This article first appeared in The Edge Malaysia Weekly on June 3, 2024 - June 9, 2024

ONE can expect Bank of America Malaysia Bhd (BofA Malaysia), now in its 65th year of operations in the country, to be far more visible than it has been in the past as it wants to grow its business more aggressively, its chief says.

BofA, headquartered in North Carolina, was the first US bank to set up a branch in Malaysia, back in 1959. However, despite its long history here, the lender has stayed relatively low key.

BofA Malaysia’s asset size as at Sept 30 last year stood at a mere RM6.6 billion, down from RM11.32 billion as at end-2022 and roughly double that of a decade earlier.

Country head Gautam Puntambekar, who was appointed to the role last October, is confident assets will grow more sizeable going forward as the group is going all out to chase more business.

“You can expect a lot more visibility from us,” he tells The Edge in an interview.

“Our franchise has been here for 65 years, [but] we have been a bit low key on our marketing presence. However, we are now looking to change that.”

The bank’s efforts are already starting to show. In the first four months of the year, its loans have grown by “close to 25%” against the whole of last year, Puntambekar shares. BofA Malaysia has yet to publicly release its financial statements for the year ended Dec 31, 2023 (FY2023), but as at 9MFY2023, its loan book stood at about RM631 million.

“We have a very healthy pipeline [of loans] and it’s a realistic pipeline. By ‘realistic’, I mean that we are confident they will come through this year. I think we’ll see 100% growth in the loan book [this year],” he says.

The growth in loans is mainly from the manufacturing sector, he says. “There’s also a little bit more demand coming through from the E&E (electrical and electronics) space, and from oil and gas on the clean energy side. But the real growth in terms of the pipeline is really from manufacturing.”

A commercial bank, BofA Malaysia is licensed to provide working capital, cash management, trade finance services, fixed income and foreign exchange trading, among others, to corporate clients and financial institutions.

Its clients are mainly multinational corporations (MNCs) that it supports as they expand into the region, and large local corporates. BofA Malaysia is increasingly looking to clinch “key local corporates”, Puntambekar says. “We have identified [whom] we want to bank with.”

Within Malaysia, BofA is represented through three legal entities, namely the commercial bank BofA Malaysia; the investment bank Merrill Lynch Malaysia Advisory Sdn Bhd (MLMA); and the offshore entity Bank of America Labuan.

(BofA Corp acquired Merrill Lynch & Co in September 2008 at the height of the global financial crisis, and the deal was completed in January the following year.)

According to Puntambekar, Malaysia is one of the top three markets in Southeast Asia for BofA in terms of earnings contribution, along with Singapore and Thailand. “Malaysia has always been a very integral and important part of BofA, not only in Southeast Asia but also in Asia-Pacific.”

He sees numerous opportunities for BofA Malaysia even as it increasingly looks to cross-sell its offerings to clients. “The number of MNCs we are seeing either setting up or investing further in Malaysia offers us multiple opportunities. One, obviously, is on the asset side, as companies continue to invest. Two, we will continue to see more and more MNCs setting up offshore service centres in Malaysia supporting their global technology and operations, given the multi-linguistic talent pool available across many cities in the country.

“Three is on the clean energy side. That’s a big area of opportunity as companies look globally to see where they should invest from a green energy perspective. I think Malaysia definitely has an advantage, having announced the NETR (National Energy Transition Roadmap) that shows its focus towards sustainability.”

The global research team, BofA Global Research, sees Malaysia’s economy expanding 4.4% this year after last year’s 3.7% growth.

Puntambekar, who oversees all of BofA’s businesses here, took over from Raymond Yeoh, who retired after 10 years of service. He has over 25 years of banking experience and formerly led the group’s corporate banking subsidiaries in the region, out of Singapore. He had joined BofA in India in 2005.

BofA is also seeing a “strong” investment banking deal pipeline in Malaysia, with mergers and acquisitions (M&A) likely to play out in the healthcare, digital infrastructure, fintech and financial institution space, says Puntambekar.

Last year, the group was the top M&A adviser in Malaysia by deal value, based on data compiled by Dealogic.  Among the four deals it advised on that year was the sale of Sime Darby Health Care Sdn Bhd to Columbia Asia Healthcare Sdn Bhd for RM5.7 billion. It marked Sime Darby Bhd’s exit from the healthcare business.

“We did quite a few marquee deals last year, and this year’s pipeline looks equally strong. We have deals that are likely to culminate this year, and the fees are to be booked this year. So, we are looking at potentially a very good year again for our investment banking division [MLMA],” he says.

On the whole, Puntambekar foresees a promising year for BofA in Malaysia. “Given our loan pipeline, and our investment banking pipeline, we’re seeing a good runway to this year. It’s all businesses gunning to make it a growth-focused franchise.

“I guess the risks or challenges that we’re seeing are [the upcoming] US election, which could put a little bit of a brake in terms of the investments coming through, or putting new investments into any country. 

Second, is the uncertainty around US interest rates. Our house view is that there could be a 25-basis-point cut in US interest rates in December,” he says.

BofA Malaysia posted a net profit of RM150.03 million for the first nine months last year, slightly more than double the RM74.34 million it made in the same

period a year earlier. This was on the back of a 58.5% growth in net income to RM270.89 million.

In FY2022, its net profit rose 259.5% to RM115 million on the back of a 108.4% increase in net income to RM270.35 million. 

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