KUALA LUMPUR (Feb 6): Following the aborted merger with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB), CIMB Group Holdings Bhd has announced its Target 2018 (T18) plan, which will see the reorganisation of its business divisions, together with changes in the senior management team, to drive its growth over the next three years.
Tengku Datuk Zafrul Tengku Abdul Aziz, acting group chief executive officer (CEO) of CIMB (fundamental: 1.35; valuation: 2.1), said the T18 initiatives are focused on streamlining and strengthening the regional banking group.
“We reviewed our starting position, current position, stakeholder expectations and the operating environment. I am happy to share some important T18 outputs with our stakeholders today, and explain some of the consequential changes we are making.
“We will recalibrate many things in 2015; then have three full years to accelerate based on those stronger foundations, to reach our targets for 2018,” said Zafrul in a press statement.
Under the T18 plan, the group will see the creation of a new regional commercial and SME banking division, an integrated wholesale banking division combining investment banking, treasury markets and corporate banking, and a regional consumer banking division.
Zafrul will be heading the integrated wholesale banking division as CEO, assisted by Datuk Lee Kok Kwan as adviser to the CEO. Lee is currently CEO of the corporate banking, treasury and markets division, which will be merged with the investment banking division, to create the integrated wholesale banking division lead by Zafrul.
Renzo Viegas will be appointed as CEO of the regional consumer banking division, while Datuk Sulaiman Mohd Tahir will be appointed CEO of CIMB Bank Bhd, upon regulatory approval.
Yong Jiunn Run, currently the head of commercial banking, CIMB Bank Singapore, will be appointed acting CEO of the newly-formed group commercial and SME banking division.
Meanwhile, Arwin Rasyid will step down as president direktor of CIMB Niaga at the Indonesian bank’s next annual general meeting, tentatively set to be held in April 2015.
“We’ve obviously made a lot of big decisions here. For example, our markets (equity and debt) infrastructure was clearly a replicative cost function, so, we delayered it. And given our focus on commercial and SME, it made perfect sense to give it, its own division. As for senior leadership, we are putting together a good blend of experience and fresh perspectives,” Zafrul said.
With the implementation of the T18 initiatives, CIMB aims to achieve a return on equity (ROE) of more than 15%, CET1 (common equity tier 1) of more than 11%, cost-to-income ratio of less than 50%, and for consumer banking to contribute approximately 60% of its income.
“I have my eye trained on driving our cost-to-income ratio down. We are targeting less than 50% by 2018, and this will require discipline and total commitment,” said Zafrul.
Meanwhile, the group will also intensify its efforts in three key businesses, namely commercial and SME banking, transaction banking and digital banking, targeting an increase in pre-tax profit by RM1 billion from the three segments, over the next three years.
"T18 is also about consolidation and being very measured about future growth. We have a very strong core engine and we will focus on realising the potential of our almost complete ASEAN platform. We are not looking for M&A opportunities except minor ones that help complete our ASEAN presence," added Zafrul.
“2015 is the year we recalibrate and set the pace for our journey towards T18. I am excited and thankful to the board for their trust in my leadership, as we move these plans into the execution phase,” he said.
CIMB closed 6 sen higher or 1.05% to RM5.80, bringing its market capitalisation to RM48.35 billion.
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