CIMB Group 4Q Net Jumps 30%; Confirms Talks With RBS

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The FINANCIAL — CIMB Group Holdings Bhd. Monday reported a 30% jump in its quarterly net profit and confirmed it is in talks with Royal Bank of Scotland Group PLC to buy parts of the British bank's investment banking and securities businesses in Asia.


Malaysia's second largest bank by assets after Malayan Banking Bhd. is seeking to buy RBS' assets in an attempt to bolster its presence in the region and get a leg up over its larger rival, which last year acquired Singapore brokerage firm Kim Eng Holdings Ltd. for US$1.4 billion.

"I can confirm CIMB is in discussion with RBS for some of their AsiaPac IB and securities business," Group Chief Executive Nazir Razak said, but declined to give details on the talks with RBS, adding that the bank would make further announcements when appropriate.

RBS said in January that it will shrink its investment banking business, and exit cash-equities, corporate broking, ECM and M&A, all of which are unprofitable. Instead, the bank, which is 83%-held by the U.K. government after a series of bailouts following 2008's financial crisis, will focus its remaining investment banking operations on fixed income, foreign exchange, debt financing, transactions services and risk management.

According to Borsa Italiana – London Stock Exchange Group, the talks have dragged out over issues such as valuation and which trading licenses will be included in the sale. People familiar with the matter told The Wall Street Journal that RBS does not wish to include its South Korean trading license in the deal. A deal was expected to be announced last week.

Separately, CIMB Group reported a 30% on-year rise in its fourth quarter net profit from a year earlier. Net profit for the three months ended Dec. 31 rose to MYR1.13 billion from MYR872.6 million, the lender said in a statement. Net interest income rose 6.7% to MYR1.76 billion, CIMB Group said.

The jump in net profit was helped by a higher gain on disposal of net assets and interest in subsidiaries of MYR250 million in the latest quarter, compared with a gain of MYR20.1 million a year earlier.

For the full year, the lender said its net profit rose 15% to MYR4.03 billion from MYR3.50 billion, with the net interest income rising 1.2% to MYR6.68 billion. Nazir also said the bank's full year net interest margin fell 22 basis points to 3.12% in 2011.

On outlook, he said, "I think 2012 could surprise on the upside as most of the downside risks are already quite visible. We are overall cautiously optimistic and have set a ROE target of 16.4% for the year."



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