New Straits Times - - Business -

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.

Malayan Bank­ing Bhd says its net in­ter­est mar­gin stood at a healthy 2.43 per cent as at the first quar­ter of this year.

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