Maybank Q2 profit surges
Income jumps 43% on better margins and lower impairments
KUALA LUMPUR: Malayan Banking Bhd (Maybank) recorded a big surge in its bottom line for the second quarter ended June 30 despite the challenging business environment, both on the global and domestic fronts.
The banking group’s net profit in the quarter jumped by nearly 43% year-on-year (y-oy) to RM1.66bil from RM1.16bil a year earlier, primarily attributed to Maybank’s higher net operating income, better net interest margin (NIM) and a significant decline in net impairment losses.
Maybank, which is the fourth largest bank in South-East Asia in terms of asset size and the largest in Malaysia, saw its overall revenue for the second quarter improve marginally by 0.17% y-o-y to RM10.92bil.
Maybank group president and chief executive officer Datuk Abdul Farid Alias remains positive on the banking group’s performance for the rest of the year, despite the ongoing challenging operating environment.
“We expect a return on equity ranging between 10% and 11% this year. As for total loans growth, it is expected to be in line with the industry.
“In the first half of financial year 2017 (H1’17), Maybank’s loans growth was at 6.4% and the group remains focused in picking up momentum in our key markets going forward. We do not want to push our loans growth at the expense of asset quality.
“Our total loans growth in Malaysia, Singapore and Indonesia in the first half were 6.4%, 4.9% 3.2% respectively, notwithstanding the challenges in the operating environment,” Abdul Farid told reporters after Maybank’s media briefing on its H1’17 financial performance.
Maybank has earlier guided for a loans growth of 6% to 7% this year.
Maybank projects loans growth in Malaysia in the second half of the year to be supported by ongoing expansion in the non-household sector. While asset quality and capital positions are expected to be stable, NIM is projected to contract due to the competition for deposits.
The group’s net operating income in the second quarter rose by 8.7% y-o-y to RM5.81bil, buttressed by the improved performance of its group community financial services segment (consumer banking, small and medium enterprises banking and business banking services).
As for H1’17, Maybank saw a 29.9% higher net profit at RM3.36bil, following its 5.8% rise in net operating income and improvement in NIM by 13 basis points. Apart from that, the group’s net impairment losses narrowed by approximately 33.1% compared to a year earlier. Its top line in the period was up by 0.35% y-o-y at RM22.2mil.
Abdul Farid said that Maybank would continue to focus on building a strong, resilient and well-managed banking group.
“For the half-year under review, net operating income reached RM11.36bil compared with RM10.74bil a year earlier, underpinned by a robust 25.6% increase from our insurance and takaful segment as well as 8% increase of the group community financial services. Our group global banking segment saw commendable growth in its pre-tax profit of 21.3% y-o-y to RM2.33bil in H1’17, driven by strong net fund based income growth.
“In H1’17, net impairment losses declined substantially to RM1.38bil from RM2.06bil a year earlier, as we continue to restructure and reschedule the credit facilities from the market segments which were affected due to the challenging economic development,” he said.
The banking group’s operations in regional markets continued to be resilient in the first six-month period of the year.
Maybank Singapore saw its operating profit to rise by 38.7% on a year-on-year basis, mainly due to a combination of broad-based reve- nue growth and disciplined cost management.
PT Bank Maybank Indonesia recorded a 16.3% increase in its net profit in the first half, largely on the back of overall improvement in its core banking business.
As at the end of June 2017, Maybank registered a slightly higher gross impaired loan ratio (GIL) of 2.53%, in contrast to 2.34% a year earlier.
Abdul Farid pointed out that Maybank continues to control its GIL at a healthy and sustainable rate.
“In line with our strategy in maintaining vigilance on our finances, Maybank’s liquidity coverage ratio stood at a healthy rate of 146%, well above the 80% minimum threshold by Bank Negara.
“Maybank remains one of the strongest capitalised banks in the region with a total capital ratio of 19.19% and CET1 ratio of 13.77%,” said Abdul Farid.
The group declared a dividend of 23 sen in the second quarter.
Earnings per share was 16.06 sen.