairussaleh Ramli at the EGM on Monday.

He reiterated that while Maybank expected its profits to fall in the current financial year ending June 30 from RM2.9bil in the previous year on loan provisions and acquisition write-downs, it would remain profitable.

To a question on a possible merger between Bank Maybank Indocorp (BMI) and BII, Wahid said Maybank was studying the options.

BMI is a joint venture entity with 93.65% stake held by Maybank and the balance held by an asset management company under the jurisdiction of Indonesia’s Finance Ministry.

At yesterday’s EGM, shareholders approved the banking group’s 9-for-20 rights issue of up to RM6bil, which the group said would help grow its business organically while strengthening core capital ratios.

 
MAYBANK :  [Stock Watch]  [News]


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