Maybank’s Q2 net profit falls to RM941.73m on pandemic impact


MALAYAN Banking Bhd’s (Maybank) net profit fell to RM941.73 million for the second quarter (Q2) ended June 30, 2020 hit by the impact of the COVID-19 pandemic, compared with RM1.94 billion recorded in the same period last year.

Revenue declined to RM11.79 billion from RM13.05 billion previously.

In a statement, Southeast Asia’s fourth-largest bank by assets attributed the weaker performance to the impact from the movement restriction orders as well as the reductions in interest rates across most of its regional markets arising from the COVID-19 pandemic.

It said net fund based income for the quarter came in lower by RM326.5 million compared with the same period last year, mainly as a result of the Day-One modification loss arising from the blanket moratorium for fixed rate financing and the 50 basis points (bps) cut in the Overnight Policy Rate.

The bank said this was offset by higher loan drawdowns, particularly for the SME and mortgage segments, strong growth in current and savings accounts (CASA) deposits, which increased its CASA ratio to 40.2 per cent, as well the funding relief plans for the SME segment.

As of Aug 14, 2020, the group had disbursed a total of RM1.4 billion under the BNM Special Relief Facility loans to SMEs.

It said given the subdued operating environment during the quarter, cost control remained a key focus of the group, which resulted in overhead costs registering a 4.1 per cent drop to RM2.71 billion in Q2 2020 from RM2.82 billion in Q2 2019.

Net impairment losses for Q2 2020, however, rose to RM1.74 billion compared with RM452.3 million a year earlier as the group maintained a prudent stance and increased its forward-looking assumption provisioning given the heightened possibility of a drawn-out pandemic, which is expected to further affect businesses and individuals globally.

Group president and chief executive officer Datuk Abdul Farid Alias said the results are a reflection of what the bank has gone through namely the movement control order which was necessary to contain the spread of COVID-19, the subsequent policies on interest rates as well as the proactive measures on the moratorium.

“That period has given all of us the time to make the necessary adjustments for us to be productive again, albeit within what is now known as a new normal.

“Once these are done, we can now focus on helping our customers who are affected by the COVID-19 pandemic to be able to continue with their business operations and their lives,” he said.

Nevertheless, he said Maybank’s strategy in maintaining superior liquidity and capital levels has assisted the bank greatly and it would continue to maintain a strong balance sheet in order to have the capacity to pursue business opportunities when the cycle picks up.

At the same time, he said the bank would continue to seek growth opportunities, whether in the consumer and global banking segments, insurance and Islamic banking, while accelerating its digital offerings to capture an even larger market share.

“In addition, we will intensify our focus on managing costs and risks to help us remain resilient for the long term,” he added.

Maybank said given the fluidity of the current environment owing to the COVID-19 pandemic, it would continue to prioritise capital and liquidity preservation and is therefore not proposing an interim dividend for the six-month period ended June 30, 2020.