Malaysia’s CIMB to Make Foray into Digital Banking in Vietnam

Minh Anh

09:58 08/12/2017

BizLIVE - CIMB Group Holdings Bhd., Malaysia’s second-biggest bank by assets, has chosen Vietnam as the starting point to penetrate digital banking in Southeast Asia, Bloomberg reported.

Malaysia’s CIMB to Make Foray into Digital Banking in Vietnam

A CIMB outlet. Photo: Berita Daily

The Kuala Lumpur-based lender will launch its first fully digital bank in Vietnam in January, and the next leg will be the Philippines, Chief Executive Officer Tengku Zafrul Abdul Aziz said, adding that Thailand is on the list in the next two to three years.
In order to scale up operations, CIMB plans to build partnerships the new markets, especially with retailers and telecommunication companies to “build a strong ecosystem,” Tengku Zafrul said.
Digital retail banking will allow lenders to reduce their cost-to-income ratios from around 50% to 20 to 30% once such operations gain size and momentum in five to 10 years, he added.
CIMB shares have rallied 32% this year, beating the local benchmark, as shrinking loan-loss provisions and higher interest income boosted profit.
Late in August 2016, CIMB received a license from the State Bank of Vietnam, the country’s central bank to establish its wholly-owned unit namely CIMB Vietnam Bank, with a registered capital of 3.2 trillion dong ($141 million). This is the second Malaysian wholly foreign-owned bank in Vietnam.
In March last year, Public Bank Berhad secured approval from the Vietnamese banking authority to set up a 100% foreign-invested bank in Vietnam after acquiring the remaining 50% stake in the joint venture bank from the Vietnamese partner, Bank of Investment and Development of Vietnam (BIDV).