Maybank’s LDR below 100%, says group CFO

Malayan Banking Bhd (Maybank) noted its group loan-to-deposit ratio (LDR) is at a comfortable level of 94.7% as at end-March 2017 and not at 99%, as stated in a recent research report.

Group CFO Datuk Amirul Feisal Wan Zahir said the group undertakes a careful management of its assets and liabilities.

“Our Malaysian operation’s LDR as at March was 90.6% and this has remained fairly stable over the last year from the 90.2% in March 2016 and improved quarter-on-quarter from the 91.3% in December 2016, due to deposit growth outpacing loan growth,” he said in a release last week.

The deposits growth has been supported by low-cost current account and savings account (CASA) growth.

Moreover, the group is focused on increasing its CASA component, and where necessary, moving away from the higher funding cost segments such as fixed deposits.

Its Singapore operation’s LDR stood at 89.5% as at March 2017, while the LDR of the group’s Indonesian chapter was at 88.4%.

Amirul Feisal said the research report had excluded the Islamic investment accounts (IAs) from its computation — thus resulting in a higher LDR for Maybank.

“This is a misrepresentation of LDR computations as IAs should be included in the LDR computation for Maybank Group and Maybank Malaysia, as provided for under Malaysian banking guidelines.

“If IA is excluded from the LDR computation, then the associated loan amount should also be excluded in the computation as investment accounts are meant to fund loans,” he added.

IA is a banking product offered by Maybank Islamic Bhd, which in essence, is similar to traditional deposits with CASA and time deposit features, and used to fund Islamic assets.

The IAs were reclassified from Mudarabah deposits under the old guidelines on Islamic banking as Mudarabah IAs starting from July 2015, in line with the group’s commitment in complying with the Islamic Financial Services Act 2013.

The group’s liquidity coverage ratio — which measures how sufficiently banking institutions hold high-quality liquid assets to withstand an acute liquidity stress scenario over a 30-day horizon — stood at 134% as at end-March 2017.

This was well above Bank Negara Malaysia’s requirement of 80% for the year 2017.

Feisal said Maybank’s net interest margin (NIM) stood at a healthy level of 2.43% as at the first-quarter of its financial year 2017.

“We have actually seen our NIM expand nine basis points from 2.34% a year ago, arising from our disciplined loan pricing and ability to reduce our cost of funding by focusing on CASA growth,” he said.

Maybank Group’s total borrowings, including subordinated debt and capital instruments, was 7.6% of total assets. — TMR