Maybank’s FY20 net profit drops 20.9% to RM6.48b

The country’s leading bank saw revenue fall by 3.5% to RM51b last year from RM53b in 2019


MALAYAN Banking Bhd’s (Maybank) saw its net profit for the financial year of 2020 (FY20) declined by 20.9% to RM6.48 billion from RM8.2 billion in the FY19 due to higher net impairment losses (NILs) as a result of the continued impact from the Covid-19 pandemic.

However, this was offset by higher net operating income and reduced overhead expenses.

The bank saw revenue fall by 3.5% to RM51.03 billion last year from RM52.87 billion in 2019.

In a statement yesterday, Maybank stated its net operating income rose 0.1% to RM24.76 billion last year attributable to a 12.3% YoY increase in total net fee-based income to RM8.11 billion.

The bank declared a dividend of 38.5 sen a share for the quarter, taking its full-year payout to 52 sen a share compared to 64 sen a share in FY19.

For its fourth quarter ended Dec 31, 2020 (4Q20), Maybank’s net profit slipped 37.2% year-on-year (YoY) to RM1.54 billion dragged by higher NILs.

Net operating income eased by 2.8% YoY to RM6.31 billion as a 0.1% increase in net fee-based income was unable to offset the 4% decline in net fund-based income.

NILs came in at RM1.5 billion in the quarter, while pre-provisioning operating profit dipped 2.9% YoY to RM3.42 billion.

Revenue for the quarter stood at RM12.24 billion, down 5.8% from RM13 billion in 4Q19.

Maybank’s president and CEO Datuk Abdul Farid Alias said loan loss provision doubled YoY to RM4.6 billion with close to 50% of provisioning mainly due to macroeconomic variable adjustments and management overlay for vulnerable borrowers.

“Loan loss coverage increased to 106.3% as at end December 2020 from 77.3% a year earlier, as new impaired loan formation remained moderate with group impaired loan ratio at 2.23% as at end December 2020,” he said in a virtual press briefing yesterday.

Its current account savings account (CASA) expanded 23.5% supported by growth across all home markets which resulted in a group CASA ratio of 42.8% last year compared to 35.5% in 2019.

In Malaysia, the group’s gross loans increased 4% YoY RM326.7 billion underpinned by a healthy 6.8% rise in the community financial services segment on the strong consumer, business banking, and small and medium enterprises demand.

The home markets of Singapore and Indonesia registered declines of 1.9% and 14.8% respectively as a result of write-offs and repayments as the group continued to manage its exposure in these markets as part of its strategy to continuously rebalance its portfolios to mitigate risks.

Gross deposits expanded 2.6% with all its home markets showing steady increases, led by Singapore at 6.9%, Indonesia at 3.8% and Malaysia at 1.2%.

Gross impaired loans (GIL) ratio stood at 2.23% as at December last year compared to 2.65% a year prior to where non-performing loans came in at 2.02%.

As for the home markets, GIL ratio for Malaysia came in at 1.54% followed by Singapore at 3.15% and Indonesia at 5.1%.

Moving forwards, Abdul Farid said economic recovery is expected to be gradual and uneven amid the pandemic containment measures this year which include the Movement Control Order and Proclamation of Emergency.

“Last year, economic activities that were allowed to open were around 30% but this year is about 60%. Having said that, not all economic activities are open like last year when we saw a slowdown in growth the first half of the year, we would probably see the same thing happening this year,” he said.

Loan growth is expected to gather momentum, in line with economic recovery, while net interest margin should improve as deposits fully re-price, barring further Overnight Policy Rate cuts.

The group also expects return on equity guidance of around 9% this year on continued soft income environment and elevated provisioning.

Read our previous report here

Maybank posts RM1.54bil net profit in 4Q20