KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) should disclose what it should about its debts to allay investor concerns about the country’s currency and stock markets, said CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak (pic).
“We need to allay concerns, [and] put concerns to rest. Probably we should disclose what needs to be disclosed so that people have the full picture ...” he told reporters after CIMB’s (fundamental: 1.05; valuation: 1.65) annual general meeting yesterday.
“The reality ... is if you keep it hanging there, nobody is really sure of the full ramification. When people don’t know, they expect worse and worse, and I think that’s where we [stand] today,” he added.
While 1MDB’s debt doesn’t pose any systemic risks to the country’s banking and financial system, concerns about the company have unsettled [local] financial markets and it is good “to put the issue behind as early as possible”, said Nazir.
Nazir, however, said he has no idea how to resolve 1MDB’s issues as he does not understand the situation, adding that it was not his job either.
Criticism, including from former prime minister Tun Dr Mahathir Mohamad, has been mounting over the state investment vehicle, established in 2009, which had chalked up debts of up to RM42 billion.
On speculations that he has disagreements with his brother — Prime Minister Datuk Seri Najib Razak, who is also the Finance Minister and the chairman of 1MDB’s board of advisers — Nazir said it is normal for siblings to have disagreements.
“We are brothers. There are agreements and disagreements. It is healthy and it is normal,” he said.
Nazir also said it was the Ministry of Finance’s (MoF) decision to forgo the option of the strategic sale of 1MDB’s power assets a few days after CIMB was appointed adviser. 1MDB is fully owned by the MoF.
On another matter, Nazir expects profit from its 97.94%-owned Indonesian unit PT Bank CIMB Niaga Tbk to improve from the second quarter of this year on lower loss provisioning, with “significant” improvements in the second half.
“The performance in Indonesia in terms of bottom line will be better in the second quarter,” he said.
CIMB Niaga saw its net profit for the first quarter ended March (1QFY15) fall 92.4% to 82.72 billion rupiah (RM24.11 million) or 3.29 rupiah per share from 1.1 trillion rupiah a year ago. It attributed the lower net profit to higher levels of provisions and an 8.8% increase in operating expenses, in tandem with the Indonesian inflation rate of 8.4% for 2014.
Meanwhile, CIMB group chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz said the group had set an overall loan growth target of 10% for 2015, after taking into consideration its businesses in Malaysia and the region.
He said the group is “cautious” on its Thai operations after the Bank of Thailand cut the country’s gross domestic product forecast but is still optimistic it will do better this year.
Zafrul added that the group has applied for a banking licence in Vietnam and is still eyeing one in the Philippines as part of its drive to expand in fast-growing Southeast Asian markets.
He is also confident that CIMB Group will have a presence in all the markets in Asean by 2018. CIMB shares closed unchanged at RM6.11 yesterday, with a market capitalisation of RM51.47 billion.
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This article first appeared in The Edge Financial Daily, on April 29, 2015.