Maybank aims to reduce provision for bad loans

Maybank's group head of Global Banking Datuk Amirul Feisal Wan Zahir

KUALA LUMPUR: Malayan Banking Bhd (Maybank) aims to reduce its provision for bad loans to 50 basis points (bps) this year from 62 bps, said group chief financial officer Datuk Amirul Feisal Wan Zahir.

"We have a guidance called Credit Charge Off, where last year we did 62 basis points. For 2017, we're guided to around 50 (bps)," he told reporters after Maybank's shareholders meeting on Thursday.

The Credit Charge Off is a statistic that Maybank uses to measure how well the bank is managing its asset quality.

Group president and CEO Datuk Abdul Farid Alias, said however, the loan provision would likely increase next year, due to the  introduction of the new Malaysian Financial Reporting Standard (MFRS) 9.

"The level of provision under the MFRS 9 will go up. That is certain, because (it is) a requirement of the MRFS 9.

"But the effect of the MFRS 9 is that (there will be a) one-time charge when we cross Jan 1, 2018. We can draw from the capital we have. That is why the capital debt is high right now.

"We are preparing for that," he added.

The MFRS 9, effective Jan 1, 2018, aims to address key concerns that arose during the global financial crisis.

It is an accounting standard with a new impairment model based on expected credit losses, thereby bringing forward its recognition.

In the financial year 2016 (FY16), Maybank group's gross loans rose by a steady 5.7 per cent, lifted by a 8.7 per cent rise in the Indonesian operations, 6.3 per cent in Malaysia and 4.5 per cent in Singapore .

The increases were all well ahead of the guidance set for the year.

Non-performing loans, however, grew to 1.64 per cent from the 1.15 per cent recorded previously. Gross impaired loans rose to 2.28 per cent in FY16 from 1.86 per cent in 2015.- Bernama