CIMB encouraging digital banking in SE Asia

by BLOOMBERG

SINGAPORECIMB Group Holdings Bhd is making a push into digital banking in South-East Asia, starting with Vietnam, as Malaysia’s second-biggest bank by assets seeks to expand in the region without swelling costs.

The Kuala Lumpur-based lender will launch its first fully digital bank in Vietnam in January, followed by the Philippines, where it has received a licence, CEO Tengku Datuk Seri Zafrul Aziz said in an interview in Jakarta yesterday. Both markets are new to CIMB.

Digital retail banking will allow lenders to reduce their cost-to-income ratios to 20%30% from around 50%, once such operations gain size and momentum in five to 10 years, Tengku Zafrul said.

Cost savings is one reason why Bloomberg Intelligence analyst Diksha Gera sees CIMB continuing to improve profitability over the next two years.

“That’s where it’s important that we have partnerships in those markets — to achieve scale, to accelerate the scale that we plan to have,” Tengku Zafrul said. He plans to work with retailers and telecommunication companies to “build a strong ecosystem”.

The bank may also consider starting a digital bank in Thailand in the next two to three years, he said. — Bloomberg