This article first appeared in The Edge Malaysia Weekly on December 20, 2021 - December 26, 2021

"SUSTAINABILITY” is not the first word that comes to mind when one thinks of investment banking, but Maybank Investment Banking Group (Maybank IBG) wants to change that.

As awareness of environmental, social and governance (ESG) issues grows in Malaysia, Maybank IBG aims to be at the forefront, driving the global agenda of sustainability among its peers.

2021 is a significant year for the investment banking group as it represents the 10th year of its acquisition of Kim Eng, then the largest equities franchise in the region.

As Maybank IBG celebrates this milestone, and looks forward to a new chapter, CEO Ami Moris highlights the success of the merger.

“The results speak for themselves. Two key recognitions for the investment banking group are being Asean’s best broker for eight consecutive years and being the best investment bank in Malaysia for the sixth time in 2021.

“Those are the headlines in terms of organisation wins. But behind those headlines are real stories of how we have worked hard and tirelessly to stay true to our mission — humanising financial services.”

Ami strongly believes that culture and strategy, when aligned, are an unbeatable force. While she acknowledges that mergers are not easy, she says the two entities have focused on their commonalities rather than differences.

“The commonality that we focused on is the desire to be the best in class. So I do believe that the greatest win [from the merger] is one where it is about a collective of people coming together to build a unified culture,” she elaborates.

The merger transformed the investment banking arm of Maybank from being a single-entity investment bank in Malaysia, to one with a regional footprint across 10 jurisdictions.

“Over the last 10 years, the vision was to become Asean’s leading investing group. For the next 10 years, the vision is [centred] around being Asean’s ‘sustainability first’ bank,” declares Ami in a virtual interview with The Edge.

To show the cohesiveness of the 10-year vision for sustainability that has been formulated at the group level of Malayan Banking Bhd, Maybank IBG is undergoing a brand name change. It will be dropping “Kim Eng” from its company name across all of its global offices and will be led by the brand name “Maybank”.

Will the name change come with noticeable differences for its clients?

Ami anticipates that there will be a palpable difference because of the clear direction of how Maybank IBG wants to be over the next five to 10 years — and that is to be ESG first.

“Ultimately, we want to be able to uphold our group mission of embedding sustainable practices in our activities and we want to be able to influence our stakeholders and enable communities that we serve to have a better future. There is a clear mindset shift.

“When we say we want to be ESG first, before we embark on a deal, we have to make sure that we can agree with our clients on why the deal matters in terms of ESG impact.”

Ami believes putting ESG first makes for a good business case as it not only helps clients identify and quantify the ESG risks involved but also guides those that are transitioning to new business models in identifying the opportunities that exist globally.

“Green opportunities have been growing exponentially and these are the opportunities that we want to ensure that our clients are able to tap into, whether [they are] around the renewable economy or the circular economy,” she says, noting that sustainability and profitability are not mutually exclusive, but can actually enhance each other.

Maybank IBG and the Maybank group hold a clear no deforestation, peat and exploitation (NDPE) stance. The banking group has placed a robust ESG framework in place that cascades down to all business sectors.

“There is a clear business understanding of the type of activities that we will refrain from undertaking, for example, financing for new coal plants. There are very clear guidelines in terms of what activities we will undertake for businesses.

“But ultimately, transitioning with our clients always means engaging with them and working collaboratively so that we will be able to understand and guide them in terms of alternatives for business models because the opportunities [out there] are real and significant,” adds Ami.

Going forward, she foresees three trends that will shape clients’ needs: the rise of conscious capital, the search for alpha and the pervasiveness of technology.

“The way these clients’ needs are heading is what will shape how we move forward over the next five to 10 years. Our role as the capital market intermediary is to help our clients make money and we want to make sure we can help them generate better returns, whilst being ESG-compliant.”

Ami believes what sets Maybank IBG apart from the rest is its ability to leverage its regional footprint, providing clients with continued access to global markets, products, investors and deals.

“The intent is to make sure that we continue to bring Asean to the world and the world to Asean.”

She says the Covid-19 pandemic has not been a deterrent to doing business as Maybank IBG has always been adaptive to circumstances around it. Deals have continued to take place despite the challenges brought about by the pandemic, the most significant, she recalls, being a US$6 billion debt-raising exercise for Petroliam Nasional Bhd (Petronas).

“The debt-raising exercise for Petronas was at competitive pricing and done virtually. Given that we are in the business of investment banking, it is really about focusing on strengths and making sure that we continue with what has provided us with success, that is, having domestic investment banking teams and in-country investment teams that are working together with regional banking teams. It is also about making sure that we understand the regional lay of the land.”

Ami observes that there has been increasing contribution from private equity clients and sees the segment growing, particularly in advisory and capital market exits.

While the Kim Eng acquisition has strengthened Maybank IBG’s positioning as a regional investment bank, it is worth noting that over the years, the group has faced challenges in retaining its market share in the stockbroking space in certain markets.

“Market activities such as high frequency trading and proprietary trading at almost zero brokerage fees are growing across key markets in Asean. That is not necessarily an optimal business strategy for us as an established investment bank. Our focus is on brand integrity and profitability, not market share for the sake of it.

“The way we create value is through ideation, thought leadership and intellectual property to retain and attract quality clients, in addition to partnering regulators in Asean to promote their markets to global investors. Our recognition in the market is about the way we serve clients and partners rather than market volumes,” Ami says.

In FY2020, Maybank IBG posted a profit before tax and zakat (PBTZ) of RM504 million, or 5.8% of the Maybank group total.

For the cumulative nine months to Sept 30, 2021, investment banking PBTZ amounted to RM355.14 million, compared with RM292.43 million a year ago.

Ami says that deal activity has yet to revert to pre-pandemic levels, but she expects overall deal activity to continue to grow and result in a stronger 2022 compared with 2021.

“Growing to what we have become today, we will naturally continue to leverage our strong coverage in Asean and beyond to originate more cross-border deals across Asean.

“Fee-based income is expected to remain robust as deal flow continues to recover post-Covid,” she states.

This expectation comes from observing how some companies have grown throughout the pandemic, such as those in the technology sector and those at the forefront of the ESG focus.

Ami also anticipates continued capital market expansion by listed issuers to raise primary capital as well as organic expansion in 2022.

She projects deal flows for the bond and sukuk market to close at RM110 billion this year and foresees heavy deal flows over the next few months as investors try to lock in better deals before an anticipated interest rate hike in 2022.

“In 2022, we expect to see robust activities; there are about RM45 billion of corporate bonds that are close to maturity, showing a healthy pipeline as corporates tap the market for refinancing purposes.”

In the initial public offering space, Maybank IBG has a few substantial ones in the pipeline where it has been appointed arranger and adviser.

In the 10 years since the Kim Eng acquisition, Ami says the group has focused on building and scaling the business while ensuring resilient profitability. Looking ahead, the challenge is to enhance a people-driven culture while pivoting to focus on the “S” in ESG to drive value for Maybank IBG’s clients and stakeholders.

“The ‘S’ in ESG is critical and easily overlooked as contemporary global narratives tend to focus on the ‘E’. In reality, without a strong ‘S’ or a culture that emphasises ‘S’, the ‘E’ and ‘G’ imperatives would be weak too. Our approach in building our own culture and in originating deals includes working on projects that address their impact on communities and have strong social aspects in ensuring a more equitable and inclusive Asean. We are calling upon organisations and investors to do the same, to use their influence and resources to drive positive changes for society,” she says.

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