RM2.04bil profit for Maybank in 1Q

Group takes cautious stance amid uncertainties

“We aim to accelerate solution rollouts on our digital platforms to continue to fulfil customers’ journeys while increasing our market penetration regionally.” Datuk Khairussaleh Ramli

PETALING JAYA: Malayan Banking Bhd (Maybank) has mixed views on the outlook for the rest of 2022, with the group president and CEO saying it would focus on tapping into growth opportunities across customer segments in key markets while maintaining its capital and liquidity strength.

“At the same time, we will ensure our risk management capabilities remain robust, and cost management and productivity efforts continue.

“Additionally, we aim to accelerate solution rollouts on our digital platforms to continue to fulfil customers’ journeys while increasing our market penetration regionally,” said Datuk Khairussaleh Ramli in a statement.

Maybank is South-east Asia’s fourth-largest bank by assets.

He noted that the positive trends in the group’s first quarter (1Q) ended March 31, 2022 were evident across key markets despite the lingering impact of global factors on the operating environment.

In its 1Q, Maybank saw its net profit drop 14.5% year-on-year (y-o-y) to Rm2.04bil while revenue fell 2.5% to Rm11.9bil, as geopolitical tensions and market volatility impacted the operating environment.

Maybank said although the reopening of regional economies led to a pick-up in loan growth and reduced impairment charges, the market weakness mitigated this positive impact.

Chairman Tan Sri Zamzamzairani Mohd Isa said the start of 2022 looked promising with the active resumption of economic activities and gradual reopening of international borders.

However, he pointed out that the escalation of geo-political tensions and resultant market volatility, as well as inflationary pressures, has somewhat dampened this sentiment.

“While we are cautious in our outlook for the rest of the year, given the significant uncertainties, we will remain guided by the forward-looking strategies set out in our M25 Plan.

“We intend to actively drive new business growth in this recovery period while at the same time continue supporting our customers to ensure they are able to remain sustainable in the long term,” he said.

In 1Q, Maybank’s net fund-based income grew 5.3% to Rm4.89bil as net interest margin expanded three basis points y-o-y on lower interest expense. Loans rose 5.2%.

However, this was offset by a 28.3% decrease in total net fee-based income to Rm1.56bil across most business segments due to market volatility.

Consequently, net operating income came in 5.4% lower at Rm6.45bil, from Rm6.83bil previously.

On the back of improved economic activities regionally, overheads grew 4% y-o-y on higher revenue-related expenses.

The group’s cost-to-income ratio stood at 45.5%, well within the financial year 2022 guidance of 45% to 46%.

Meanwhile, the group’s impairment losses declined by 31.3% to Rm597.1mil, from Rm868.5mil last year.

Gross loans rose to Rm562bil in 1Q from Rm534.4bil a year ago, led by Singapore operations, which grew 7.2%, and Malaysia operations, which expanded 4.9%.

Maybank’s Indonesia operations, however, registered a 2% decline primarily from its ongoing strategy to rebalance its non-retail portfolios in the community financial services segment to mitigate risks.

The group continued to maintain a robust liquidity base and expand its low-cost funding structure, which resulted in gross deposits expanding 5.5% y-o-y on the back of steady increases in current account and savings account (CASA) deposits across its key home markets.

The group’s CASA ratio to total deposits expanded to 46.2% as at March 2022 from 44.5% a year earlier.

Meanwhile, fully loaded common equity tier-one ratio strengthened to 14.95% in the first quarter while total capital ratio stood at a 18.37%, helping it to retain its position as one of the best capitalised banks in the region.

Maybank’s liquidity coverage ratio and net stable funding ratio, meanwhile, were also at healthy levels of 143.2% and 118.6%, respectively – well above the regulatory requirement of 100%.

Asset quality during the quarter under review saw a significant improvement, with the gross impaired loans ratio improving to 1.95% from 2.2% in March 2021.

The group said it remains vigilant in monitoring its credit portfolios to identify any signs of weakness from an early stage, so that proactive engagement can be taken to assist clients in managing their financial commitments.

Loan loss provisions almost halved to Rm443.41mil for the first quarter from a year ago mainly on lower management overlay, given the improving economic outlook.

Loan loss coverage remained at a healthy level of 106.4% as newly impaired loan formation remained low.

Maybank continued to offer various repayment assistance packages to customers who remain affected by the impact of the Covid-19 pandemic.

As at April 30, 2022, some 16.8% of the outstanding loan balance in Malaysia remained under relief, while the proportion in Indonesia and Singapore stood at 11.6% and 3.3%, respectively.

As for its key home markets, Maybank Indonesia reported a 12.1% y-o-y increase in pre-tax profit of 562 billion rupiah (Rm169.2mil) for the first quarter.

This was backed by lower provisions and cost of funds, well-contained overheads cost as well as strong growth in fee-based income.

Meanwhile, Maybank Singapore registered a 29.5% increase in first-quarter pre-tax profit to S$114mil (Rm364.8mil) on the back of lower provisions and a 21.6% increase in net fund-based income to S$173.82mil (Rm556.3mil), driven by loans growth and margin improvement.

Net fee-based income, however, was 14.2% lower at S$82.16mil (Rm262.9mil) compared with a year earlier due to reduced wealth management income.

Loans expanded by 7.2% y-o-y, led by a 7.3% growth in community financial services loans and 6.1% increase in corporate loans as the country continued to recover from the pandemic.

Its CASA ratio improved to 49.3% from 39.2% a year ago on expanded current account deposits although total deposits showed a marginal 3.3% y-o-y decline, in line with its strategy to shift from costly fixed deposits in favour of CASA acquisition.