Tuesday, 10 January 2012

MAYBANK 's Kim Eng Holdings as a springboard become a regional financial powerhouse.

MAYBANK Investment Bank Bhd (Maybank IB) plans to use the acquisition of Singapore’s banking franchise, Kim Eng Holdings, as a springboard to become a regional financial powerhouse.

“Through the recent acquisition of Kim Eng, our regional footprint has grown across 11 countries and we will continue to expand our regional product offerings in order to become a truly regional organisation,” chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz told Business Times recently.

The company now has operations in Malaysia, Singapore, Hong Kong, Thailand, Indonesia, Philippines, India, Vietnam, Saudi Arabia as well as in London and New York.

Maybank IB is currently focusing on establishing and expanding its line of business – investment banking and advisory, retail
equities, institutional equities, derivatives and asset management – in its home markets, which are Malaysia, Singapore, Thailand and Indonesia.

“Our next step will be to establish and grow the businesses in markets such as the Philippines, Hong Kong, Vietnam, China and India,” he said.

Maybank IB has a presence in the Middle East via its investment in Anfaal Capital, an Islamic investment bank.

“We are continuing to invest in this region in order to tap deal flows from the Middle East, as well as to further deepen our expertise in Islamic finance,” Zafrul said.

Asked if Maybank IB is eyeing any acquisitions this year, he said that the investment bank’s default position for expansion is by organic growth.

"However, we are always open to the prospect of inorganic growth and are constantly on the lookout for business opportunities, especially if the valuation is justifiable," said Zafrul.

He added that at this juncture the company is focused on its integration exercise with Kim Eng.

The acquisition of Kim Eng has paid dividends, barely two months after Maybank IB's buy.

For the financial year ending June 30 2011, Kim Eng contributed a pre-tax profit of RM29.9 million on the back of RM166.8 million revenue.

Zafrul reiterated that Maybank IB's biggest challenge this year is the eurozone sovereign debt crisis and the prospect of a global financial crisis.

He pointed that within the markets where Maybank IB-Kim Eng has a research presence, there are earnings downside risks.

Waning investor confidence will also affect overall performance and growth rates and volatility is expected to persist amid uncertainties, he explained.

Nonetheless, Maybank IB expects gross domestic product (GDP) growth to be steady and positive for the next five years across all countries with gradual market liberalisation.

Across its key markets of Malaysia, Singapore and Indonesia, average GDP growth forecasts are between 4.8 per cent to 6.3 per cent.

"However, despite the gloomy economic outlook, we still see opportunities because of the immediate synergies from the merger with Kim Eng.

"With our combined strength, Maybank-Kim Eng will have larger underwriting capabilities which will allow the combined entities to market for more and bigger primary deals. Capital markets will be growing at a slower rate but our deal pipelines are still robust," Zafrul explained.

In Malaysia, corporate finance and bond markets are expected to benefit from the government's implementation of the Economic Transformation Programme and growth in initial public offerings (IPOs) and advisory transactions are also expected to be robust in Singapore, he added.

In terms of new markets to be tapped from its current platform within the Maybank group, Maybank IB is in the midst of setting up its derivatives business and opportunities abound, especially given Maybank's strong distribution network and existing client base.

"In this respect, we would be helping our clients to take advantage of either bullish or bearish market conditions through derivatives and structured products.

"We will also be rolling out products in countries such as Singapore and Thailand," he said.

In order to have a competitive edge, Zafrul said the company must differentiate itself from the rest and let its products speak for themselves.

"In creating innovative products, we offer our clients solutions which will contain high-value propositions. Apart from that, strategic competitiveness through innovative structures, pricing and configurations will help to add depth to products.

"A very good example of an area where we have deep expertise in is Islamic finance - especially in the area of sukuk, where we are continuing to deepen our expertise and innovate to stay ahead of the market," Zafrul said.


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