CIMB expects jumbo IPOs to raise RM10b in first half of 2018

KUALA LUMPUR: Large initial public offerings (IPO) are expected to raise over RM10 billion in the first half of this year, said CIMB Investment Bank Bhd managing director and head of ECM and Syndicate Asia, Derek Lim.
Lim said the hives of activity for IPOs in 2018 are in the infrastructure, consumer and financial services sectors.
“ACE Market, small caps and mid caps will continue to be robust this year as well with the overall conditions,” Lim said at a media briefing at the CIMB 10th Annual Malaysia Corporate Day here today.
CIMB Group Holdings Bhd chief executive Tengku Datuk Seri Zafrul Tengku Abdul Aziz (pix) expects 2018 to be an exciting year for investment banking, buoyed by a positive outlook and strong fundamentals that could boost the market such as better corporate earnings, expectations of RM90 billion infrastructure bond/sukuk issuances, as well as potential IPO and merger & acquisition activities.
CIMB is also optimistic that 2018 will be a good year for the group, as it is on track to achieve its T18 targets by year-end.
Tengku Zafrul is anticipating 2018 provisions for the group to be lower than last year’s, saying provisions for Malaysia is expected to go down this year, while provisions for Thailand, Indonesia and Singapore will improve.
In 2018, CIMB’s focus areas include new markets of Vietnam and Philippines; transformation of the Thai business, its commercial banking and data & digital outfit; as well as portfolio optimisation with the completion of its China Galaxy joint venture.
Tengku Zafrul said: “2018 is the final year for T18. All businesses have committed to give their all to achieve the T18 targets.”
Some of the T18 targets include a cost-to-income ratio of 50%, common equity tier 1 of 12%, return on equity of 10.5-11%, income contribution from consumer and commercial of 60%.
“Last year’s GDP growth was above expectations, this will definitely translate into stronger loan growth for 2018,” Tengku Zafrul said, adding that CIMB’s loan growth target for 2018 is 4-5%.
Despite this being an election year, he said, it will not have any impact on CIMB as the market has already factored this in, while strong fundamentals and economic growth should augur well for the banking sector.