A good third quarter for Maybank Indonesia
KUCHING: Maybank Indonesia registered a profit of 289 billion rupiah for its third quarter of 2020 (3Q20), which brought its sum for the first nine months of 2020 (9M20) up to 1.09 trillion rupiah.
This was largely in line with consensus expectations, making up 83 to 86 per cent of respective full year forecasts.
According to Maybank Indonesia president commissioner and group president and chief executive officer Datuk Abdul Farid Alias, disciplined cost management, coupled with a solid growth in syariah business and improvement in the recurring fee-based income helped to offset the impact from market volatility, disruption and reduction in loans as a result of the Covid-19 outbreak.
“The bank is encouraged that despite the challenging nine months of this year, it has managed to maintain a steady performance and demonstrated its resilience to the impact from the pandemic,” he said in a statement.
“While outlook continues to remain uncertain, the bank believes that the substantial capital and liquidity buffers Maybank Indonesia has built will help it navigate the challenges in the coming quarter.
“Our experience so far has also given us the opportunity to reshape our business while our emphasis on building our digital capabilities has provided us the platform to serve our customers better in the new normal, and is expected to provide us additional revenue streams in the future,” he added.
Hong Leong Investment Bank Bhd (HLIB Research) calculated that on a quarter-on-quarter (qo-q) basis, the six per cent rise in bottom-line was owing to lower loan loss allowances.
This masked the overall weak performance as net interest and non-interest income (NOII) fell 12 and seven per cent respectively, because of loans contraction, net interest margin (NIM) slippage and lower foreign exchange gains.
“Year on year (y-o-y), net profit dipped 18 per cent given tepid top-line; key culprits were shrinkage in loans growth, NIM, and fees. That said, these were cushioned by the decline in bad loan provision,” it saw.
“Year to date, earnings ticked down slightly by one per cent despite weak total income, thanks to lower allowance for impaired loans and normalising downward effective tax rate.
“Other key trends include Maybank Indonesia’s net loans growth dropping 17 per cent y-oy but deposits did not follow suit and nudged up one per cent y-oy instead. In turn, sequential net loan-to-deposit ratio improved 17 percentage points to 93 per cent. As for asset quality, gross nonperforming loans (NPL) ratio fell 69bps q-o-q to 4.3 per cent due to proactive assistance extended to troubled customers.
“We see the multiple interest rate cuts this year to continue exert pressure on NIM. Also, their plan to switch to loweryielding but safer assets will cap expansion.
“However, Maybank Indonesia’s focus on discipline deposit pricing and better funding management could help to prevent a sharper NIM erosion. Besides, loans growth is expected to stay tepid, considering the confluence of events from Covid19 headwinds. That said, pickup in loan restructuring efforts would help to limit a significant deterioration in NPL ratio.”