This year marks the 10th anniversary of Malayan Banking (Maybank) acquiring then Singapore-listed stockbroking firm Kim Eng Holdings, as part of its ambition to expand its footprint across the region with a wider range of financial services.
“The two firms came together in 2011 and there was a distinct value proposition that Maybank saw in acquiring Kim Eng,” says Aditya Laroia, CEO of Maybank Kim Eng (MKE) in an interview with The Edge Singapore.
“The typical model of large M&A transactions is the acquirer absorbing the target company and everything starts to look and feel like the acquirer. But in this specific transaction, you can see that there is distinct value kept by leaving the ‘win-win propositions’ in place.
“In that sense, Maybank’s governance process and branding was kept, while Kim Eng’s localisation, customisation and product know-how was kept too,” adds Laroia.
After a solid and stable “marriage” of a decade, MKE has become an established brand in its own right and is seen as one of the leading stockbroking businesses in Southeast Asia, enjoying the backing of the larger Maybank group with a full range of financial services available to clients, ranging from retail investors who are eager to trade overseas markets, to institutional clients requiring more sophisticated products and services.
Now, it is time for Maybank’s various units to simplify their brands and present a unified branding across the group so as to provide their clients with more value.
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The way Laroia sees it, this rebranding exercise will help the bank, as a whole, service its clients holistically. Hence, from Dec 15, all entities within MKE will be aligned with Maybank as the master brand. This means parting with “Kim Eng” in the name and logo. This rebranding exercise aims to reflect how the MKE has evolved to become one of the leading investment banks in Asean today.
This transformation was possible because MKE had the backing of the larger Maybank group’s asset base and brand equity while tapping on Kim Eng’s largest stockbroking (equities) franchise in Asean.
Since day one of the acquisition of Kim Eng, the MKE teams have worked closely with Maybank Commercial Bank, Group Global Banking, and other parts of Maybank.
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Transform, new opportunities
Laroia, who joined MKE in May last year, shares that the investment landscape in the region has been the “most transformational” in recent times, with big mega trends shaping up and defining the way its business is going to be modelled going forward.
Laroia notes that newer incumbents are entering the market with new technology and digital services, but that does not make him unduly worried. “I think having a competitive landscape is important because it pushes us to be better at what we do. But at the end of it all, I think it is most important to understand and play to our core strengths.”
Apart from giving clients exclusive access to Maybank’s products and services, Laroia explains that it differentiates from the competition with its empathy and commitment to its clients. “We make sure clients can make money and grow with us, in terms of what they save for their retirement and being able to do all of that in an environment that is supporting their needs and specific to their requirements,” says Laroia, who was previously with other financial institutions such as Saxo, Nomura and Lehman Brothers.
“When you use a lot of technology, you have to generalise some of the services that you provide in order to see efficiency and scale. We think that still has a lot of value in the market, but given that we come from an element of strength from human capital, we think we can do better by combining technology with the human touch,” adds Laroia.
The way Laroia sees it, the competitive environment keeps the company agile. “Just as long as our competitors push out new products and services forward, we are benefitting because the end consumer is able to get a better product. Every product out there caters to a certain type of client and will have a certain client in mind, and hence the business model,” he says.
Furthermore, given Maybank’s position as an incumbent in the market, it is also in a position to increase its value by adopting and incorporating some of the efficiencies that the new entrants have.
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Along with this brand alignment, Maybank Group has taken the opportunity to reflect on its ESG-first positioning, which is an expression of humanising financial services.
For some time now, the research reports put out by the analysts with the brokerage already include ESG (environmental, social, and governance) considerations and not merely financial metrics.
In an effort to become a regional ESG leader, Maybank has set a series of sustainability commitments. For example, it aims to mobilise RM50 billion ($16.18 billion) in sustainable finance by 2025; next, it wants to achieve carbon neutrality by 2030 and be in a net zero carbon position by 2050.
Laroia explains that Maybank as a group will be working towards these goals. “Sustainability itself is a mega trend for all of us who are in this industry. If we do not recognise the change that is necessary, we are all heading ourselves towards a catastrophic reality,” he says.
“We are highly committed to our commitments around sustainability, ESG growth and infusion of that ESG principal in all of our businesses.”
He believes that the emphasis on sustainability will help bring about “tremendous” opportunities for Maybank to do more business. “We are going to focus on sustainability in financing, trading and helping companies raise capital, while advising on companies that are all positive to our environment and society that we work in,” adds Laroia.
