by winston » Sun Jan 03, 2016 8:55 am
CIMB GROUP BHD
TRADING at just below book value, CIMB Group Bhd is probably the cheapest financial institution with a regional exposure on Bursa Malaysia.
There are banking stocks that are trading at lower valuations but they do not have the regional reach such as CIMB.
Present in almost all Asean countries, CIMB’s biggest draw is its large presence in Indonesia where it derives more than 20% of its business.
But Indonesia is also the market that has dragged down the bank in the past 18 months. The deterioration of asset quality in Indonesia coupled with CIMB’s exposure to the mining sector has caused the banking group provisions for doubtful loans to rise significantly last year. This impacted its profitability.
In 2015, CIMB also undertook a manpower rationalisation programme to bring down cost. It shut down several offices outside the Asean region including the investment banking division in Australia to bring down cost.
The group’s wholesale banking division, which is a combination of its corporate banking, treasury and markets and investment banking operations, was considerably weak in 2015. It was due to CIMB’s restructuring of its operations and provisions.
The bank has embarked on initiatives to cut down its cost and the measures are targeted towards improving the bottom line. The result of the rationalisation scheme that has involved cost of some RM450mil for the first nine months of last year are expected to be reflected this year.
As for the rising non-performing loans in Indonesia, some analysts feel that the worse if over for the banking group.
Source: the Star
It's all about "how much you made when you were right" & "how little you lost when you were wrong"