Thursday 5 January 2012

2012 CEO Outlook series: Public-private sector ties to boost RHBCap

TEFD: What are your expectations for 2012, for your bank and the industry?
Kam: Economic growth is expected to weaken with the eurozone’s sovereign debt crisis still lingering and the risk of it worsening remains high on the back of a slow US economic growth.

Due to the protracted slow growth, export growth is expected to slow down in 2012.

However, we expect the Malaysian economy to continue to be supportive of business growth and the outlook for the banking sector to remain positive, supported by the
underlying strengths of the domestic economy and the progressive rollout of the Economic Transformation Programme (ETP) projects.

In addition, Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate and statutory reserve requirement to be supportive of growth. However, if global economic conditions are to deteriorate rapidly, Malaysia will be impacted negatively and we expect BNM to proactively act and begin cutting interest rate sooner rather than later to support growth.

Domestically, the progressive rollout of the ETP shall provide more opportunities in the capital markets.

We will capitalise on our relationship with the public and private sectors for corporate and investment banking businesses. The proposed merger with OSK Investment Bank Bhd will complete our clientele coverage from small to large corporates and enhance our distribution reach to Asean and Hong Kong.

On the international front, high on the agenda will be completing the acquisition of Bank Mestika and participating in the growing Indonesian market, as well as driving our existing businesses in Singapore and Thailand.

What impact, if any, do you expect from the euro crisis?
In a bid to preserve liquidity and capital, European banks appear to have opted to be more conservative with their balance sheets. Consequently, within the region, this will provide opportunities for the domestic banks to step in and fill up the gaps when it comes to supporting transactions with our balance sheet. On a broader view, should the euro crisis continue to deteriorate, the impact on the real economy globally will not be spared and economic growth will be impacted.

Will BNM’s recent tightening of consumer borrowing have an impact?
These guidelines are not new as banks are already practising prudent and responsible lending, taking into consideration the necessary risk-reward of the loan. Nevertheless, banks may see slower loan growth ahead as they move to tighten consumer lending practices from this year, and competition for quality customers is set to intensify.

While the loan growth potential will be slower, we do not foresee the impact to be significant given the existing excess liquidity condition, accommodative interest rate regime, strong capital adequacy ratios of banks and historically low impaired asset ratio.

What is your banking group’s plans and focus for this year?
The strong private and public sector relationship built up over the past 24 months shall position us well to tap those ETP-related opportunities, while our enhanced banking network and channel through Easy by RHB and POS will provide a strong reach to our retail and consumer customers. The recently launched RHB Bank@work which comes with a complete suite of products and services under our renewed electronic and online banking platform will further enhance our capability to serve our customers better. We will also focus our efforts on maintaining the momentum built in our Islamic banking business.

What is your wish list for 2012?
I wish for the global economy to rebound and the Malaysian and regional economies to continue with their growth path, and to complete our acquisition of Bank Mestika in Indonesia as well as the OSK M&A successfully.


The 2012 CEO Outlook series started on Dec 19, 2011 and will run every day into January. The Edge Financial Daily has so far interviewed Geoffrey Briscoe of BMW Malaysia, Tan Sri Teh Hong Piow of Public Bank Bhd, Jeffrey Chew of OCBC Bank (M) Bhd, Osman Morad of Standard Chartered Bank Malaysia Bhd, Yvonne Chia of Hong Leong Bank Bhd, Tan Sri Lee Oi Hian of Kuala Lumpur-Kepong Bhd, among many others. If you’ve missed them, please read our back issues on iPad for free.



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