June 16, 2014 00:00
By Kwanchai Rungfapaisarn
Group firmly 'committed to Thailand'; eyes presence in every market in the region by 2015
CIMB Group is set to put together all the pieces of the jigsaw and become an Asean bank with a presence in every market in the region by 2015, its chief executive Nazir Razak said.
Razak said the bank hoped to get a licence to operate in Vietnam this year.
He said CIMB would open its first branch in Laos in July or August through its subsidiary CIMB Thai Bank.
“We are going to do whatever we can in trying to get a licence in Myanmar,” he added. “We are also searching for the right platform for the Philippines.
“We will complete everything by the end of 2015. We want to have a universal banking presence in all of Asean We want to have a presence in other key markets beyond Asean such as Australia and China.”
Subhak Siwaraksa, president and chief executive of CIMB Thai, said Thailand had strong trade links with Cambodia, Laos, Myanmar and Vietnam.
As a result, he said CIMB Thai would take a greater role in providing financial support to those markets via its strong network, such as the operation of more than 10 branches in Cambodia.
He said the bank, which was going to increase its investment in Cambodia, would soon disclose another important deal and it would reflect CIMB Thai’s strength.
“In Laos, we are going to open our first branch for full banking services in July this year,” he added.
“CIMB has also operated its representative office in Myanmar for 17 years and we’re waiting for the Myanmar government to grant the policy to allow foreign banks to open and operate their own branches in the country.
“In addition, the CIMB Group has also operated a securities business in Vietnam and has requested for a licence to operate a commercial bank in the country. The licence is expected to be granted within the next 12 months.”
Razak said CIMB had been very active in Asean.
“We are in Asean. We have to be a universal bank in all of Asean,” he said. “The political uncertainty in Thailand in some ways is better for Asean as Thai corporates will be reminded about how important it is to look at the opportunities elsewhere in Asean.
“CIMB today is heavily diversified in other markets, such as Indonesia and Thailand, where we are doing very well. We are very committed to Thailand, and of course in this kind of situation it could be an opportunity to increase our exposure to Thailand.
“This is something we will consider, depending on how we read the future. However, at this moment it’s still not clear what is going to happen. In this kind of difficult environment, this also brings opportunity, as it always does.”
Razak said politics was the most important element for Asean economic integration. The bank, however, could not revise its strategy until it had a better sense of the future. It wanted to make sure it had minimum asset quality and continue to service customers.
“For Thailand, we have to judge where the country will go economically before deciding whether we will put more money into the market or not,” he said.
Razak said the prolonged political uncertainty in Thailand had impacted on the ousted government’s policy-making and that had created pressure on Thai borrowers and consumers. It had also contributed to a weak performance of the economy as a whole and all banks had suffered as a consequence.
But he is hopeful the retail sector will not suffer too badly.
“Apart from a handful of situations we have monitored, I think will be okay. Some Thai corporations have diversified overseas to gain a better earnings balance,” he said.
He said CIMB Thai’s first-quarter profit in Thailand had increased year on year and it was growing very fast because it had a small base.
The bank kept talented staff and continued to strengthen its manpower.
In 2013, CIMB Thai recorded a consolidated net profit of Bt1.49 billion, a year-on-year increase of Bt184 million or 14.1 per cent.
CIMB Thai recorded a consolidated net profit of Bt440.7 million in the first quarter this year, a year-on-year increase of Bt127.7 million or 40.8 per cent.
The rise has mainly been attributed to increased net interest income, net fees and service income – up 106 per cent, 27.1 per cent and 23.1 per cent respectively on the year.
“We actually have seen high NPLs [non-performing loans] in auto loans. That is one area where we see high NPL,” Razak said.
“But it is not a big part of our portfolio. Nothing in Thailand is big for us. CIMB Thai is quite small, but with high potential.”
He said in terms of growth, CIMB would continue to lend to small and medium-size companies that meet its credit criteria.
He said the bank saw itself as deeply committed to Thailand and with 150 branches in the country, it saw the political uncertainty as a chance to become stronger and monitoring credit underwriting more.
Thailand accounted for about 5 per cent of CIMB Group’s total profit last year and it wanted that percentage to increase.