STRONG loan growth, coupled with an improved economic environment, pushed up MALAYAN BANKING BHD's group pre-tax profit by 28% to RM700.6mil for the first quarter ended September 2003, from RM547.6mil in the previous corresponding quarter.
Analysts said that Maybank, the bellwether of Malaysia's banking sector, appeared to be on track for record full-year earnings.
They also expressed confidence in the group's full-year operational outlook.
A research head at a foreign stockbroking house said Maybank's operational results could surprise shareholders even more if Malaysia's economy performed better than expected.
Analysts polled by Reuters Research have forecast net profit of RM2.08bil for Maybank for the full year ending June 30, 2004 – which will be a record for Maybank – and above the RM1.99bil it posted a year ago.
Analysts expect Maybank's outstanding loans to grow 7.5% in the current financial year from 7% previously. But net interest margins could fall to 2.4% from 2.5%.
Maybank president and chief executive officer Datuk Amirsham A. Aziz, in announcing the results yesterday, attributed the higher first-quarter pre-tax profit to the improved economic environment as well as better sales and marketing efforts of the bank.
On the back of the positive economic outlook, Amirsham said, the group expected more improvement in its performance.
“Fund-based income increased further, arising mainly from strong loans growth. In addition, the group continued to record a decline in loan loss and provisions,” he said.
Group non-interest income, however, was impacted by the adverse trading conditions in the bond market although other services such as transactional banking, remittances and foreign currencies trading registered higher income, he said.
“Gross loans and advances of the group grew at an annualised rate of 5.9% during the quarter. The retail and SMI (small- and medium-sized industries) segments, in particular, recorded significant increases,’’ Amirsham said.
“These more than offset the marginal decline in corporate loans, which continued to see a shift to the capital market,” he added.
The Maybank group's total assets grew to RM164bil for the quarter ended September 2003 from RM161bil previously, while shareholders' funds rose to RM14.1bil from RM13.5bil.
Group revenue was RM2.27bil for the quarter compared with RM2.37bil for the corresponding quarter in the previous year.
Earnings per share for the quarter also continued to grow to 13.92 sen from 10.73 sen previously.
The bank's latest results were within analysts' projection. AmResearch Sdn Bhd executive director and head of research Gan Kim Khoon has said in a research note that the Maybank group had one of the best loan asset quality in the industry.
“We expect Maybank to register a turnaround in its core operating profit with a 8.7% growth in the financial year ending June 30, 2004, after a 6% year-on-year decline in the financial year ended June 30, 2003,” he said.
AmResearch has forecast loan growth of 7% year-on-year, stable-to-slightly wider net interest margins, higher non-interest income particularly from equity market activities, and a slower rate of growth in overhead expenses.
For the year ended June 2003, Maybank 's group non-performing loans (NPLs) ratio was 6.2% compared with the industry average of 9.5%.
Of greater significance, new NPLs that emerged during this period were 70% lower at RM324mil compared with RM1bil the prior year, indicating a sharp improvement in loan asset quality.
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