THE merger between RHB Investment Bank and OSK Investment Bank, which took effect in April this year, has no doubt raised the RHB Banking Group's stature a few notches and it is determined to use the achievement as a platform for further growth.
Group managing director Kellee Kam said the merger has madeRHB the largest stockbroker in Malaysia by volume, undertaking about 14.5 per cent of all volume in the stock market, while its asset under management grew to RM36 billion.
"Based on the June investment banking table, we are now in the top three for a number of categories compared with our ninth and 10th position just a year ago," said Kam in a recent interview.
The merger has no doubt given the RHB Group some scale in the country's banking industry in addition to access to a larger pool of clients, he said, adding that the next challenge for the Group is to enhance the growth here and offshore.
While it embarks on growing its international business, Kam said domestically, the Group needs to tackle what he described as a rather challenging year for banks, especially in the first half, due to the weaker capital market flows.
"For one, we missed our return on equity (ROE) target of 13 per cent and have since revised it to 12 per cent for 2013. For the rest of this year we are quite cautious," he said.
However, the banking group is confident it will achieve its full-year loan growth target of 12 per cent and is hopeful of achieving a cost-to-income ratio target of less than 50 per cent.
"Our underlying fundamental targets are still okay, as far as we are concerned," said Kam, adding that the Group has always been ahead of the industry in terms of loan growth for the last four years.
On banks' margins being under pressure as interest rates have not moved up, he said banks have been facing this the last few years.
"It has been a very good envi-ronment for business over the last couple of years as the market was fairly liquid and rates are low. But this has not been so good for the banks.
"However, we have seen the margin compression declining. For us, in the past two years, our margin compressed by 35 basis points but between last December and now, it has only compressed by one to two basis points. It has come down to a steady level," he noted.