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EON Bank Pushes Ahead With Transformation Plan
KUALA LUMPUR, Feb 17 (Bernama) -- Amid the turbulence in the boardroom of its parent company, EON Bank Bhd is looking optimistically to the future with a three-year transformation plan and new products such as bancassurance for its customers.
Emphasising the need to move forward, EON Bank Bhd Group Chief Executive Officer (CEO) Michael Lor said the vision is to enter the bancassurance market and at the moment, there are ongoing talks with three potential partners on this.
"We hope to make a positive announcement by the third quarter of this year," he told Bernama in a recent interview. Lor is optimistic about the bank's three-year transformation plan, stating it does not intend to compete with the "big boys", in the Malaysian banking sector.
"The intention is not to be the largest bank. We do not intend either to compete against the larger banks or have the biggest network of branches. We are not talking about being the largest in any area but to be simply good in what we do," he said, adding that EON Bank wants to find a niche, where it is the preferred bank with a world class standard.
EON Capital Bhd, EON Bank's parent company, recently rejected a RM4.92 billion offer from Hong Leong Bank Bhd to buy its assets and liabilities, which is basically EON Bank. The deal, if it materialises, will see Hong Leong Bank becoming the fourth largest in the country after Maybank, CIMB and Public Bank.
"We are not in a hurry to merge. The journey we have embarked on with regards to the transformation aspirations, will keep us very busy over the next three years," said Lor.
"The Hong Leong Bank proposal has caused a certain amount of distraction to both employees and the operations of EON Bank. But, the impact has not been significant," he said.
Lor went on to state that from what he could see, EON Bank has been even more aggressive in the market over the past month, compared to before the Hong Leong offer. EON Bank in January, was the first to launch two initial public offerings (IPO) for its customers.
"We were also the first in the country to launch a deposit scheme. We also launched a car financing campaign," he highlighted. There are five strategic businesses focuses under the transformation plan approved by EON Bank's board of directors last year, with the domestic market continuing to be the main thrust of the group.
"To us, venture overseas over the next three years, is not a priority. The more important thing is to work very hard to build up the banking franchise. We want to distinguish ourselves as the preferred bank on the local front. We feel it may not be smart of us to think of venturing overseas. But if there is an opportunity, we will not look the other way. What I mean is, we believe domestically there is a franchise to be built and we will still get value for it, over the next two or three years," he explained.
Turning back to the transformation plan, he said the main focus is on sustaining the returns from its retail banking, which currently delivers 85 per cent to revenue. "The consumer lending and banking businesses will continue to be the bank's backbone. We do not see any diversification or moving away from consumer banking to small medium enterprises (SMEs)," he added.
Consumer banking, currently contributes 65 per cent to the bank's income, while SMEs generate the remaining 20 per cent. Apart seeking a new revenue stream by venturing into bancassurance, the bank, he said is looking to drive potential income from its investment banking, treasury segment as well as priority banking. It has also identified a CEO candidate for its investment unit.
"We have proposed the name to Bank Negara for consideration. We hope the investment business will continue to race on with the addition of more experts," he added. Under the transformation plan, it is also intended to improve the bank's credit risk management structure, by putting in place a system that allows it to be more up to date along with a more sophisticated analytical credit risk. EON Bank is also busy developing talent in the organisation as well as corporate efficiency. This is the key pillar to driving our business over the next three years and we have set a growth target of around 15 per cent for loan growth and a 25 per cent growth in pre-tax profit in FY10," Lor disclosed.
With a total of 140 branches at present, EON Bank plans to increase this number to 144 by year-end. According to Lor, the bank is also looking to relocate at least five branches this year. The future of EON Bank is likely to be determined after the extraordinary general meeting (EGM) of EON Capital on Feb 22.
A major shareholder has proposed to appoint eight more directors, thus forcing a likely change, in the balance of power in the group and possibly the policy as to whether EON Bank remains as it is, or is swallowed by a larger entity. -- BERNAMA
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