Maybank’s profit 13% higher at RM2b in 3Q17

by NG MIN SHEN / pic by TMR filepic

Malayan Banking Bhd’s (Maybank) net pro t expanded 13.1% to RM2.03 billion for the third quarter ended Sept 30, 2017 (3Q17), boosted by higher income from lending activities and Shariah-compliant banking.

The country’s largest lender’s net interest income, revenue from lending activities rose 8.6% to RM3.05 billion in 3Q17 from RM2.81 billion previously.

Income from Islamic banking at the biggest listed company, based on market capitalisation, increased 24.3% year-on-year (YoY) to RM1.25 billion from RM1.01 billion a year ago.

Net earned insurance premiums from the insurance and takaful subsidiaries also climbed to RM1.31 billion against the same period last year.

Revenue for the quarter was 2.7% higher at RM11.59 billion, compared to RM11.29 billion registered the year prior, the group said in a statement.

Allowances for impairment losses on loans, advances, financing and other debts grew 4.4% YoY to RM386.49 million from RM370.25 million, as a result of higher net collective allowance made of RM71.6 million.

The increase was mitigated by lower net individual allowance made of RM61.4 million, and lower bad debts and financing recovered of RM6.8 million.

The group also reported an allowance for impairment losses on financial investments of RM23.1 million during the three months under review, versus a writeback of RM39.4 million last year.

Other operating income fell by RM206.9 million YoY to RM1.52 billion for the quarter, mainly contributed by unrealised mark-to-market loss on revaluation of financial assets at fair value through profit or loss of RM420.8 million.

Overhead expenses for the quarter grew 7.9% YoY, or RM213.9 million — largely on increased administration and general, as well as personnel expenses.

For the nine months ended Sept 30, 2017 (9M17), group gross loans climbed 5.3% YoY to RM485.89 billion, helped by a 6.6% rise in Malaysian operations and 3.7% in international operations.

Group deposits expanded 2.7% from last year on a 7.5% hike in Malaysian operations and 3% hike in Indonesian operations.

Net interest margin for 9M17 climbed 12 basis points (bps) to 2.39% compared to December 2016.

However, it was 2bps lower than the 2.41% recorded in 2Q17 — reflecting the increasing pressure on margins owing to rising cost of funds.

As at end-September, Maybank’s liquidity coverage ratio stood at 137%, up from 136% a year ago.

The group’s net impaired loans ratio dropped to 1.63% in 3Q17 from 1.73% in the previous quarter, while its gross impaired loans ratio fell to 2.5% from 2.53% in 2Q17.

Maybank chairman Datuk Mohaiyani Shamsudin said the outlook for the remaining months appears to be improving, giving the bank’s opportunity to seek new growth segments.

Group president and CEO Datuk Abdul Farid Alias added that the group has been supported by its franchise and balance sheet throughout the last few quarters.

“We are now seeing a pick-up in business and loan growth, as well as market sentiments — which we intend to leverage further in the coming months.

“However, in the middle of this more positive outlook, we are conscious of the heightening pressure on interest margins, owing to the increasing cost of funds.

“While we remain focused on building our core franchise for the long term, we will ensure that we price our assets and liabilities appropriately, to ensure continued profitability,” he said.