KUALA LUMPUR: The year 2012 would be a year when “revenues will be harder to earn”, and one that even larger banking groups would find thoroughly challenging, Datuk Seri Nazir Razak, group managing director of CIMB Group Holdings Bhd, told employees in his recent New Year address.
Even with its envied deal pipeline, dominance and reach, Nazir told employees that CIMB performed below par in 2011, a source said.
“CIMB did not outperform and shareholders lost a lot of value,” the source quoted Nazir as saying, adding that the message had a cautious undertone.
Net earnings growth, which Nazir expects to be around “mid-teens” in 2011, “relied heavily on cost containment and low provisioning”, the source added.
That CIMB probably only managed a 2% growth in net interest income, despite mid-teens growth in loan books, is another telling sign of margin compression and tougher times ahead.
In offering his views on why CIMB’s share price tumbled the way it did last year, Nazir even admitted the bank’s initial growth targets for 2011 were too aggressive. And the market didn’t question the guidance until CIMB under-delivered in several areas including on loans, deposits and net interest margins growth, the source said.
While CIMB beat rivals on several fronts and would probably meet or perhaps exceed latest analysts’ earnings projections, Nazir said year 2011 will still be one of CIMB’s worst years in terms of total shareholder returns.
Mirroring an industry-wide concern over asset quality, capital ratios and hazy prospects, CIMB shares tumbled over 22% from as high as RM9.17 on Jan 5, 2011 to RM7-levels currently.
That wiped out easily RM15 billion in terms of market capitalisation.
Calling himself a “corporate strategy buff”, Nazir sounded more motivated than shaken by the imminent tough tides of 2012 though, the source said.
“That 2012 would be tough isn’t a surprise and Nazir thinks CIMB is well-prepared for the challenges ahead, at least better prepared and better organised than they were for 2011,” the source said. “He is not as certain about Thailand at this point but sees political changes in Myanmar opening up investment opportunities for CIMB.”
In his address, Nazir also reminded employees to be aware of the many changes that the business environment and advancement in technology bring, telling them to embrace technology and be that “21st century banker” in attitude, mind and practice.
Having prepared for tougher times, Nazir is “excited about 2012” and is “cautiously optimistic” about the year ahead, citing silver linings like CIMB’s investment banking deal pipeline which was already looking good. CIMB, he said, would have a great 2012 if it can capitalise on opportunities that would present themselves even amid uncertain times.
Even with its envied deal pipeline, dominance and reach, Nazir told employees that CIMB performed below par in 2011, a source said.
“CIMB did not outperform and shareholders lost a lot of value,” the source quoted Nazir as saying, adding that the message had a cautious undertone.
Net earnings growth, which Nazir expects to be around “mid-teens” in 2011, “relied heavily on cost containment and low provisioning”, the source added.
That CIMB probably only managed a 2% growth in net interest income, despite mid-teens growth in loan books, is another telling sign of margin compression and tougher times ahead.
In offering his views on why CIMB’s share price tumbled the way it did last year, Nazir even admitted the bank’s initial growth targets for 2011 were too aggressive. And the market didn’t question the guidance until CIMB under-delivered in several areas including on loans, deposits and net interest margins growth, the source said.
Nazir: 2011 wil be one of CIMB's worst years in terms of total shareholder returns.
While CIMB beat rivals on several fronts and would probably meet or perhaps exceed latest analysts’ earnings projections, Nazir said year 2011 will still be one of CIMB’s worst years in terms of total shareholder returns.
Mirroring an industry-wide concern over asset quality, capital ratios and hazy prospects, CIMB shares tumbled over 22% from as high as RM9.17 on Jan 5, 2011 to RM7-levels currently.
That wiped out easily RM15 billion in terms of market capitalisation.
Calling himself a “corporate strategy buff”, Nazir sounded more motivated than shaken by the imminent tough tides of 2012 though, the source said.
“That 2012 would be tough isn’t a surprise and Nazir thinks CIMB is well-prepared for the challenges ahead, at least better prepared and better organised than they were for 2011,” the source said. “He is not as certain about Thailand at this point but sees political changes in Myanmar opening up investment opportunities for CIMB.”
In his address, Nazir also reminded employees to be aware of the many changes that the business environment and advancement in technology bring, telling them to embrace technology and be that “21st century banker” in attitude, mind and practice.
Having prepared for tougher times, Nazir is “excited about 2012” and is “cautiously optimistic” about the year ahead, citing silver linings like CIMB’s investment banking deal pipeline which was already looking good. CIMB, he said, would have a great 2012 if it can capitalise on opportunities that would present themselves even amid uncertain times.
