Monday, Nov 03, 2003
MARC has upgraded the long-term rating of Commerce Asset-Holding Berhad (CAHB) to A+ (single A plus). This reflects the strengthened credit standing of the CAHB Group, which benefited from the strong franchise of its core subsidiaries; a better performance by its commercial banking subsidiary; the improvement in its overall asset quality; a low gearing level; and a proactive management. The rating however is constrained by the weaker asset quality of its commercial banking arm; and the uncertainty surrounding the potential impact of the recently proposed acquisition.
Against a backdrop of a strongly competitive financial services industry, the CAHB Group’s consolidated pre-tax profit rebounded (+45.0%) during the year, while the net NPL ratio of the Group decreased marginally from 6.7% to 6.1%. The Group’s net NPL ratio remained well below the banking industry average.
Going forward, MARC anticipates intensified efforts to boost the Group’s non-interest income base. The current mixed credit quality of the Group’s loans portfolio is expected to be maintained in the short term. MARC nevertheless remains cautious on the potential post-acquisition impact that may arise from the acquisition of Bank Niaga.
The acquisition of Bank Niaga exposes the CAHB Group to new cross-border challenges. In addition to managing the bank, CAHB will also face the challenges presented by the political and currency risks associated with Indonesia. Nevertheless, the RM435.6 million invested in Bank Niaga represents only 11.6% of CAHB’s strong shareholders’ funds of RM3,765.7 million (company level).
In all, the acquisition shows the growing regional standing of the CAHB Group and signals the way forward for the Group. It enables the Group to expand its market reach and expertise beyond the borders faced by its domestic competitors, especially in light of liberalization in the region.
MARC views the government ownership (through Khazanah and MoF) as a strong financial backing. The successful listing of CIMB in 2003 provides additional flexibility to CAHB as it is an avenue for CAHB to raise funds by further offering for sale its shareholdings in CIMB, if the need ever arises.
Against a backdrop of a strongly competitive financial services industry, the CAHB Group’s consolidated pre-tax profit rebounded (+45.0%) during the year, while the net NPL ratio of the Group decreased marginally from 6.7% to 6.1%. The Group’s net NPL ratio remained well below the banking industry average.
Going forward, MARC anticipates intensified efforts to boost the Group’s non-interest income base. The current mixed credit quality of the Group’s loans portfolio is expected to be maintained in the short term. MARC nevertheless remains cautious on the potential post-acquisition impact that may arise from the acquisition of Bank Niaga.
The acquisition of Bank Niaga exposes the CAHB Group to new cross-border challenges. In addition to managing the bank, CAHB will also face the challenges presented by the political and currency risks associated with Indonesia. Nevertheless, the RM435.6 million invested in Bank Niaga represents only 11.6% of CAHB’s strong shareholders’ funds of RM3,765.7 million (company level).
In all, the acquisition shows the growing regional standing of the CAHB Group and signals the way forward for the Group. It enables the Group to expand its market reach and expertise beyond the borders faced by its domestic competitors, especially in light of liberalization in the region.
MARC views the government ownership (through Khazanah and MoF) as a strong financial backing. The successful listing of CIMB in 2003 provides additional flexibility to CAHB as it is an avenue for CAHB to raise funds by further offering for sale its shareholdings in CIMB, if the need ever arises.