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UPDATE 1-Malaysia's CIMB Q2 profit drops, Zafrul named acting CEO
August 29, 2014 / 6:15 AM / 3 years ago

UPDATE 1-Malaysia's CIMB Q2 profit drops, Zafrul named acting CEO

* Net profit dropped 10 pct, Indonesian unit weighs

* Bank says Indonesia remains its biggest challenge

* Tengku Zafrul Aziz steps in as acting CEO

* Shares down 0.5 pct after earning (Recasts and adds new acting CEO)

KUALA LUMPUR, Aug 29 (Reuters) - CIMB Group Holdings Bhd , Malaysia’s second biggest lender, said quarterly net profit slid 10 percent on a weak performance in Indonesia, and named its head of investment banking as acting CEO.

Tengku Zafrul Aziz, who was poached from archrival Malayan Banking Bhd (Maybank) last year, will take on the top position from Sept. 1. Current CEO Nazir Razak will become chairman as previously announced.

It was CIMB’s fifth straight quarter of year-on-year profit decline and the result comes after Maybank booked its lowest quarterly profit in a year, hampered by a dearth of IPO and other deals.

In Indonesia, charges for bad loans have risen and the value of the rupiah has fallen. CIMB’s net profit for the second quarter dropped to 949.9 million ringgit ($300 million) while revenue was flat at 3.4 billion ringgit, it said in a statement.

First-half net income slid 17 percent to 2.02 billion ringgit.

“Indonesia will remain the biggest challenge in the second half due to prevailing economic and liquidity factors,” CIMB said in a statement.

CIMB is in talks with smaller local rivals RHB Capital and Malaysia Building Society on a planned mega merger to become Malaysia’s largest banking group, surpassing Maybank.

RHB, Malaysia’s fourth-largest lender by assets, is discussing the sale of its investment banking unit if the merger proceeds, people familiar with the plan said on Thursday.

CIMB has boosted its regional operations over the past decade and expanded its investment banking capabilities by acquiring parts of Royal Bank of Scotland’s Asia operations outside Japan.

Shares of CIMB were down 0.5 percent while the broader index fell 0.2 percent. (1 US dollar = 3.1560 Malaysian ringgit) (Reporting by Yantoultra Ngui and Al-Zaquan Amer Hamzah; Editing by Edwina Gibbs)

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