CIMB boss not worried about lack of branches

Brand visibility, for one, would suffer, especially due to the thin presence on the ground, while individuals and businesses have other more established options, both local and foreign banks, to choose from.

But that has not stopped CIMB Bank Singapore chief Mak Lye Mun, a Malaysian from Kedah, from growing the bank’s presence on the island-republic. CIMB Bank, part of CIMB Group Holdings, was a new player back in 2007 when the brand emerged following CIMB Group’s acquisition of Southern Bank in March 2006 for 6.7 billion ringgit (US$2.08 million, Bt65 million).

Along with the acquisition came a universal banking licence in Singapore, but distinct from a qualifying full bank licence, which would have allowed the bank to set up branches and ATMs in 25 locations across Singapore.

“Our strategy is to take this disadvantage and turn it into an advantage,” he told select media during an interview held on the sidelines of the CIMB Annual Asia Pacific Conference 2013.

With cost savings from fewer physical branches, the bank was able to entice more retail depositors by offering a much higher current account interest rate (of 1.2 per cent) than other banks, which offered an average of 0.1 percent to 0.2 per cent.

Today, with a much higher deposit base – 40,000 retail current accounts – the bank offers a 0.8 per cent interest rate compared to the average 0.2 per cent being offered in the industry, with deposits growing to 8 billion Singapore dollars ($6.2 billion).

The credit card business has turned profitable after nearly three years in operation with 170,000 credit cards, while the commercial banking business has 1,500 customers and the corporate banking business another 400 to 500. Total loan size has grown to S$6.5 billion dollars (from S$600 million in 2009) and should grow to S$8 billion by the end of the year. Non-performing loans stood at S$8.5 million.

“We’ve the deposits to fund the loans with our loans-to-deposit ratio at 70 per cent, but we're comfortable with a 80 to 85 per cent ratio, so there’s still a lot more to grow,” Mak said, adding that the goal was to have a 50/50 ratio for non-interest versus interest income.  

At the moment, non-interest income accounts for 65 per cent of revenue.

Mak noted that not having a larger physical presence would not be a handicap, as technology-savvy customers were comfortable now with Internet banking and phone banking services.

He said having a presence in other parst of the region via Indonesia’s PT Bank CIMB Niaga, CIMB Thai Bank and Cambodia’s CIMB Bank helped to make banking seamless for businesses to individuals.