DRB-HICOM gets more time

by **hlk** Sat 28 May 2011, 06:19

Shah Alam: Conglomerate DRB-HICOM Bhd said the central bank has given it until mid-2012 to pare its 70 per cent stake in Islamic lender Bank Muamalat Malaysia Bhd.

"BNM (Bank Negara Malaysia) has given us reasonable time ... sometime by middle of next year," group managing director Datuk Seri Mohd Khamil Jamil told Business Times yesterday.

DRB-HICOM, controlled by tycoon Tan Sri Syed Mokhtar Al-Bukhary, has a wide range of businesses including automobiles, property and infrastructure.

It has to cut its stake in Bank Muamalat, a small-sized standalone Islamic bank with assets of about RM15.9 billion, to comply with local banking rules on shareholding limits.

BNM allowed the group to buy the 70 per cent stake in the bank in 2008 on condition that it would later sell down its holding to 40 per cent in a year.

In September last year, the group said it had asked the central bank for more time to do this.

The group will consider various options, Mohd Khamil said.

It has yet to assess how much of the stake it would be willing to sell.

"That one depends on our later assessment on it. We haven't finalised any figures," he remarked.

The group, however, intends to remain in the driving seat of the bank, he added.

DRB-HICOM had been keen to explore a merger with larger rival Bank Islam Malaysia Bhd, but this was dashed earlier this week when the latter said it was currently "unable" to consider a merger exercise.

Bank Islam, which has RM31 billion in assets, did not provide reasons.

"We're now looking at other opportunities," Mohd Kamil said, adding that DRB-HICOM is "open" to considering local or foreign parties in any exercise to pare its stake in the bank.

The limit on foreign shareholding in banks is 30 per cent, but BNM is open to increasing this on a case-by-case basis.

DRB-HICOM, which will soon have a stake in postal firm Pos Malaysia Bhd, plans to use Bank Muamalat to leverage on Pos Malaysia's 692 outlets to expand its network and retail reach. Bank Muamalat has just 55 branches nationwide.

The group last month won a bid to buy Khazanah Nasional Bhd's 32.2 per cent stake in the postal firm for some RM622.8 million.

Interestingly, state investment firm Khazanah has also been looking to sell its 30 per cent stake in Bank Muamalat.

The bank is aiming for an annual growth in pre-tax profit of between 15 per cent and 20 per cent for the next three years, chief executive officer Datuk Mohd Redza Shah Abdul Wahid told reporters after a group event here yesterday.

The bank's pre-tax profit for the nine months of the financial year ended March 31 2011 stood at about RM170 million.

This is already higher than the RM143 million it made in the last financial year which spanned 15 months.

"We do feel there's plenty of room for the bank to grow, moving forward," Mohd Redza said, adding that it has already started collaborative talks with Pos Malaysia this week.

Bank Muamalat has a financing portfolio of over RM8 billion, of which about half is in the consumer segment.

Lending is expected to grow by between 12 per cent and 15 per cent this year, compared with about 7 per cent before, as the bank increases its focus on the consumer segment, Mohd Redza said.

Read more: DRB-HICOM gets more time [You must be registered and logged in to see this link.]