May­bank low­ers 2016 loan growth tar­get

The Sun (Malaysia) - - SPEAK UP -

PETALING JAYA: Malayan Bank­ing Bhd (May­bank), which saw a 5.4% drop in its third quar­ter (Q3) earn­ings, has cut its 2016 loan growth tar­get to be­tween 2% and 3% from the ini­tial tar­get of be­tween 8% and 9%.

The re­vi­sion comes af­ter it reg­is­tered an­nu­alised loan growth of only 2.9% for its Malaysian op­er­a­tions in the first nine months of the year, while its in­ter­na­tional op­er­a­tions saw a mar­ginal con­trac­tion of 2.6% on softer eco­nomic con­di­tions.

May­bank’s net profit was down to RM1.8 bil­lion for the third quar­ter ended Sept 30, 2016 from RM1.9 bil­lion, pri­mar­ily due to a lower tax charge in the pre­vi­ous cor­re­spond­ing quar­ter.

Rev­enue slipped 0.8% from RM11.38 bil­lion to RM11.29 bil­lion.

For the first nine months of the year, May­bank’s net profit con­tracted 15.5% to RM4.38 bil­lion from RM5.18 bil­lion, due to higher pro­vi­sion­ing in the first two quar­ters. Rev­enue came in at RM33.41 bil­lion, 13.2% higher than the RM29.5 bil­lion in the same pe­riod last year.

While May­bank ex­pects its fi­nan­cial per­for­mance for 2016 to be sat­is­fac­tory in a more chal­leng­ing re­gional en­vi­ron­ment, it low­ered its re­turn on eq­uity (ROE) tar­get to be­tween 10.5% and 11% from be­tween 11% and 12%.

In a fil­ing with the stock ex­change, May­bank said the loan growth and ROE tar­get re­vi­sions are premised on its se­lec­tive as­set growth this year, and it is mind­ful of po­ten­tial as­set qual­ity weak­ness in a slow­ing eco­nomic growth en­vi­ron­ment in some of its key op­er­at­ing mar­kets.

May­bank main­tained its ro­bust cap­i­tal po­si­tion with com­mon eq­uity tier-1 (CET1) ra­tio strength­en­ing to 13.73% from 12.53% in De­cem­ber 2015, and to­tal cap­i­tal ra­tio of 19.07% from 17.49% (af­ter pro­posed div­i­dend and as­sum­ing an 85% div­i­dend rein­vest­ment rate).

It noted that net im­pair­ment losses nar­rowed sig­nif­i­cantly in Q3 to RM331 mil­lion com­pared with RM1.18 bil­lion in Q2, although for the nine-month pe­riod, it was still higher at RM2.39 bil­lion com­pared with RM1.49 bil­lion a year ear­lier due to the im­pair­ments made in the first half of 2016, a sig­nif­i­cant por­tion of which were pre-emp­tory in na­ture.

May­bank’s as­set qual­ity im­proved in Septem­ber 2016 to 2.22% from 2.34% in June 2016 while the group’s liq­uid­ity cov­er­age ra­tio stood at 136%, well above Bank Ne­gara Malaysia’s min­i­mum re­quire­ment of 70% for 2016.

May­bank group pres­i­dent and CEO Datuk Ab­dul Farid Alias said the group has ben­e­fited from its di­ver­si­fied port­fo­lio and ge­o­graph­i­cal foot­print that have helped the group in nav­i­gat­ing the un­cer­tain op­er­at­ing en­vi­ron­ment over the past few quar­ters.

“We are en­cour­aged that our fran­chise re­mains sound across the re­gion, and rev­enue con­tin­ues to grow across all our busi­ness sec­tors. We in­tend to sus­tain this mo­men­tum, while at the same time, re­main­ing dis­ci­plined in man­ag­ing costs, mit­i­gat­ing risks and en­hanc­ing ef­fi­ciency, to bet­ter po­si­tion our­selves for sus­tained growth in the fu­ture,” he added.

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