Maybank’s profit soars on lower expenses

KUALA LUMPUR: Malayan Banking Bhd (Maybank), Malaysia’s largest lender, posted its highest ever first-quarter profit yesterday, helped by a drop in expenses and continued decline in impairment losses.

Maybank’s net profit for the quarter was 1.9 billion ringgit ($477.39 million), up 10% from 1.7 billion ringgit a year ago. It beat an average estimate of 1.85 billion ringgit from two analysts surveyed by Thomson Reuters I/B/E/S.

Revenue was 2% higher at 11.5 billion ringgit.

The results were supported by a better cost-to-income ratio of 47.6%, versus 50.1% a year ago, as fee-based and fund-based income growth outpaced rise in overhead expenses, the bank said in a statement.

Net impairment losses for the quarter ended March fell 7.7%, while gross impaired loans ratio improved to 2.37% from 2.40%, it added.

Maybank’s Malaysian operations recorded a strong 6.7% increase in loans, while its Singapore and Indonesia operations saw increases of 5.5% and 2.9%, respectively.

On the group level, loans expanded 1.5% year-on-year.

Maybank chairwoman Mohaiyani Shamsudin said the bank was buoyed by the positive outlook in the region and Malaysia, despite some uncertainties in the operating environment.

“In particular, we await policies which are expected to be outlined by the new government in Malaysia which we hope will further drive private sector investments and enhance consumer confidence,” she said.

The country’s l enders are seeing increased domestic loan demand from sectors including manufacturing, finance and infrastructure, according to analysts.

Malaysian banks with presence in the neighbouring Southeast Asia countries expect stronger demand for corporate and consumer loans as economies improve, which is likely to support credit growth in 2018.

But slower economic growth is a concern and uncertainty over economic policy has increased after 92-year-old Mahathir Mohamad led an opposition alliance to a surprise election win this month.

Malaysia’s first-quarter GDP grew 5.4% from a year earlier, its second straight quarter of slower economic growth.

GDP growth had slowed to 5.9% in the fourth quarter of 2017 from 6.2% in the third quarter, its strongest showing in three years.

Maybank’s net interest margin (NIM) — the difference between interest paid and earned and a key gauge of bank profitability — shrank slightly to 2.39% in the first quarter from 2.43% a year ago.