Maybank’s 1Q profit falls 3% on additional provisions for bad loans

The group’s liquidity coverage ratio is healthy at 134.2%, well above the regulatory requirement of 100%


Malayan Banking Bhd’s (Maybank) moves to set aside additional provisioning for bad loans saw its net profit fall 3% year-on-year (YoY) to RM1.8 billion for its first quarter ended March 31 this year (1Q19).

Revenue for the period improved 13% YoY to RM12.98 billion on a 1.6% rise in fund-based income to RM4.31 billion.

This was partly offset by a marginal dip in net fee-based income to RM1.55 billion from RM1.58 billion in 2018, owing mainly to lower commission, service charges and fees, as well as mark-to-market losses in financial liabilities.

Earnings per share for 1Q was 16.37 sen. Net operating income revenue grew by 0.7% YoY to RM5.86 billion, underpinned by a 4.8% expansion in loans.

Loans and deposits grew 4.8% respectively for the period as the loan-to-deposit ratio stood at 92.4% at the end of the quarter.

Stiff competition resulted in a compression of the group’s net interest margin to 2.3% in March 2019 compared to 2.38% in December 2018.

Maybank group’s liquidity coverage ratio was also a healthy 134.2%, which was well above the regulatory requirement of 100%.

Gross impaired loans ratio as at March 2019 stood at 2.48% compared to 2.41% in December 2018, in line with the group’s proactive asset quality management, its exchange filing yesterday noted.

Impairments for the period rose to RM637.3 million from RM500.8 million in 2018, mainly owing to top-up of provisioning for existing impairments and some provisioning made for new impairments.

Its group community financial services continues to benefit from the group’s established franchise in the region, recording a 1.6% rise in net operating income to RM3.38 billion.

Its global banking operations recorded a 2.9% YoY increase in pre-provision operating profit to RM1.54 billion, lifted by a strong performance of its corporate banking and global markets business, which saw an 11.4% rise to RM1.53 billion.

The group’s Islamic banking’s pretax profit rose 96.9% to RM896.6 million due to lower provisioning levels and higher write backs for the quarter, as well as on the back of a 9.3% rise in total income.

Maybank Islamic Bhd reported a 7.3% increase in gross financing of RM180 billion.

Etiqa and Takaful Malaysia recorded a solid 58.9% rise in net operating income to RM478.3 million, supported by a 12.3% rise in net interest income as well as a 7.6% increase in net earned premiums as a result of a 4.1% increase in life insurance and family premiums.

Etiqa maintained its top position in the general insurance and takaful segment with a 12.3% market share and fourth in the life/family segment with an 11.2% market share.

“We remain focused in driving our growth agenda through disciplined pricing of credit, ensuring sound cost and risk management, as well as driving productivity and efficiency for sustainable future growth,” Maybank chairman Datuk Mohaiyani Shamsudin said in a statement.

Group president and CEO Datuk Abdul Farid Alias (picture) said while the 1Q was relatively benign, the recent revision in interest rates is expected to support economic expansion in the coming quarters and lead to a stronger growth path for Malaysia.

“Asean continues to be an important market for the group with its growing population and stable economic growth, and we continue to see opportunities that we can tap into, particularly as we drive our digital agenda forward,” Abdul Farid said.