When corporate and retail banking stalwart Victor Lee was appointed CEO of CIMB Singapore in January of 2020 to replace outgoing Mak Lye Mun, the country was just beginning to face the harrowing Covid-19 pandemic. In an interview with The Edge Singapore, Lee recounts the days where the bank had to swiftly rethink its strategies just after launching a five-year growth accelerating plan the previous year.
In 2019, Malaysia-headquarter CIMB Group embarked on the plan dubbed “Forward23”. This follows the success of its previous four-year strategic plan “Target 2018” on the back of strong, cohesive group-wide execution.
Forward23 sets out more ambitious targets, with the group aiming to achieve return of equity of more than 12%, a Common Equity Tier 1 (CET1) ratio of over 13% and a cost-to-income ratio of below 45%, aside from non-financial targets relating to customer experience, sustainability goals and ratio of digitally skilled staff. But when Covid-19 hit, it was clear that the group may face big hurdles in achieving its targets. For Lee and his team in Singapore, it meant having to determine which segments to focus on and which ones to defer.
To navigate the difficult operating landscape, Lee uses military terms “tahan” (resist), “semula” (again) and “cepat jalan” (quick march) as a mantra. He explains that this means the bank has to resist the challenges faced and play up on its strengths; recalibrate its strategy; and quickly position itself to capture opportunities in the post-pandemic recovery.
In the “tahan” stage, for example, the bank not only had to manage its own business headwinds, it also did its part in reassuring its SME customers that their operations can be sustained. This is done via efficiently deploying government grants and support schemes for businesses with the help of digital tools such as the EVA Chatbot, says Lee. This helps its customers easily apply for the schemes while simultaneously relieving the bank’s staff from the application influx.
The bank also introduced a temporary bridging loan, CIMB BizAssist, to help the SMEs address their working capital needs, which Lee says is widely successful and significantly contributed to its revenue. In fact, the revenue contribution from its SME products and services have more than tripled over the last two years, he adds.
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Recalibration plan
In 2020, the bank also had to re-engineer its business, entering the “semula” stage. Lee notes that at the time, the five-year growth acceleration plan was already underway — however, due to dampened business sentiment, the banking group decided to add one more year to the goal, becoming Forward23+. This means that the plan will be complete next year instead of the initially planned 2023, he clarifies.
As part of its recalibration plan, CIMB Singapore has decided to focus more on digitalisation, which Lee acknowledges cannot be done overnight. It took the bank 1½ years to “rewire” its systems and enhance its digital capabilities, which seems to have borne fruit — the bank’s number of accounts opened this year is five times that of last year.
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“And this is not because we opened more branches; in fact, we closed one branch and now only have one branch at our headquarters in CIMB Plaza. It was instead driven by our seamless digital onboarding processes,” says Lee.
Most of these new customers are part of the 1.13 million Malaysians residing in Singapore looking to open an account with a familiar bank. These customers can also open an account with CIMB Malaysia at the Singapore branch, Lee adds. He says the bank sees significant remittance contribution as well as synergies within the group as the group’s Malaysia team can help the customers manage their wealth back home.
As businesses started ramping up again, the company entered its “cepat jalan” phase, moving quickly to amplify its products and services to gain market share. Lee says there is no secret formula to this, adding that it goes back to the basics of banking which is to keep it fast, free and simple.
“Unlike other banks, we don’t make our customers jump through hoops. There are no special requirements that customers have to qualify for in order to enjoy certain benefits. For instance, customers who open a FastSaver account get attractive interest rates from the first dollar — no triple somersault required,” he adds.
For its SME clients, CIMB Singapore notes that these enterprises are the country’s largest employers. Therefore, the bank has wrapped its propositions around SMEs and their employees, supporting them as they grow bigger to become one of its corporate banking customers.
Being different
As an Asean player, CIMB’s corporate banking customers consist mainly of Southeast Asian conglomerates. As the fifth largest bank in Southeast Asia, CIMB is also Indonesia’s largest foreign-owned bank with about 500 branches across the country.
This, coupled with Singapore’s status as a financial hub, means that the bank is able to service many Indonesian conglomerates and high-net-worth individuals (HNWIs), says Lee. He adds that there are also large segments of opportunities for the bank to tap conglomerates and build relationships with HNWIs across other neighbouring countries, such as Malaysia and Thailand.
That said, Lee acknowledges that CIMB Singapore’s private banking business is relatively small. The bank has repositioned its private banking services to be within its wholesale banking umbrella, being a lending-led private bank to the region’s rising entrepreneurs.
“We want to be different — the private banking space can be very cut-throat and the competition is intense in Singapore. Instead of competing with the global players that have set up shop here, we want to work together with the entrepreneurs and help them build up their legacy. Therefore, the private banking team works very closely with the commercial and corporate banking teams, giving them opportunities to cross-sell,” says Lee.
Moving forward, CIMB Singapore is working towards increasing its contribution to the group, says Lee. In its FY2022, the bank’s Singapore business recorded a 31.5% y-o-y increase in profit before tax to RM756 million ($216.6 million), predominantly on strong operating income and asset recoveries.
Its topline growth was attributed to the 6.5% y-o-y gross loan growth, coupled with a solid net interest margin expansion with non-interest income expanding from the growth of its consumer franchise. Its deposits rose 35.3% y-o-y, contributed by all segments despite a drop in CASA (current account savings account), bringing down its CASA ratio to 44.6% from 62.5% in 2021.
In order to help drive its growth, the bank seeks to strengthen its workforce, and is already in the process of doubling the sales force in retail and SME segments. Early next year, CIMB Singapore is also looking to announce partnerships to further reinforce its digital offerings, building up on its digitalisation effort over the past few years. The prospective partners are likely to be those with existing customer ecosystems, such as insurance or technology providers.
“On the group level, we are starting to discuss our next five-year plan,” says Lee.
