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TWO words: My bank. That's how Tan Sri Azlan Zainol would like RHB Bank Bhd the organisation in which he has been the chairman for the past seven years to be seen by its customers.
Indeed, it is every banker's dream to be the first choice of service providers for customers.
It's not surprising therefore that Azlan is thinking of positioning RHB Bank as such.
“When people look for banks, RHB should be the first choice that comes into their minds,” Azlan tells StarBizWeek in an interview in conjunction with the bank's 100-year anniversary this year.
“The key for us (to achieve that) is to find a niche,” he says, pointing to “Easy by RHB” as one of the most important initiatives that the bank has launched in recent years towards this end.
RHB Bank is one of the key subsidiaries of Main Market-listed RHB Capital Bhd (RHB Cap). It contributes about 80% of the group's pre-tax profit annually.
The banking group will reach a significant milestone come July this year, when RHB Bank is officially 100 years old.
“I presume that we are the oldest bank in Malaysia,” Azlan says, noting that there are not many companies in the country that have reached this milestone.
“We're proud of the fact that we're 100 years old, and that we've done well throughout all these years,” he says.
Lots of programmes are in store, according to Azlan, for the banking group's customers, stakeholders and staff, as it will celebrate in a “reasonably big way”. The organisation, he says, will also focus a little more on charity as part of its celebration.
Rich history
The RHB Banking group boasts a rich history that traces the development of the country's banking and financial services industry from pre-independence days to the most turbulent economic times in the region's history.
Its important celebration this year is also taking place amid the changing landscape of the industry that has already seen a spate of mergers and acquisitions (M&As) in the past couple of years, both at home and in the region.
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The RHB Banking group, which assumed its current name only in 1997, is itself no stranger to M&As.
It came about through a merger between Kwong Yik Bank Bhd and DCB Bank Bhd (formerly known as the Development and Commercial Bank Bhd) in 1997. That year saw bumiputra entrepreneur Tan Sri Abdul Rashid Hussain emerge as the group's executive chairman. The bank's current initials come from his name.
Kwong Yik Bank was founded by a Chinese community led by Wong Loke Yew, or better known as Loke Yew in July 1913, while DCB Bank was established in 1966 by then finance minister Tun Sir Henry H.S. Lee.
In the aftermath of the 1997/98 Asian financial crisis, the troubled Sime Bank Bhd (formerly known as UMBC Bank) was merged into the RHB Banking group in 1999.
Four years later, when Kuching-based Bank Utama Bhd, the banking arm of Cahya Mata Sarawak Bhd, became the latest bank to be merged into the RHB Banking group, Rashid made his exit from the group.
Today, the controlling shareholder of the RHB Banking group is the Employees Provident Fund (EPF), which owns a 41% stake in RHB Cap.
(Azlan is also the CEO of EPF at present and holds directorship in RHB Cap.)
“As a major shareholder in the RHB Banking group, we (EPF) will continue to make sure that the group grows in a healthy way,” he stresses.
Going international
According to Azlan, the immediate challenge for the group is to try and grow its business outside Malaysia.
“We are still hopeful of the deal with PT Bank Mestika Dharma (Bank Mestika) in Indonesia as part of our plan to grow our presence outside Malaysia,” he says.
RHB Banking group's initial plan was to acquire an 80% stake in Bank Mestika for RM1.16bil. But recent regulatory changes in Indonesia, which put a limit on foreign shareholding, means the group cannot own more than a 40% stake in Bank Mestika.
“We will play by the rules. If the rules now say foreign ownership would be limited to 40%, we will take the 40%,” Azlan says.
In November last year, RHB Bank and Bank Mestika had mutually extended the period for the completion of the conditional sale and purchase agreement to Jan 31, 2013.
According to Azlan, the RHB Banking group will still be able to drive the operations of Bank Mestika with its local partner once it completes the proposed acquisition in the latter, which could be by June this year.
The immediate priority in Indonesia upon completion of the deal is to increase RHB group's network and presence in Sumatra, and all the other key economic areas that the Indonesian government intends to develop.
According to media reports, the Indonesian government has identified at least five special economic zones to boost growth. These include Mandalika in central Lombok, West Nusa Tenggara, and Bitung in North Sulawesi; Sei Mangke in Simalungun, North Sumatra; and Tanjung Lesung in Pandeglang, Banten.
On its regional expansion plans, Azlan further says: “We want to concentrate on South-East Asia first, and then, South China.”
The group already has an office in Hong Kong and China, and is looking at expanding further in the Indochina region, encompassing Vietnam and Laos. The group is also eyeing possible opportunities in the Philippines and Myanmar.
“Our target is to grow our overseas contributions from the current 5% of total revenue to 30% of total revenue by 2017,” Azlan says.
He says the recent acquisition of OSK Investment Bank (OSKIB) has boosted the group's presence outside Malaysia.
“There are plenty of synergies gained from the exercise. A boost to our overseas presence is one. The “people factor” is another this is a merger of talented people,” he says, adding that the focus is to ensure that the group's growth could be accelerated from now on.
Investment banking currently contributes only about 3% of RHB Cap's group pre-tax profit.
“We expect to see huge growth for the group now because OSKIB is in,” Azlan points out.
RHB Cap raked in a net profit of RM1.4bil, or 62.1 sen per share, for the first nine months of 2012. This represented an increase of 8.8% from the corresponding period a year ago.
The group's revenue for the period in review, on the other hand, rose 7.6% year-on-year to RM3.5bil. Pre-tax profit for that period in 2012 stood at RM1.8bil, of which RM1.7bil came from RHB Bank.
Annualised return on equity (ROE) and return on assets stood at 14% and 1.1%, respectively.
“I think we can improve our profitability I don't see why our ROE cannot go to 20% within a short period of time,” Azlan says.
The RHB Banking group has already outlined several strategies to grow its business and improve its bottom line.
According to Azlan, these strategies include boosting loan growth to enhance interest income, expanding the group's transaction banking and treasury businesses as well as enhancing other areas that could boost its fee income.
But to Azlan, what's most important is not just about keeping the business growing and making profits.
“I want to build a wholesome bank it is not just about profits and making money, but it is also about our responsibility to society, our duty to develop talent within the management of RHB group, and making our customers happy,” he explains of his longer-term vision for RHB Banking group.
