Logo of Phnom Penh Post newspaper Phnom Penh Post - CIMB eyes expansion

CIMB eyes expansion

CIMB eyes expansion

120618_07

CIMB Group chief executive Nazir Razak speaks last week on the sidelines on the CIMB ASEAN Conference in Kuala Lumpur. Photograph supplied

CIMB Bank Cambodia will look to expand into the Kingdom’s fledgling capital market, as well as into its maturing microfinance sector, Nazir Razak, the chief executive of Malaysia’s second-largest bank, CIMB Group, says.

The relatively limited scale of Cambodia’s banking sector, coupled with the more than 30 banks that experts say already overcrowd the space, would push regional banks such as CIMB to diversify their services, Razak said last week on the sidelines of the CIMB ASEAN Conference in Kuala Lumpur.

“We are playing a long-term game. As [Cambodia’s] capital market develops, CIMB wants to get involved as well. We want to look at other deposit-acquisition opportunities, possibly including micro-finance,” Razak said. “We we will look at other avenues to make a bigger impact on the Cambodian market.”

CIMB opened a bank branch in Phnom Penh in late 2010. By the end of next year, it should have 10 to 12 branches, Razake said.

Cambodia must continue to invest in its human resources and technology for the banking sector to catch up with regional standards, Razak said.

Given the the size of the Cambodian market, domestically owned banks would also need to eventually look beyond their borders to find economies of scale, he said.

Malaysian banks such as CIMB, Maybank and Public Bank have done as much in the region, even with a population of 28 million that earned US$8,363 per capita in 2010.

Cambodia’s 14.7 million people brought in slightly more than $900 per head last year, according to Ministry of Economy and Finance data.

Malaysia’s Maybank became an incorporated subsidiary in Cambodia in April, betting on what Maybank CEO Abdul Wahid Omar said was a low banking-penetration rate in the country.

Although the numbers are disputed, a World Bank report released last month showed Cambodia at the bottom of the list in terms of bank use in the Asia-Pacific region.

Only four per cent of Cambodians had formal bank accounts, and just one per cent saved money at a formal financial institution, it said.

Razak noted the sector’s low penetration rate, but agreed with most industry insiders on the need for smaller banks to consolidate.

“My view is that it’s fine if the central bank wants to proliferate the number of licences, but over time the right thing to do is to have consolidation.

“To have fewer, bigger banks is better for the customer as well. You have bigger, safer banks. Banks enjoy economies of scale, which allow them to place their products more efficiently.”

Although Razak did not give a time frame for consolidation, he said the market would most likely end up with about 10 banks.

To contact the reporter on this story: May Kunmakara at [email protected]
Reporting from Kuala Lampur, Malaysia

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Mr Pancake or M Crepe? Tasty by any title

    Crowds of people gather around a lone man with a mobile food cart every day at around 2pm in front of the Institut Francais du Cambodge to order what many say are the best crepes in Phnom Penh. To some – even to the man making

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • Singapore backs Cambodia's efforts on Myanmar

    Singaporean Prime Minister Lee Hsien Loong supports Cambodia in its efforts to seek a solution to the ongoing Myanmar crisis as the chair of ASEAN. Lee expressed his support during a meeting with Prime Minister Hun Sen via videoconference on January 14, with the talks focused

  • PM sets tourism reopening as centrepiece of ATF 2022

    Prime Minister Hun Sen urged ASEAN to reopen tourism and trade now that many of the bloc’s member countries have vaccinated their populations. Speaking at the 40th ASEAN Tourism Forum 2022 (ATF 2022) in Preah Sihanouk province on January 18, the premier also said ASEAN has a