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Farid says Maybank still open to mergers and acquisitions

KUALA LUMPUR: Malayan Banking Bhd (Maybank) has come out strongly to dismiss any notion that it is fixated on being the No. 1 financial institution in the country.

Facing the prospect of being dislodged as the biggest banking group in the country, Maybank president and chief executive Datuk Abdul Farid Alias said the group would not rush into buying another financial institution just to maintain its No. 1 status in the country.

The group, however, would remain open to merger and acquisition (M&A) opportunities that could add value to its business proposition, he said.

“Will we grow for the sake of being No. 1? No, we will not … whether we are No. 1 or No. 2, it does not matter to us,” Farid said at a briefing on the company’s second-quarter financial performance.

“But are we going to close the option of M&A opportunities? The answer is no. That might be a deal that brings value and the value can come from various perspectives. We do check around on what’s going on, we’re not passive,” Farid said.

Maybank has been reported to be on the lookout to buy another bank, as the proposed mega-merger involving CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd is expected to create a banking group with combined assets estimated at RM613.7bil, overtaking Maybank’s position as the top banking group in Malaysia with a current asset size of RM578bil.

“We do not need to acquire another bank just to have the biggest size in terms of total assets.

“At our size in Malaysia right now, we can be significant and relevant and provide all the things that we’ve promised our customers,” he explained.

Reinforcing Farid’s statement, Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor said the most important thing for it was to create shareholder value. “We are big enough already,” he said.

“We believe we have a footprint across not just Asean but also in other significant growth markets in the world, such that with our improved capability and services as well as product offering, we can grab the opportunities that come with the growth in those markets,” Zaharuddin explained.

Zaharuddin, however, stressed that Maybank was always on the lookout for M&A opportunities. “If it adds to shareholder value, then we will pursue it,” he said.

On the potential regulatory changes in Indonesia that could see foreign ownership in banks being capped at 40%, Farid said Maybank would strive to keep as much as it could of the shares it owned in PT Bank Internasional Indonesia Tbk (BII). Maybank currently has about 80% interest in BII.

As for the group’s expected performance for the financial year ending Dec 31, 2014, Farid conceded that Maybank would unlikely meet its return on equity (ROE) key performance indicator (KPI) target of 15% for the year.

He said Maybank was expected to achieve an ROE of around 14% by year-end.

“When we prepare our budget, we assume all our engines will be running at full steam. Last year, we had a good run but this year, some engines will not be running at full steam because of the current market condition that is beyond our control,” Farid said.

“We will do what we can to enhance earnings by focusing on improving our fee-based income and net interest income while maintaining our cost management,” he said.

According to Farid, Maybank remains “quite comfortable” with its headline KPI target for loan growth at 13%.

Maybank’s net profit for the second quarter ended June 30 came in below market expectations, increasing marginally by only 0.5% to RM1.58bil from RM1.57bil a year ago, as gains from the pick-up in loans during the quarter were pared down by lower fee income, mainly as a result of slower regional investment banking and global market activities.

During the quarter in review, the group’s earnings per share (EPS) fell to 17.47 sen from 18.23 sen while revenue grew about 2% to RM8.76bil from RM8.59bil previously.

Maybank declared a single-tier interim dividend of 24 sen a share, comprising four sen cash with the balance 20 sen electable under its dividend reinvestment plan.

For the cumulative period, Maybank’s net profit grew 3.4% to RM3.18bil for the first six months of the year from RM3.07bil a year ago. During the first half of the year, its EPS fell to 35.55 sen from 36.11 sen while revenue was up 2.5% to RM17.12bil from RM16.71bil.

– THE STAR

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