Maybank posts third straight profit drop on loan impairments

KUALA LUMPUR: Malayan Banking Bhd posted a third straight decline in quarterly profit as the biggest Malaysian lender more than tripled allowances for loan impairments.

Net income fell to 1.16 billion ringgit ($288 million) in the three months through June from 1.58 billion ringgit a year earlier, the Kuala Lumpur-based company said in a stock exchange filing on Thursday. Revenue increased about 23 per cent to 10.9 billion ringgit.

Maybank reiterated its “vigilance” over asset quality in its statement, as falling oil income and weaker exports put Malaysia’s economy on course for its slowest annual growth in seven years. Chief Executive Officer Abdul Farid Alias told reporters at a briefing that the bank will be more careful in identifying customers who may be vulnerable to market volatility after higher loan provisions eroded profit.

The bank is closely monitoring the oil and gas sector in both Malaysia and Singapore, and has made full provision for its bond holdings in Swiber Holdings Ltd, Chief Financial Officer Amirul Feisal Wan Zahir said at the same briefing. The Singaporean energy-services company sought court supervision at the end of last month after facing payment demands from creditors.

For the June quarter, allowances for loan losses jumped to 982 million ringgit from 301 million ringgit a year ago, the lender said in its statement. The bank declared separate provisions of 200 million ringgit for Swiber.

Net interest income rose 7.4 per cent to 2.9 billion ringgit, Maybank said. Loan growth for Malaysia “will likely continue to moderate” to 6 per cent to 7 per cent this year, from 2015’s 7 per cent to 8 per cent as household lending weakens, it said.

The bank’s shares fell 1.1 per cent on Thursday to close at 7.90 ringgit in Kuala Lumpur. — Bloomberg