Maybank: Measured metamorphosis

Abdul Farid Alias has made Maybank more Asian in scale

The last decade has been an interesting one for Maybank. Since its $1.4 billion acquisition of Singaporean brokerage Kim Eng Holdings in 2011, the Kuala Lumpur lender has undergone a steady but undeniable transformation. The formerly Malaysia-centric financial institution has steadily become more Asian in scale and scope.

It now operates in seven countries across the Asean region, including the Philippines and Vietnam, with branches in China and India and dedicated sales offices in the UK and US – although its stronghold remains firmly in Malaysia, Indonesia and Singapore.

And it has expanded the reach of its brokerage department in east Asia by signing partnerships with Japan’s Mizuho Securities, Taiwan’s Cathay Securities and South Korea’s Daishin Securities.

Maybank’s slow metamorphosis coincided with the arrival, a little over six years ago, of chief executive Abdul Farid Alias.

On his watch, the bank has grown steadily and profitably, rarely putting a foot wrong, even as the country dealt with the fallout from the 1MDB scandal, an ensuing election and the return of the nonagenarian Mahathir Mohamad as prime minister.

Southeast Asia’s fourth-largest bank by assets reported record net profit of RM8.11 billion ($1.94 billion) in the calendar year 2018, boosted by higher loans, lower overhead costs and lower provisioning. Revenues rose 3.8% year on year over the same period, to RM47.3 billion.

It also posted a 9.1% rise in income in the final three months of 2018, its highest quarterly profit in two years.

Under its chief executive, Maybank’s successful policy – steady, organic expansion and no big announcements or acquisitions – appears set to continue. This year, Farid announced plans to expand the bank’s mortgage book by 60%, or about RM50 billion, over the next three years, and to plough RM35 billion into domestic SME financing.

A key area of focus for the lender is income from Islamic banking, a division that reported a pre-tax profit of RM897 million in 2018, up 97% from the previous year.

Maybank has completed a number of landmark deals in recent years. Foremost among them was the $500 million sale of Islamic trust certificates, completed in March 2019 for the Qatari lender QIIB.

Another standout transaction was the Republic of Indonesia’s $2 billion sovereign sukuk, completed in February 2019. Maybank was joint lead arranger and joint bookrunner on that sale, which also included a $750 million green tranche that will be used for Shariah-compliant projects.

Maybank is building a reputation, domestically and regionally, for embracing new asset classes.

It was a bookrunner on the sale of $156 million worth of Asean-region green bonds in the 12 months to the end of May 2019, placing it fourth on a list headed by HSBC.

Speaking of which, Maybank was joint lead manager on the sale of RM500 million worth of Islamic bonds, printed by HSBC Amanah in October 2018, the first print of its kind tied to the United Nations’ development goals.

The Malaysian lender has also embraced, though a little belatedly, China’s Belt and Road Initiative.

It printed Rmb1 billion ($141 million) worth of three-year panda bonds in June 2019, channelling the proceeds into BRI-related deals.

It opened China coverage desks in Kuala Lumpur, Jakarta and Singapore, and now has branches in five mainland Chinese cities, including Beijing, Shenzhen and Kunming.

Maybank was also joint lead manager on ICBC Singapore’s $2.2 billion green bond, completed in April 2019.

Farid has turned Maybank into Malaysia’s largest lender by some distance, streets ahead of its nearest rival CIMB, and a domestic leader in private banking and wealth management.

Total assets at the end of 2018 amounted to RM807 billion, a rise of 44% over the last five years. Earnings per share, net profit, return on equity and tier-1 capital: all rose sharply in 2018.

If there is a fly in the ointment, it is a digital one. Maybank has expanded steadily over the decade to be Malaysia’s standout lender. It is not a pan-Asian bank yet, and there are few signs that its CEO is keen to spend to grow its footprint, but it is a lender of relevance, certainly in the Asean region.

But whereas rivals such CIMB and Hong Leong Bank have embraced digital banking, with the latter publicly placing digital at its core, Maybank has been slower off the mark.