Maybank revises down loan growth, return on equity forecasts

KUALA LUMPUR: Malayan Banking Bhd (Maybank), which only managed a marginal 0.6% growth in net profit for the second quarter ended June 30, 2015, has revised its headline key performance indicators for financial year 2015 (FY15) in line with what it sees is a challenging economic outlook.

Group president and CEO Datuk Abdul Farid Alias ( pix) said yesterday it has revised downwards its group loan growth forecast to 8%–9% from an earlier guidance of 9%–10%, while projected return on equity has been revised downwards to 12%–13%, from 13%–14% earlier.

Forecast group deposits growth, however, has been revised upwards to 10%–11% from 9%–10%.

The group saw stable performance in the first half of the year, during which the group’s loan growth, return on equity and group deposit growth came in at 11.1%, 12.1% and 6.3% respectively, but noted that operating conditions are changing for the second half (H2).

Farid said Maybank’s strategic priorities for H2 include more selective asset growth, continued focus on deposit taking, but with expected higher funding costs. It will also remain focused on monitoring and proactive management of asset quality, as well as maintaining its strong capital position and continued focus on productivity.

He said 8%–9% loan growth in FY15 would be a “base case” at this point in time and H2 growth will be driven by its portfolios across various segments.

However, he added that because of the group’s approach to be more disciplined on credit pricing and credit underwriting, it would not typically see the growth it had previously.

“The number is something that we can catch up but we want to be more realistic with what we see in the industry and we’re going to be more disciplined aligning ourselves to the industry,” Farid told a media briefing after announcing the group’s H1 financial results here.

“We believe with a more prudent approach in addressing the market, deposits will go towards safety. We’ll see a lot more tactical initiatives in the second half (for deposits).”

On the weakening ringgit, Farid, who is now a member of the special economic committee, said Maybank is a beneficiary to a certain extent as it has businesses outside Malaysia.

“Singapore, for example, is funded through the Singapore dollar ... it’s independent, managing the risk where it’s funded and the assets are grown in Singapore dollar so it’s naturally hedged,” said Farid, explaining that the margin from translation will be better.

Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor said the group will pay more attention to organic growth given the current turbulent market environment. However, he conceded that the volatile situation may offer up merger and acquisition opportunities that the bank will not ignore. “There must be one or two (banks) which would not be able to survive this. We continue to look for opportunities.”

For the second quarter, Maybank’s net profit increased marginally by 0.6% to RM1.58 billion, on the back of a rise in net operating income. Its revenue grew 1.8% to RM8.94 billion from RM8.76 billion a year ago.

For the six months, group net profit rose 3.4% to RM3.28 billion, aided by a jump in net operating income across all business pillars. Revenue went up 5.9% to RM18.12 billion from RM17.12 billion previously.