Friday February 22, 2013
Sterling results by Malaysia's largest lender Maybank, it looks at Indonesia ops for growth
By CHOONG EN HAN
PETALING JAYA: The country's largest lender Malayan Banking Bhd is continuing with its record streak, turning in RM5.74bil in net profit for the year ended Dec 31, 2012, boosted by double-digit growth across all its key financials.
For the next phase of growth, president and chief executive officer Datuk Seri Abdul Wahid Omar said Indonesia had the highest potential for the group in 2013.
“This is based on the country's estimated gross domestic product (GDP) of 6.7% on demography, foreign direct investment and infrastructure development, coupled with its relatively low banking penetration rate which is expected to grow by about 20%,” he said.
Its Indonesian arm, Bank Internasional Indonesia (BII), turned in a strong set of results last year with an 80.6% jump in net profit to 1.21 trillion rupiah (RM384.3mil) on the back of a 17.8% rise in net income and a 3.4% drop in provision expenses.
The banking group is still applying for extension of time to sell down its stake in BII, and would only sell if the share price is above its cost of 510 rupiah (16 sen) per share.
“Our focus remain on the fundamentals. If we can continue to improve the profit by 40% to 60% year in year out, there will come a time when the share price will exceed our cost,” Abdul Wahid said.
Moving into 2013, Abdul Wahid believes Maybank is well positioned in Asean to capitalise on the growth prospects of the region.
“We are strategically well positioned across Asean to further grow our international operations towards a 40% profit before tax contribution by 2015, and very much in a strong capital position to support at least 12% growth in risk-weighted assets in the near term, with a focus on providing sustainable returns to shareholders,” he said.
He said the banking group would raise the tempo of its international operations in 2013 and intended to enhance further its presence in Asean.
“Our first priority is to make sure that we intensify our efforts in the markets we are present in especially Indonesia, the Philippines and Cambodia and we would grow these markets on an organic basis. While for Thailand, we have always been interested to go into retail and commercial banking, but that would only come at the right time and with the right vehicle and valuation,” he said.
Abdul Wahid said valuations had gone up tremendously following bullish market sentiments and was not conducive at the moment from a valuation perspective but added that the bank was still hunting.
Recently, Maybank pumped in a further US$100mil to accelerate its growth in the Philippines, including the opening of a new corporate head office in Manila, in addition to its previous investment of US$50mil in 2010 for network expansion.
Singapore will continue to be an important hub for the bank for trade finance and mergers and acquisitions activity.
However, bank lending in Singapore is likely to moderate in line with the slowdown in economic growth, coupled with demand for housing loans that is anticipated to weaken after the Singapore government announced a seventh round of property tightening measures to curb investment purchases.
On the local front where 66% of the group's gross loans originate from, Maybank expects Malaysia to continue with its domestic activities, especially with momentum arising from the ETP (Economic Transformation Programme) investments.
It expects GDP to remain above 5% for 2013 due to sustained domestic demand and strong implementation of the ETP projects.
“We expect a 25-basis-point hike in the overnight policy rate, and we think the ringgit should strengthened against the US dollar by end 2013 based on fundamentals,” Abdul Wahid said.
Maybank has set a 15% return-on-equity target for 2013, in addition to a 12% growth target for group loans and group deposits.