Maybank poised to expand in Indonesia

Maybank poised to expand in Indonesia



Written by Ellina Badri

Thursday, 01 October 2009 11:14



KUALA LUMPUR: MALAYAN BANKING BHD [] (Maybank) is poised to expand its Indonesian operations after its bottom line took a hit in an impairment charge in its last financial year ended June 30, 2009 pursuant to its acquisition of Bank Internasional Indonesia (BII).



Maybank president and chief executive officer Datuk Seri Abdul Wahid Omar said the banking group would expand its Indonesian operations as part of its aspiration to become the leading financial services group by 2015.



He said BII would be developed aggressively over the next three years, with its branch network to be expanded to 450 from 250 branches currently, and by doubling the presence of its automated teller machines (ATMs) to 1,500.



“We are targeting to have a sizeable presence in all areas in Indonesia,” Wahid told reporters after Maybank’s AGM yesterday. He said capital expenditure for its expansion was, however, still being finalised, with the amount of money spent to depend on the size of each branch.



Wahid said the bank would focus on improving BII’s fundamentals via loans and revenue growth, rather than achieving growth through mergers and acquisitions.



Maybank took a RM1.62 billion impairment charge on its 97.5%-owned BII in FY09 and an impairment loss of RM353 million in its 20%-owned MCB Bank in Pakistan that resulted in its net profit falling 76% year-on-year to RM691.88 million.



Wahid (left) and chief financial officer Khairusalleh Ramli at the AGM yesterday. Photo by Chu Juck Seng



Wahid added Maybank did not expect further impairment charges in FY10, with BII set to record profitable results in the current fiscal year.



He also said loan-loss provisions at its Indonesian unit would be “normal” moving forward, with nothing “out of the ordinary” expected.



Maybank’s total loan-loss provisions had risen 109.7% to RM1.7 billion in FY09, with the consolidation of BII’s loan-loss provisions for the first time by RM366.2 million.



Wahid is confident of an improved performance in FY10, though the current financial year would still be challenging, with the bank seeing a gradual recovery in tandem with the residual recession.



“Our improved performance will stem from the lack of impairment charges on our overseas acquisitions, the economic recovery which is expected to bring broad-based growth, results delivered from our overseas operations, and higher revenue and cost optimisation from our Leap30 transformation programme,” Wahid said.



He also said the bank was maintaining its FY10 headline key performance indicator of achieving 8% revenue growth and an 11% return on equity. On its Singapore operations, which contributed to S$248 million (RM613 million) in profit in FY09, he said Maybank’s presence there was far ahead of other Malaysian banks located there.



He said while Malaysian banks provided additional competition in the Singapore market, Maybank was viewed as a local player there and possessed a significant brand presence.



SMOOTH TRANSITION... Maybank’s outgoing chairman Tan Sri Mohamed Basir Ahmad (left) with his successor Tan Sri Megat Zaharuddin Megat Mohd Nor at a ceremony marking the handover of the chairmanship during the bank’s AGM in Kuala Lumpur yesterday. Photo by Chu Juck Seng



Elaborating on the bank’s Middle Eastern presence, with one branch located in Bahrain and a small stake in an investment company in Riyadh, Wahid said these were used as “listening posts” to help the bank capture greater capital flows between the Middle East and Malaysia.



On the bank’s dividend policy, he said it would maintain its payout at between 40% and 60% of net profit.



Asked on the impact of the flooding in the Philippines on its 45 branches there, he said of its branches, five were located in Manila, but they had not seen any major impact from the catastrophe. He added the bank had put in place contingency measures, and that it was “all under control”.



On Maybank’s outlook for the Malaysian economy, Wahid said the worst was over, with Maybank having revised its gross domestic product (GDP) forecast to a contraction of 2.9% from a previous projection of a 3.8% decline, while its 2010 GDP forecast had been revised upwards to 4.5% from 4.2%.



He also said inflation was expected to come in at 1% this year, and 1.5% in 2010, with upside risks, while the overnight policy rate was expected to be maintained at 2% in 2010.



Maybank also projected the ringgit to strengthen against the US dollar going forward, at RM3.50 to the greenback in end-2009 and RM3.40 to the dollar in end-2010.



During the AGM, Tan Sri Mohamed Basir Ahmad handed over the chairmanship of Maybank’s board to Tan Sri Megat Zaharuddin Megat Mohd Nor, who takes over today.



Mohamed Basir retired as chairman after 16 years of service, the longest-serving chairman on the bank’s board.



Megat Zaharuddin had served as an independent, non-executive director on Maybank’s board from July 2004 before resigning in February 2009.



He has returned as chairman upon being appointed by the bank’s largest shareholders. He also served as chairman of its remuneration and establishment committee, and was a member of its nomination committee.



He possesses over 30 years of experience in the oil and gas industry, and had been regional business CEO/MD of Shell Exploration and Production International BV (Netherlands), before retiring in January 2004.



Megat Zaharuddin is also currently chairman of the Malaysian Rubber Board, director of the Capital Market Development Fund, the International Centre for Leadership in Finance, and Australia’s Woodside Petroleum. He was also chairman of Maxis Communications Bhd from January 2004 until November 2007.





This article appeared in The Edge Financial Daily, October 1, 2009.