May­bank sees slower lend­ing to cor­po­rate sec­tor

The Star Malaysia - StarBiz - - Front Page - By YVONNE TAN yvonne@thes­

KUALA LUMPUR: The country’s largest lender, Malayan Bank­ing Bhd (May­bank), ex­pects cor­po­rate sec­tor lend­ing to see a slow­down but re­mains con­fi­dent about the con­sumer seg­ment.

The bank, also the fourth big­gest in South­East Asia, how­ever, has no of­fi­cial es­ti­mates as to how much its loans can grow for the en­tire year, group chief fi­nan­cial of­fi­cer Datuk Amirul Feisal Wan Zahir said.

Clos­est ri­val CIMB Group Hold­ings Bhd on Wed­nes­day said it was pro­ject­ing its to­tal group loans to grow by 6% for 2018 af­ter see­ing an in­crease of 3.4% in the first half of the year.

For the six months to June 30, May­bank said its to­tal group loans grew by 4.6%.

“We do see a strong mo­men­tum in con­sumer in tan­dem with eco­nomic growth, but for cor­po­rate, par­tic­u­larly on the larger cor­po­rate side, we see slower growth,” Amirul said at a re­sults brief­ing here yes­ter­day.

“For in­vest­ment bank­ing, there are two parts, one is bro­ker­age fees and the other is cap­i­tal mar­ket-rais­ing and as far as bro­ker­age fees are con­cerned, we’ve seen some de­cline in the first half.”

He said it re­mained “hard to project” how the cap­i­tal mar­ket-ras­ing part of its busi­ness would fare, but added that there re­mained “win­dows of op­por­tu­nity” in this area.

“There are win­dows of op­por­tu­nity, for ex­am­ple, in the debt mar­ket.

“Be­cause of the in­crease in vo­latil­ity, a lot of funds are switch­ing from eq­uity to cash, but they are still look­ing for yields. So, there will be (chances) of very strong names go­ing out there rais­ing bonds, so we do ex­pect ac­tiv­ity on the fixed in­come side,” Amirul said.

As for the eq­ui­ties mar­ket, (op­por­tu­ni­ties) are pos­si­ble too but this re­mains choppy, he added. For the sec­ond quar­ter ended June 30, May­bank re­ported a net profit of RM1.96bil com­pared to a net profit of RM1.66bil in the same pe­riod a year ago, a hike of 18%.

The in­crease was sup­ported by higher op­er­at­ing in­come and lower pro­vi­sions.

Rev­enue for the pe­riod stood at RM11.5bil com­pared to RM10.9bil last year.

Its cost-to-in­come ra­tio came in at 46.9% from 48.9% a year ear­lier.

The lender also an­nounced yes­ter­day a sin­gle-tier in­terim div­i­dend of 25 sen per share for share­hold­ers, com­pared with the 23 sen per share an­nounced for the same pe­riod last year.

For the six months up to June 30, May­bank’s net profit stood at RM3.83bil against RM3.36bil a year ear­lier, higher by 14%.

Over the same pe­riod, net fee-based in­come grew 7.4% to RM3.28bil boosted by higher in­come from Is­lamic bank­ing op­er­a­tions and forex prof­its.

Gross de­posits grew 5.5%, helped by an 11.6% in­crease in Sin­ga­pore and a 10.1% hike in Malaysia. In terms of net in­ter­est mar­gin, this was at 2.33% in June, a dip of eight ba­sis points from a year ear­lier.

May­bank’s cap­i­tal po­si­tion con­tin­ued to be sup­ported by a to­tal cap­i­tal ra­tio of 17.78% and a com­mon eq­uity tier-1 ra­tio or CET1 ra­tio of 13.16%.

In terms of the bank’s ex­po­sure to the oil and gas (O&G) in­dus­try, Amirul said to­tal ex­po­sure was cur­rently at about 3.8%.

When asked, he said he could not com­ment on whether or not the lender had any ex­po­sure to debt-laden O&G oufit Sa­pura En­ergy Bhd, which re­cently an­nounced a rights is­sue to raise up to RM4­bil. It has debts amount­ing to RM16­bil.

Re­call, May­bank’s Sin­ga­pore op­er­a­tions took a hit in re­cent years be­cause of its ex­po­sure to the-then be­lea­guered O&G mar­ket.

Amirul said at 3.8%, the bank­ing group’s ex­po­sure to the sec­tor had re­duced.

At the close of trad­ing yes­ter­day, May­bank fin­ished four sen lower to RM9.96.

Strong mo­men­tum: Amirul says the bank sees a strong mo­men­tum in the con­sumer seg­ment in tan­dem with eco­nomic growth but be­lieves that there will be a slow­down in cor­po­rate sec­tor lend­ing.

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