Malaysia’s Bumiputra-Commerce net profit up 9 percent in fourth quarter – UPDATE
02.21.08, 6:14 AM ET

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KUALA LUMPUR (Thomson Financial) – Malaysia’s Bumiputra-Commerce Holdings Bhd said Thursday its fourth-quarter net profit rose 9 percent to 486 million ringgit, helped by the strong performance of its investment banking and treasury divisions.

The company, which controls Malaysia’s second largest bank CIMB Bank, said net profit for 2007 jumped 86 percent to 2.793 billion ringgit, boosted partly by a 590-million-ringgit gain from the sale of its insurance related businesses.

Revenue for 2007 rose 41 percent to 9.011 billion ringgit.

The bank said it will pay a 25 sen final dividend.

‘We are delighted with our overall financial results for 2007, our first full-year post-merger with Southern Bank Bhd. We had an outstanding first-half in the regional capital market and that successfully navigated the adverse conditions in the global capital market,’ said Nazir Razak, Bumiputra-Commerce’s chief executive officer.

The bank’s return-on-equity (ROE) stood at 20 percent at end-2007, exceeding its target of 18 percent.

The group said total loan growth for 2007 was at 7.3 percent after mortgages, credit cards, the group’s micro-credit loans posted strong growth. Its corporate lending book grew 8.2 percent.

As for portfolios under restructuring, business loans were down by 4.5 percent while hire purchase loans continued to shrink by 9.1 percent.

The group said asset quality indicators continued to improve with its net NPL ratio falling to 3.8 percent from 5.5 percent at the beginning of 2007.

Loan loss coverage ratio stood at 69.3 percent at end-2007, up from 57.5 percent a year ago.

Looking ahead, Nazir said the bank’s investment banking division is expected to continue to perform strongly, riding on the government’s efforts to promote the country as the Islamic financial hub of the region.

The bank is retaining its ROE target of 18 percent in 2008, he said.

‘Although global capital markets remain volatile, we remain positive about activity levels in domestic and regional capital and global SUKUK markets in 2008,’ said Nazir.

Malaysia is the world’s largest issuer of SUKUK or Islamic bonds.

Nazir said the bank’s expansion plan will focus on the acquisition of Indonesia’s Bank Lippo and developing its presence in Vietnam, China and India.

Bank Lippo, currently controlled by Khazanah Nasional Bhd, the investment arm of the Malaysian government, will be merged with Bank Niaga, under a Khazanah-led restructuring.

Khazanah is also a major shareholder of Bumiputra-Commerce, which owns Bank Niaga.

Nazir said the Malaysian bank is also applying for a banking license in Vietnam and is in the process of setting up stock-broking operations in Vietnam.

The stock-broking operations via its Vietnamese partner will be ‘up and running’ by the third quarter, he said.

He did not elaborate on its expansion strategy in China and India.

Separately, the bank also announced that it plans to buy back and cancel up to 1 billion ringgit worth of Bumiputra-Commerce shares over the course of 2008.

‘This signals a shift in our capital management paradigm in favour of share buybacks and cancellation,’ said Nazir.

Bumiputra-Commcerce shares ended Thursday’s trading down 10 sen or 1 percent at 10.30 ringgit.

(1 US dollar = 3.22 ringgit)

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