CIMB May Start Broking Operations in India, South Korea

CIMB Group Holdings Bhd. (CIMB), Southeast Asia’s top-ranked investment bank over the past three years, said it may start broking operations in India and South Korea after buying most of Royal Bank of Scotland Group Plc’s Asian investment banking assets.

The Malaysian lender may acquire existing broking licenses or apply for new ones in both countries, Nazir Razak, CIMB’s chief executive officer, told reporters in Kuala Lumpur yesterday, after unveiling a 14 percent jump in second-quarter earnings. It’s still in talks to buy a 50 percent stake in Australian brokerage RBS Morgans, he said.

“The whole idea is to build a comprehensive Asia-Pacific stockbroking and investment banking network,” Nazir said. “India and Korea are essential to such a network. We feel that we must be in both markets.”

The Kuala Lumpur-based lender has spent about $2.3 billion on 19 acquisitions since Nazir became CEO in 2006, including the purchase announced in June of a 60 percent stake in the Philippines’s Bank of Commerce. The RBS deal allowed CIMB to absorb or buy investment banking and broking operations in markets including Hong Kong, Indonesia and Thailand.

Net income climbed to 1.11 billion ringgit ($354 million), or 14.9 sen per share, in the three months ended June, up from 970 million ringgit, or 13.1 sen, during the same period a year earlier, according to a Kuala Lumpur exchange filing yesterday. Even so, the group cut its dividend to 5 sen per share from 12 sen a year ago.

Big Deal

Earnings were boosted by higher net interest income, as well as increased contributions from consumer and investment banking, the filing showed. CIMB helped manage deals including Felda Global Ventures Bhd.’s $3.3 billion initial public offering in Kuala Lumpur in June, the world’s biggest share sale this year after Facebook Inc.

CIMB’s shares fell 0.3 percent to 7.89 ringgit at 10:24 a.m. in Kuala Lumpur trading and have risen 6.1 percent this year. The stock’s price target was raised to 8.20 ringgit from 7.60 ringgit at HwangDBS Vickers Research Sdn., analysts Lim Sue Lin and Hon Seow Mee wrote in a report today.

“With the momentum that we built in terms of growth and assets, we are looking at the targets we set at the beginning of the year quite confidently,” Nazir said.

CIMB is benefiting from Malaysia’s resilient economic growth, which unexpectedly accelerated to 5.4 percent last quarter, according to a central bank statement yesterday. The benchmark FTSE Bursa Malaysia KLCI Index closed at a record yesterday, having climbed 8 percent this year.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, rose 12 percent to 1.9 billion ringgit in the quarter, CIMB said. Allowances for impairment losses on loans and financing shrank 40 percent to 51.5 million ringgit, the company said.

The Malaysian lender is ranked first in takeover advisory and in managing equity and bonds sales in Southeast Asia over the three years to June 21, according to data compiled by Bloomberg.

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net

To contact the editors responsible for this story: Barry Porter at bporter10@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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