Malayan Banking, Malaysia’s largest lender, is seeking to increase corporate lending and investment banking activities in Indonesia to help shelter it from slower economic growth in its home country.

Maybank, as the company is known, will focus on lending to large companies in the transport, utilities and consumer businesses in Indonesia, Feisal Zahir, the firm’s global banking head, said Tuesday in his first media interview since he assumed the position in October.

He declined to provide the bank’s financial targets for Indonesia this year.

Slower economic growth in Malaysia, which accounted for 60 percent of Maybank’s 2014 loan book, augurs weaker lending for banks in the country, Feisal said.

The government is forecasting growth this year to be as low as 4.5 percent, which would be the slowest pace since a contraction in 2009.

“Indonesia is a key focus for us this year,” Feisal, 45, said in Singapore. “There’s a huge natural resource base, population base and middle-class income that is growing as a consumer group. The outlook is pretty strong” for growth.

Indonesia’s economy may grow 5.2 percent this year, the World Bank estimates. Maybank had 31.4 billion ringgit ($8.5 billion) of Indonesian loans last year, or almost 8 percent of its total loan book, according to its financial statement.

The bank owns 79 percent of Bank Internasional Indonesia.

“I am sure there will be speed bumps here and there,” Feisal said. “But we want to grow the market in the long term” in Indonesia.

Maybank is also positive on the economic outlook in other Southeast Asian nations including Vietnam, Thailand and the Philippines, he said.

The bank is talking with regulators to expand into banking in Thailand, where it currently has a brokerage unit, chief executive Abdul Farid Alias told reporters on Tuesday in Singapore, where Maybank is hosting a two-day conference.

“We have yet to find an avenue that makes sense to us,” he said. “It’s not just [mergers and acquisitions], it could be setting up a new license” for commercial banking, he said.

The global-banking division accounted for 51 percent of Maybank’s 2014 profit before tax, Feisal said.

Its operations include investment banking, asset management, global markets and corporate banking.

Bloomberg

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Oversea-Chinese Banking’s fourth-quarter profit missed estimates as a trading slump and bad-loan provisions shaded gains in lending profitability.

Net income climbed 11 percent from a year earlier to S$791 million ($584 million) in the three months ended Dec. 31, the Singaporean bank said in a statement Wednesday. That missed the S$883 million average estimate of four analysts surveyed.

Southeast Asia’s second-largest lender followed DBS in posting lower trading income and rising provisions for soured loans amid slowing growth in Singapore and abroad. Chief executive Samuel Tsien led OCBC through last year’s $5 billion purchase of Wing Hang Bank in Hong Kong as the bank sought to expand outside of its home market.

“OCBC’s results look almost a direct mirror to DBS,” said Lachlan Colquhoun, chief executive officer at research firm East & Partners Asia.

“2015 is going to be a difficult year and other banks may reflect this. If any banks can withstand difficult waters, it’s DBS and OCBC with their strong balance sheets.”

Net interest income rose 24 percent in the quarter from a year earlier to S$1.28 billion as the bank’s net interest margin widened, the report showed. Operating expenses swelled 29 percent to S$922 million.

Net allowances for loans and other assets more than doubled to S$154 million, mostly on rising bad debts in Malaysia and Singapore, OCBC said. Net trading income slid 74 percent to $18 million.

Shares of OCBC dropped 0.3 percent to S$10.57 at 1:38 p.m. in Singapore, paring this year’s gain to 1 percent. That compares with the benchmark Straits Times Index’s 2.3 percent increase. The bank advanced 5.5 percent in 2014 for a third consecutive annual gain.

Loans to customers rose 24 percent from a year earlier to S$210 billion as of December, the bank said. Net interest margin, a measure of lending profitability, increased 3 basis points in the 12 months to 1.67 percent. Loan growth this year will be “high single-digit,” Tsien said at a news briefing.

“The credit environment is going to be, generally speaking, tougher than what we’ve seen in the past,” the chief executive said. OCBC will remain cautious on sectors with overcapacity including steel and shipbuilding, he said.

Banks have been aided by an increase in short-term interest rates. The three-month Singapore interbank offered rate has climbed to the highest levels since January 2010, driven by a stronger US dollar and new bank liquidity requirements.

About 40 percent of local lenders’ Singapore-dollar loans are priced based on Sibor, according to a Feb. 6 Phillip Capital report.

OCBC began accounting for Wing Hang in its earnings in July. The Hong Kong unit contributed after-tax profit of HK$495 million ($64 million) to the group in the year ended Dec. 31 following merger-related adjustments.

Greater China contributed to 12 percent of OCBC’s pretax profit in 2014, greater than 6 percent the year before, Tsien said.

The region has high potential to match the 19 percent contribution from Malaysia, he said. Singapore will remain the largest income provider to the bank, with its share likely to stay above 50 percent, he said.

OCBC, its insurance arm and the bank’s founding Lee family are in talks to sell their combined 34.1 percent stake in United Engineers to TCC Top Enterprise, controlled by Thai billionaire Charoen Sirivadhanabhakdi.

Selling the stake in the engineering and property development company would bolster OCBC’s capital after its Wing Hang takeover. The parties are in exclusive negotiations under an agreement that expires Feb. 13.

While the bank doesn’t plan to hold on to its non-core assets forever, it’s not under any time pressure to sell them, Tsien said.

Bloomberg

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