‘MAYBANK LOAN-TO-DEPOSIT RATIO BELOW 100pc’
KUALA LUMPUR: The Malayan Banking Bhd (Maybank) group has clarified that its loan-to-deposit ratio (LDR) is at a comfortable level of 94.7 per cent as end-March, in contrary to a Bloomberg report stating that the LDR is 101 per cent.
Maybank group chief financial officer Datuk Amirul Feisal Wan Zahir said the report on Friday did not give a true picture of Maybank’s careful management of its assets and liabilities.
He said the article failed to take into account the Islamic investment accounts (IAs) offered by Maybank Islamic Bhd, which in essence was similar to traditional deposits with current account and savings account (Casa) and time deposit features used to fund Islamic assets.
“Maybank runs its business at
To state that our loan-todeposit ratio is approaching 101 per cent is wrong and can lead to misunderstanding among our stakeholders... DATUK AMIRUL FEISAL WAN ZAHIR Malayan Banking Bhd group chief financial officer
the highest level of prudence and transparency and we have clearly disclosed in our quarterly earnings presentations, the levels of both our LDR and liquidity coverage ratio,” he said in a statement yesterday.
“This is a misrepresentation of LDR computations as IA should be included in the LDR computation for Maybank group and Maybank Malaysia, as provided for under Malaysian banking guidelines.
“If IA is excluded from the LDR computation, then the associated loan amount should also be excluded in the computation as investment accounts are meant to fund loans.”
The IAs were reclassified from Mudarabah deposits under the old guidelines on Islamic banking to Mudarabah IAs starting from July 2015.
This is in line with Maybank group’s commitment in complying with, and embracing the Islamic Financial Services Act.
Feisal said for Maybank’s Malaysian operations, its LDR as at March was 90.6 per cent, and this had remained fairly stable over the last year, from 90.2 per cent in March last year.
“It was in fact lower quarteron-quarter from the 91.3 per cent level recorded in December last year, arising from deposit growth that outpaced loan growth.
“Deposit growth was also supported by low-cost Casa growth.”
The group had been actively focusing its attention on increasing its Casa component, and where necessary, moving away from the higher funding cost segments such as fixed deposits, he said.
Maybank’s Singapore operations, meanwhile, had an LDR of 89.5 per cent as at March, while Maybank Indonesia’s LDR at the bank level stood at 88.4 per cent.
“To state that our LDR is approaching 101 per cent is wrong and can lead to misunderstanding among our stakeholders, including our customers, shareholders and regulators.”
He also clarified that the group’s liquidity coverage ratio, which measures how sufficiently banking institutions hold highquality liquid assets to withstand an acute liquidity stress scenario over a 30-day horizon, stood at 134 per cent as at end-March, which was well above Bank Negara Malaysia’s requirement of 80 per cent for this year.
On the issue of some Malaysian banks’ (including Maybank’s) net interest spread being less than two per cent as stated in the Bloomberg article, Feisal said Maybank’s net interest margin
(NIM) stood at a healthy 2.43 per cent as at the first quarter of this year.
“We have actually seen our NIM expand nine basis points from 2.34 per cent a year ago, arising from our disciplined loan pricing and ability to reduce our cost of funding by focusing on Casa growth.”
On Malaysian banks’ growing reliance on foreign currency debt issuances, Feisal said Maybank group’s total borrowings, including subordinated debt and capital instruments, was 7.6 per cent of total assets.
As part of Maybank group’s prudent risk management approach to avoid foreign currency exposure mismatch for its assets and liabilities, he said it would only raise foreign currency borrowings to fund client requirements in that particular currency.