Maybank net profit at record RM7.5bil
Lender remains cautious in view of external uncertainties
KUALA LUMPUR: The country’s largest lender Malayan Banking Bhd (Maybank), which saw for the first time ever its net profit breach the RM7bil level, remains “cautiously optimistic” moving forward owing mostly to the external environment.
Group president and chief executive officer Datuk Abdul Farid Alias said although the overall sentiment worldwide was “quite positive” currently, the bank, whose fortunes are closely tied to global economic conditions, chooses to be cautious.
“Bearing in mind that leverage ratios have gone up quite (a lot) all around the world,” he said.
He also said this year looks to be “equally challenging as 2017”, given the volatile markets that were seen at the start of the year.
Speaking at a press conference after the bank released its financial year ended Dec 31, 2017 (FY17) results here yesterday, Farid said the group, nevertheless, was prepared to capture a “stronger-than-expected” growth partly because of its healthy liquidity and capital positions while being prepared for any unexpected outcome of current global circumstances.
Maybank said yesterday its net profit for its fourth quarter ended Dec 31, 2017 came in at RM2.13bil compared to the normalised net profit of RM1.74bil for the same period a year earlier.
However, without eliminating exceptional one-off proceeds from the sale of securities in 2016, Maybank’s net profit for the fourth quarter ended Dec 31, 2016 was a higher RM2.36bil compared to the net profit for the quarter under review.
For the entire FY17, Maybank’s net profit stood at RM7.52bil compared with RM6.74bil in FY16, revenue was RM45.6bil compared with RM44.7bil previously while pre-tax profit surpassed the RM10bil mark at RM10.1bil against RM8.84bil in FY16.
Earnings were boosted by stronger revenues from key segments, lower provisions and better management of its assets and liabilities, the lender said.
Notably, loan provisions for the full year dropped by 30.8% to RM1.96bil from RM2.83bil in 2016.
The group has proposed a final single-tier dividend of 32 sen per share, comprising 18 sen per share to be paid in cash and an electable portion of 14 sen per share which can be reinvested under its dividend reinvestment plan.
Combined with the 23 sen interim dividend declared earlier, Maybank’s full-year payout to shareholders stands at RM5.90bil or 78.5% of net profit, which translates into a dividend yield of 5.6% – one of the highest among banks in the region.
Among its targets this year, Farid said Maybank is expecting a loan growth similar to that of last year’s.
The group’s Malaysian operations saw a loan growth of 5% for FY17, while its Singapore and Indonesian operations saw growths of 4.3% and 3.6%, respectively. “We want to be cautious in our forecast. “We are hopeful that domestic investment will partly drive this growth ... I think we may be surprised on the upside but I just want to be cautious,” he said.
Maybank is also expecting a lower net interest margin expansion of five basis points (bps) this year after improving by nine bps in FY17, and has guided for a return on equity (ROE) of 11% after reporting an ROE of 10.9% in FY17.
In terms of its cost-to-income ratio, he said the group aspired to contain this at about 48%.
Farid said the adoption of new accounting standard MFRS 9 this year – which requires banks to set aside higher provision amounts for expected bad loans – will not have any material impact on the group’s capital position and is expected to result in a marginal 40-bps reduction of its total capital ratio.
The bank’s common equity tier 1 ratio stood at 14.2% and total capital ratio at 18.8% as of FY17.
Meanwhile, group chief financial officer Datuk Amirul Feisal Wan Zahir said Maybank’s total exposure to the oil and gas (O&G) industry remains “contained”.
Its exposure has actually reduced to 3.54% for total exposure in all countries compared to 3.96% in the third quarter of last year, he said.
Maybank’s Singapore operations took a hit in recent years because of its exposure to the-then beleaguered O&G market.
Feisal said the group would continue to monitor the situation in this regard.
“Even though oil prices have actually inched up, I think oil majors need a little time for planning, and as far as assets are concerned, there is still excess supply.
“So, it is a stressed environment but as far as our exposure is concerned, it is reducing,” he added.
Among its key sector performances, Maybank’s Islamic banking segment saw its pre-tax profit increasing 41.4% to RM2.75bil in FY17, while its insurance arm – Etiqa Insurance & Takaful – achieved a record pre-tax profit of RM1.01bil.
Its group community financial services segment comprising retail, small medium enterprises and business banking operations, meanwhile, achieved a pre-tax profit of RM5.31bil for FY17, up over 23% from a year ago.
Maybank’s shares closed flat at RM10.46 yesterday.
In the past one year, its share price has gained over 28%.