The CEO Interview
COMMERCE Asset-Holding Bhd wants to expand its footprint beyond Malaysia and Indonesia to become a regional bank, said newly appointed group chief executive Dr Rozali Mohamed Ali.
“We are committed to having some kind of presence within the region as it grows and continues to integrate,'' said Rozali, the former chief executive officer of Bumiputra-Commerce Bank Bhd.
The group's regional ambition in some ways stems from its successful acquisition of a 51% stake in PT Bank Niaga in Indonesia, whose performance has surpassed all initial expectations.
Profit from the Indonesian bank accounted for 16% of the Commerce group's pre-tax profit for its financial year ended December 2003, as economic stability and growth propelled the demand for credit in the country.
Bank Niaga's contribution to CAHB's pre-tax profit rose to 25% during the first six months of CAHB's current financial year ended June 30. BCB accounted for 43% of CAHB's pre-tax profit and CIMB Bhd 27%.
Rozali believes that Bank Niaga will be able to chalk up double-digit growth over the next two to three years.
With the risk in operating in regional countries now falling and economies improving, Rozali said CAHB should be willing to invest in the region given the risks that may prevail in such an environment.
“I think our decision in the past has been borne out by the results we have obtained,'' he said, adding that the group now had a better knowledge of the domestic conditions in Indonesia than many other foreign operators.
Over and above that, Rozali said, it was important that domestic banks within each Asean country take a more proactive stance in supporting the development of the Asean Free Trade Area.
“If they do not and continue to look after their own backyard, they will find that the major movers in the developing free trade area will be the foreign banks,'' he said.
Rozali admitted that CAHB still had some way to go before it could become a regional player but said there were “internal contemplations” about what could happen.
He said the decision to establish presence in any country would depend of the strength of its trade linkages with Malaysia.
“We have to find a way of establishing presence in some other markets, directly or indirectly. Then again, the ambition of being a regional player is not an end in itself,'' he said.
Rozali knows that having a slew of banks in the region is one thing but being able to operate as a regional bank in another.
To accomplish that, he said, CAHB, operationally, would have to at the least be as good as a global player.
“This means you have to be better than a global player. In terms of standing, I think there is very little difference in the level of competence between a domestic leader and a global player,'' he said.
He said there was little separating an outpost of a global bank from a dominant domestic player in terms of the abilities of its staff, the amount of capital that is employed and the technological capabilities.
“There is really little difference between a global bank and a large domestic Asean player. I think that we are able to present at least as good a proposition as any global bank in any market in Asean but in order to be useful to an Asean country, you must be able to present world class capability.''
Rozali would not specify which country CAHB is eyeing next, only to say there would be many opportunities for regional expansion in the next few years.
While it has ambition to expand beyond Malaysia and Indonesia, Rozali said the group would not preclude from investing in Malaysia.
“All this excitement about overseas investment may give the impression that we are only looking outside Malaysia but certainly we have invested a lot of time and money here. Our outsourcing business in Malaysia is fully mature and this business is developing at exactly the right time. There is plenty of new business to be done in Malaysia.''
Although he did not comment on specifics, Rozali said domestic consolidation was a valid possibility.
“I don’t think there is any reduction in opportunities and from the viewpoint of investments, it means we have to analyse these possibilities very carefully. We are always long term players,'' he said.