BIMB still keen on Indonesia

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KUALA LUMPUR: BIMB Holdings Bhd, which wholly-owns Bank Islam Bhd and 60.5% of Syarikat Takaful Malaysia Bhd, remains keen on acquiring banks in Indonesia with the condition that it will have board representation and management control, said its group managing director and chief executive officer Johan Abdullah.

“The fact that we want to expand there must be backed with a clear business purpose and direction. If we are going there, we would like to have board representation as well as management control,” Johan told reporters after the group’s extraordinary general meeting yesterday.

“As of today (yesterday), the plan is still preliminary and nothing is on the table yet,” he said.

It was previously reported in 2012 that BIMB was in talks to acquire PT Bank Muamalat Tbk, but the deal was called off due to Indonesia’s regulatory uncertainty.

 Johan said BIMB is currently studying several factors such as economic conditions and the impact of the recent installation of Indonesia’s president Joko Widodo and its regulatory environment, especially on foreign ownership restrictions.

Under Indonesia’s current regulation, the maximum foreign ownership of domestic banks is capped at 40%.

Last year, Singapore’s largest bank DBS Group Holdings Ltd aborted its plan to acquire PT Bank Danamon Indonesia Tbk for 66.4 trillion rupiah (RM17.86 billion) as it was not allowed to own more than 40% stake in the latter.

BIMB is currently present in Indonesia through its subsidiary Takaful Malaysia, which controls 56% of PT Syarikat Takaful Indonesia.

For the six months ended June 30, 2014 (1HFY14), Takaful Malaysia’s operations in Indonesia contributed 9% or RM76.74 million to group revenue, while total assets there stood at RM412.2 million.

Meanwhile, Johan said BIMB is unperturbed by the creation of a mega Islamic bank in Malaysia, saying it is “not fixated in numbers” and believes that there is still ample room to grow organically.

“We are not fixated in numbers, and if you look at our key ratios, I would say that we are still doing fine. I also believe that the pie is still big enough for a so-called standalone Islamic bank that does not leverage on conventional banking,” he said.

 The proposed tripartite merger between CIMB Islamic Bank Bhd, RHB Islamic Bank and Malaysia Building Society Bhd (MBSB) is expected to create a mega Islamic bank with total assets of RM126.87 billion — second after Maybank Islamic Bhd

As at June 30, 2014, Bank Islam’s total assets and total capital ratio stood at RM42.92 million and 13.9% respectively.

Earlier at the meeting, BIMB shareholders approved its dividend reinvestment plan, which will allow them to reinvest their dividends in new shares in lieu of receiving cash.

 

This article first appeared in The Edge Financial Daily, on October 28, 2014.