This article first appeared in The Edge Financial Daily on July 14, 2017 - July 20, 2017

KUALA LUMPUR: CIMB Group Holdings Bhd group chief executive officer Tengku Datuk Seri Zafrul Tengku Abdul Aziz is “cautiously optimistic” about the banking industry in the second half of 2017 (2H17).

He explained that this is due to Malaysia’s highly open economy, which is affected by the performance of major economies like the US, China, and Europe.

“To that end, we think [the] second half will also continue to be at least [faring] at a similar growth in the first half of this year, and to summarise, 2017 should look better than 2016.” said Zafrul during a press conference at the Finance Forum 2017 on Belt and Road Initiative yesterday.

In addition, Zafrul disagreed with some analysts’ views on dull market sentiment as he sees strong gross domestic product (GDP) growth.

“I don’t agree with that (weak market sentiment), and if you look at the numbers, GDP numbers are strong.

“If you look at the market performance, you can see that Malaysia is one of the strongest performing markets in Asia, and we will continue to see strengthening and stabilisation of our currency,” said Zafrul.

Furthermore, Zafrul said CIMB is looking to increase collaboration with Chinese companies as more investments are seen flowing between China and Southeast Asia, with China Galaxy International Financial Holdings Ltd as the first step.

Last month, CIMB announced that its wholly-owned unit CIMB Group Sdn Bhd had signed a conditional share purchase agreement with China Galaxy to sell a 50% stake in CIMB Securities International Pte Ltd for S$167 million (RM515 million) to the latter.

China Galaxy is one of the largest Chinese securities firms, and will become CIMB’s partner in the institutional and retail brokerage, equities research and associated securities businesses across Indonesia, Singapore, Thailand, Hong Kong, South Korea, India, the UK and the US.

“We are now waiting for approvals from all the regulatory authorities as they involve many countries,” said Zafrul, adding that CIMB is looking to get those approvals by year end.

Meanwhile, Zafrul sees that One Belt, One Road (Obor)-related bond issuances will benefit the market in the long run.

“If there is an opportunity for capital market exercises including bonds or equities, that will definitely benefit the market. It is important that the bond markets are there to support this long-term investment that is required,” said Zafrul.

“We, Malaysia, we are one of the deepest in terms of debts for capital markets in this region. So, we hope that Malaysia can play a part in helping the Obor market to raise the bonds,” Zafrul added.

Operating in 15 countries, Zafrul said CIMB will be looking for opportunities to acquire or merge with other financial institutions in the countries that are operating in a “subscale” size, taking into consideration commercial liability of any possible merger and acquisition exercise.

Going forward, looking at other growth potential, CIMB is currently in the midst of finalising the opening of its second branch in Vietnam and waiting for the approval of bank operations from the central bank of the Philippines.

“These are the two markets that we are excited about, especially Vietnam,” he said.