THE following is an excerpt from our interview with RHB Bank Bhd group managing director Datuk Khairussaleh Ramli

The Edge: What are the biggest challenges you see for the industry in the next few years?

Datuk Khairussaleh Ramli: It’s growth, finding growth in profitability. We can grow in assets and in deposits but these assets’ margins are getting smaller while deposit cost is increasing. That’s why you have to look at how to deliver things in a more efficient way through digital.

There’s also digital disruption … this disruption is still happening and there is still no new normal yet because things are still unravelling. So, how do we react to that? Do we not do business? Do we try to partner fintechs? Do we invest a lot of money? In a way, there is a form of calculated risk banks have to take in trying to deal with the disruption. But as I’ve highlighted, doing nothing is not an option. We are trying to do something here but we don’t know whether that thing is the best. But we’ve done our analysis and we think that it can probably help.

Apart from trying to find growth and tackle disruption, we also need to make sure regulatory compliance is observed. Last but not least, it’s about people. How do we attract people to the industry? It’s about trying to offer them a proposition for career development and so on, and retention is also important. In the digital space, for example, when we try to attract talent, we’re not just competing with banks but with everyone because everyone is going digital. So, that is a challenge and to do that, we need to also think about what we have to offer them. In short, there’re many things to juggle for the banking industry.

Do you think there will still be eight banks in five years’ time?

I don’t know. I think as long as each bank is able to deliver what is promised to shareholders, why not? But really, it will be up to market forces. It’s market driven. No, there is no pressure from the central bank for us to consolidate.

What went wrong in the proposed merger with AMMB Holdings Bhd?

As we’ve announced, we just couldn’t agree on the key terms and rather than prolong the process, we decided to move on.

Was it because you were concerned about their contingent liabilities?

No, it’s more about the key terms.

You have been RHB’s group managing director since May 2015 but even longer at the bank. Do you see yourself being there until the end of [email protected]?

I don’t know. I’ll leave it to the shareholders to decide. As long as they need me, I have a plan. I want to stay and try to hopefully deliver the plan.

There’s constant speculation that RHB may one day merge with MBSB (Malaysia Building Society Bhd) because of your common major shareholder — the EPF. What is your view? Would there be synergy in such a merger?

I don’t know if the shareholders are considering it. It has to be looked at from cost benefits. I see MBSB as an enlarged group; they will focus on Islamic. We are more than just Islamic. Those are the considerations, in particular, that people have to think about. But my view is that it will be up to the shareholders to decide, and one major consideration is to think about how an Islamic bank can fit into a bigger bank that has conventional business as well.

Islamic banking wasn’t specifically mentioned in [email protected] ...

We didn’t include it in [email protected] because it cuts across everything we do. We don’t want to duplicate it. We are doing Islamic on a leverage model anyway. Whatever we do must cover Islamic but having said that, if you look at the profile of our own Islamic bank, we have improved the composition of Islamic financing to about 30%. I think when we started, when I first joined, it was below 20%. We have really pushed Islamic financing but, of course, this is also driven by customer demand. One area where we want to position Islamic is from the payment perspective. We believe in demand for Islamic-based transaction banking and payments, particularly catering for the public sector. So, that’s one differentiation we are trying to build for our Islamic business.

How do you see your investment banking outfit performing?

We are seeing growth in the [deals] pipeline and we have also hired a new ECM (equity capital markets) head. We are going to hire a group M&A (mergers and acquisitions) head and we believe this business can grow. But, of course, we have to pick segments we can go into. The mid cap is about increasing penetration, the large cap is about getting the share wallet. Robert (Huray) helms the IB (investment bank) and we are seeing good engagement with our clients. The idea is to be engaging clients much more, providing them with ideas and so on, and so far Robert has been doing that. Our potential deals are quite chunky, so we need to close some of them. The market is conducive at least; it has improved significantly.

You are at No 3 or 4 on the league table …

Yes, the league table is important but we always emphasise that making money is more important.