CIMB announced at the end of August a 34% increase in April-June net profit at 889 million ringgit ($283 million). Like many banks, the increase is down by lower loan loss provisions. But where it differs is in the strong performance in its Indonesian unit, with net profit in the first half of this year at 1.13 trillion rupiah ($126 million).
The profit validates CIMBs successful bid to increase its presence in the country this July when it received regulatory approval to grab a further 19.67% stake in its Indonesian unit, known as CIMB Niaga, from Khazanah Nasional. The acquisition from the Malaysian governments investment holding company gives CIMB effective majority control of the banking unit in an economy that the IMF predicts will grow 6% this year.
CIMB groups healthy profitability this year is not an inevitable consequence of south-east Asias awe-inspiring growth. Instead, the banks executives, led by Nazir Razak, have transformed the institution over the past 20 years, from a middle-tier investment bank in Malaysia to a well-managed universal financial institution.
Underscoring its growing global presence, CIMB has, over the past year, established an asset management business in Brunei and has beefed up its Islamic investment banking capabilities in Bahrain. This years steadfast move into Middle East markets also represents growing cross-border liquidity flows between Asia and the Gulf.