KUALA LUMPUR: Malayan Banking Bhd (Maybank), the country’s largest bank by assets, will be opening a new branch in Kunming, Yunnan Province, in China, making it the first Malaysian bank to set foot in the province.
The branch, which is Maybank’s fourth in Greater China, will open tomorrow.
Maybank (fundamental: 1.5; valuation: 1.45) also has branches in Beijing and Shanghai.
Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor Zaharuddin said the bank is relying on the potential of China, and the strategic position of the Yunnan Province which borders Myanmar, Laos and Vietnam, to be gateways to South Asia and Asean.
“Coupled with our global capabilities in transaction banking and treasury, as well as our position as market makers for the yuan/Singapore dollar, and the yuan/ringgit, we are confident that Maybank can add value to our clients in the region,” he told a press conference yesterday, after Maybank’s 55th annual general meeting (AGM).
He said the group sees China as a key driver of the global economy, especially of Asean economies, noting that the bilateral trade between Asean and China grew five-fold to US$444 billion (RM1.6 trillion), from US$78 million, for the five-year period up to 2013.
“More significantly, Malaysia has over the last six years been China’s largest Asean trading partner,” said Megat Zaharuddin.
Besides China, group president and chief executive officer Datuk Abdul Farid Alias said the group will be opening a branch in Myanmar — its first in the country — this August.
According to Maybank’s website, the Maybank Yangon Rep Office was granted a foreign branch representative office licence by the Central Bank of Myanmar in 1993. It said the rep office does not provide any commercial banking services in the country, but acts as a liaison for Maybank operations worldwide.
Meanwhile, Thailand, Megat Zaharuddin said, has been an “elusive” market for Maybank. Abdul Farid said the bank had planned to open a branch in Thailand, but said the requirements were steep.
“We are looking at an inorganic approach, meaning M&As (mergers and acquisitions) but none of them makes commercial sense to us, or in other words, [they’re] pricey. We need to find something that meets our requirements.
“We’re going to be patient. We want to make sure we end up with the right asset,” said Abdul Farid.
Asked about Maybank’s announcement relating to a fund-raising exercise in a foreign country, he said the exercise does not concern any M&As.
“It’s a multi-currency facility; it has nothing to do with any plans for an M&A. As you know, part of our business involves lending activity in a non-local currency denomination,” he said, adding that the facility will most likely be US dollar-denominated.
Historically, Maybank has been dependent on its limited deposits and the money market, said Abdul Farid, noting that it is “not a good way to manage our exposure”.
“The way to manage this is to have a proper medium-term funding strategy, and that was what we announced on Monday,” he said.
Yesterday, Moody’s assigned an A3 rating to Maybank’s planned issuance of Samurai bonds.
At the group’s AGM yesterday, its shareholders passed all its resolutions, which included the payment of a final single-tier dividend of 33 sen per share for the year ended Dec 31, 2014, bringing total dividends for the year to 57 sen per share.
Total net dividend payout for the year amounted to RM5.27 billion.
Maybank closed five sen or 0.53% higher at RM9.55, bringing its market capitalisation to RM89.03 billion.
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This article first appeared in The Edge Financial Daily, on April 8, 2015.