CIMB Holds Talks for RBS Asian Assets as Profit Hits Record

February 27, 2012, 10:33 PM EST
By Chong Pooi Koon
(Updates with analyst’s reaction in seventh paragraph.)
Feb. 28 (Bloomberg) — CIMB Group Holdings Bhd., Malaysia’s second-biggest bank, said fourth-quarter profit surged 30 percent to a record on increased lending as it seeks to grow its Asia-Pacific reach.
The Kuala Lumpur-based bank is in talks to buy part of the Royal Bank of Scotland Plc’s investment banking and securities business in the region, CIMB Chief Executive Officer Nazir Razak told reporters in Kuala Lumpur yesterday. It’s simultaneously in negotiations to acquire a stake in Manila-based Bank of Commerce, he said, declining to give details on both deals.
Net income climbed to 1.13 billion ringgit ($374 million), or 15.2 sen per share, in the three months ended Dec. 31 from 872.6 million ringgit, or 11.8 sen per share, a year earlier, the company said in an exchange filing. It declared a higher dividend of 10 sen per share, compared with 8 sen previously.
“I think 2012 could surprise on the upside as most of the downside risks are already quite visible,” Nazir said in a separate e-mailed statement. “The investment banking deal pipeline is good,” he told reporters.
CIMB wants to extend its regional reach after being Malaysia’s top underwriter for equity and rights offerings in the past three years. It has made acquisitions in Singapore, Thailand and Indonesia in the last seven years and may be one of two remaining bidders for RBS’s Asian equities, mergers and acquisitions businesses as well as its research arm, the Financial Times reported Feb. 7, citing people it didn’t name.
Philippine Talks
The Malaysian group is in separate talks with San Miguel Corp. and other shareholders to buy a 60 percent stake in Bank of Commerce, a person with knowledge of the matter said last month. It was the 16th largest lender in the Philippines by assets as of June 30 with 122 branches, according to the county’s central bank.
“Management again reassured that both mergers and acquisitions if successful won’t be financed through equity,” UOB-Kay Hian Holdings Ltd. said in a report today. “Financing will come mostly through internal funds.”
UOB upgraded the stock to “hold” and increased its price target to 6.90 ringgit from 6.20 ringgit, still below its unchanged market price of 7.14 ringgit at 11:05 a.m. in Kuala Lumpur trading today. Hong Leong Investment Bank Bhd. boosted its price target for CIMB to 7.78 ringgit from 7.69 ringgit, according to a separate broking report.
CIMB joined other Malaysian lenders Malayan Banking Bhd. and Public Bank Bhd. in posting increased earnings for the quarter as a domestic economy that expanded 5.1 percent last year helped spur demand for loans and financing. Hong Leong Bank Bhd. yesterday reported a 31 percent jump in quarterly net income, while RHB Capital Bhd. is expected to report today.
Net interest income, or revenue from borrowers after deducting interest paid to depositors, increased 7 percent to 1.76 billion ringgit in the quarter, CIMB said. Allowances for impairment losses on loans and financing grew 73 percent to 289 million ringgit, the company said.
–Editors: Barry Porter, Chan Tien Hin
To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net
To contact the editor responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net
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