Maybank first quarter earnings up 9.9%

PETALING JAYA: Malayan Banking Bhd (Maybank) which reported a 9.9% increase in net profit for the first quarter ended March 31, 2018, has flagged higher allowances for impaired loans and financing for the current financial year with implementation of the Malaysian Financial Reporting Standard 9 (MFRS 9).

Net profit for the first quarter ended March 31, 2018 rose to RM1.87 billion from RM1.7 billion a year ago thanks to higher interest income, Islamic Banking income and net earned insurance premiums.

Its revenue jumped 2.1% to RM11.52 billion compared with RM11.28 billion in the previous year’s corresponding quarter.

Following Malaysia’s 14th general election, Maybank maintained the view that the country’s real GDP growth in 2018 will be driven by improved consumer spending growth and stronger net external demand.

The group said its loan growth is expected to be in line with industry growth, as the bank focuses on pockets of opportunities within the consumer, retail SME and corporate lending segments.

“At Maybank group, key priorities for 2018 include maintaining pricing discipline across our products, focus on attaining cheaper funding sources to support loan growth and growing our loan portfolio within our risk appetite while proactively managing our asset quality,” Maybank said.

The group has also implemented MFRS 9 on Jan 1, 2018 and will continue to keep its capital and liquidity positions strong. The Day-1 impact to Maybank group’s CET1 capital ratio is a reduction of 39bps.

“The impairment assessment under MFRS 9 is based on the expected credit loss model, which uses forward-looking assumptions, as opposed to the previous accounting standard MFRS 139, in which the impairment assessment is based on an incurred loss model. As such, the allowances for impaired loans and financing in FY2018 are expected to be higher than the previous year.”

Barring any unforeseen circumstances, Maybank expects its financial performance for 2018 to be satisfactory against the expected growth prospects of its key home markets. The group has set its headline key performance indicator for return on equity of 11%.