Indonesia is becoming an increasingly tough market for Malaysia’s regional banking groups. CIMB and Maybank as both face growing challenges in SEAs largest economy.
Bank Indonesia’s move to tighten liquidity in the country, coupled with rising inflation and a slowing economy, has made for a tougher operating environment for banks in Indonesia. Loan growth and interest margin are expected to be dragged down further.
This has already impacted the earnings for the first six months to June 2013 of CIMB’s 98% owned subsidiary Bank CIMB Niaga and Maybank’s BII. The full impact will be felt in the bank’s second half 2013 earnings.
Both Indonesia banks lowered their loan growth projections in late July 2013.
Among CIMB Group’s regional operations, Indonesia is the key concern for the group given its high inflationary environment, coupled with slowing economic activities.
The tough operating environment in Indonesia may deter other banks from Malaysia from venturing into the market for now (Aug 2013).
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