The way Ami Moris, CEO of Maybank IBG sees it, it is a must for the world to be cognisant of megatrends such as climate action and adapt to them. “Our ambition is to take the lead in championing the ESG agenda in Asean. This means becoming top of mind for clients in sustainable investing, sustainable financing and sustainability thought leadership,” she adds.
With the change in brand name to Maybank IBG, Moris sees the group entering a new chapter as it shifts its focus to support its clients' transition to sustainability-first businesses, and ensuring equitable prosperity in the communities that it operates in.
In a bid to better serve the institutional clients, Maybank has in the last few years added prime brokerage services to its suite of offerings. With additional services including financing, clearing, and custody capabilities, Laroia wants to position the brokerage as a key player in this space.
He is also placing strong emphasis on providing sound, timely and engaging research. The research strength in Singapore has been doubled. “We believe having the ability to provide relevant content and research becomes increasingly vital as the investor seeks yield in multiple asset classes, products and markets and by providing the information the client seeks.”
Laroia also plans to make good use of how Singapore as a whole is trying to boost the market ecosystem here. For example, the Singapore Exchange has recently introduced more accessible rules for special purpose acquisition company (Spac) listings and that is seen to help make the capital markets livelier.
Various government bodies have also come together in a more structured way to fund promising growth companies with an eventual goal of going IPO here.
And with Singapore actively moving along in areas of digital transformation and product innovation in financial services, that has created a growing buzz and new opportunities for firms both incumbent and new to launch new offerings in the FinTech space. “We see these areas of long term opportunity and a financial framework that will enable Maybank to strategically position ourselves to continue to deliver value to our clients,” he adds.
Banking on growth
In its latest 3QFY2021 ended September results, Maybank reported net operating income of RM6.15 billion, up 1.2% y-o-y as the pandemic-related restrictions weigh on business activities in the various markets the bank operates in. However, due to heftier impairments, earnings came in at RM1.69 billion, down 13.7% y-o-y.
Specifically in Singapore, Maybank Singapore registered a net income of $664.6 million for 9MFY2021 ended September, down 7.7% y-o-y. However, thanks partly to lower allowances and also lower costs, earnings in the same period was up 51.9% y-o-y to $156.7 million. Despite the drop in overall profit, the bank retained its robust capital and liquidity positions, with its CET1 capital ratio at 14.2%, making it one of the best capitalised banks in the region. The group’s liquidity coverage ratio stood at a healthy 138.1%, way above the regulatory requirement of 100%.
Looking ahead, Maybank chairman Zamzamzairani Mohd Isa said that despite the impact of movement restrictions on the group’s third quarter performance, its strong liquidity and capital base will allow it to tap growth opportunities that are emerging with the reopening of the economy. With a higher proportion of the population vaccinated, that is additional impetus for resumption of business and economic activities.
“As Malaysia sees economic recovery in the fourth quarter of 2021 on the back of strong vaccination rates and an uptick in business and leisure mobility, we will position ourselves for renewed growth and to support our customers in making the most of these early days of economic recovery,” he adds.
To support the recovery stage of this pandemic, banks are working with relevant government agencies on a targeted financial assistance scheme to help the most vulnerable segment of individual customers transition out of the various repayment assistance programmes so that they can gradually resume their financial obligations and continue contributing to the economy. For businesses, Maybank will focus on extending additional loans to support their growth momentum in this recovery phase.
Meanwhile, with its refreshed branding, the group will continue to provide tailored financial solutions to meet the current needs of customers that have shifted from preservation to growth, with the reopening of economies, while continuing to support customers who require targeted financial assistance.
“We will help our customers capitalise on growth opportunities arising from the recovery and so they are able to sustain themselves moving forward in this new operating environment,” says group president and CEO Abdul Farid Alias.
This includes supporting them in embracing digitalisation in their operations, exploring alternative forms of financing solutions and looking at investment solutions that can help grow their wealth, he says.
“Meanwhile, within the organisation, we are constantly exploring ways to improve our efforts in relation to the climate and sustainability agenda as part of our motto to always do the right thing,” he adds.
Photo: Laroia: Having a competitive landscape is important because it pushes us to be better at what we do. But at the end of it all, I think it is most important to understand and play to our core strengths / Albert Chua
