Malayan Banking's Indonesia unit to sell 68.55% stake in WOM for $51 million
KUALA LUMPUR (NewsRise) - Malayan Banking, Malaysia's largest bank by assets, said Thursday its Indonesian unit plans to sell 1entire 68.55% stake in local lender Wahana Ottomitra Multiartha for 673.77 billion Indonesian rupiah ($51 million).
The deal is the latest in a string of asset sales through the past two years as the bank, also known as Maybank, grapples with slumping profits on the back of slowing economic growth and volatile capital markets.
"The proposed disposal is undertaken as part of Maybank Indonesia's strategic initiative to maximize its capital use and streamline its customer segmentation, which will optimize its resources in the most efficient manner," Maybank said in an exchange filing.
Last year, Maybank sold all of its shares held in the U.S.-based payment technology company Visa Inc. for $93.9 million and disposed of its Thai asset management company for an undisclosed sum. In late 2015, the company sold two subsidiaries in Papua New Guinea for about $123 million.
The latest stake sale in Wahana Ottomitra, which primarily provides financing for motorcycle purchases, to Indonesian financial services company Reliance Capital Management will likely close by the first quarter of 2017, Maybank said.
Once completed, Wahana Ottomitra will cease to be Maybank Indonesia's unit. Still, the company will remain as a "significant business partner of Maybank Indonesia in the future," Maybank noted. The deal is not expected to have "any material effect" on earnings this year, it added.
Maybank counts Indonesia as one of its three home markets alongside Malaysia and Singapore that make up bulk of its profits. Indonesia accounted for 8.3% of its gross loans but nearly 15% of its net operating income between January and September.
Net profit slipped 5.4% year-on-year to 1.80 billion ringgit in the three months ended September 30 - its fourth consecutive quarter of decline - prompting the company to lower two of its key financial targets. Maybank said it was targeting to achieve return-on-equity of 10.5%-11.0% and now aiming for loan growth between 2% and 3% compared with its initial guidance of 11%-12% and 8%-9% respectively.
Shares of Maybank ended 0.1% higher at 8.31 ringgit, while the benchmark FTSE Bursa Malaysia KLCI closed 0.2% up.