Malayan Banking Bhd (Maybank) posted a net profit of RM1.09bil for the first half of its financial year ended June 2004, up 32% from RM831mil in the corresponding period before.
Earnings per share rose to 30.39 sen from 23.38 sen.
The group's pre-tax profit was up 22.4% to RM1.5bil while interest income improved 8.4% to RM3.6bil.
Group president and CEO Datuk Amirsham A. Aziz said the bank will maintain a high dividend payout over the next three to four years as a reward to its shareholders. It does not intend to keep a war chest for future acquisitions.
“What we are saying is that we are going to maintain a high dividend payout. Since our capital adequacy ratio is over 14%, there are opportunities to go to the capital market if we want to increase our capital,'' he added.
“We want to return the favour to shareholders who have given us support all these years.''
Amirsham's announcement of Maybank's future dividend policy was made during the release of the bank's second quarter results, in which it declared an interim dividend of 10 sen per share less tax and a special dividend of 25 sen per share less tax.
The country's largest bank declared an interim dividend of 35 sen less tax during the second quarter of its 2002 financial year.
“With the economy going quite strongly and the equity market looking very good, there is no reason why we should do worse (in the second half) than what we have done today,'' said Amirsham.
For the second quarter ended December 2003, net profit rose 29% to RM593mil, and its pre-tax profit grew 16.4% to RM799mil.
Earnings per share for the second quarter rose to 16.46 sen from 12.89 sen.
“We are very encouraged by this performance, particularly with our topline growth,'' said Amirsham.
Except for Mayban Discount, the rest of Maybank's major entities reported a marked improvement in profitability during the half year to end December 2003 compared with the corresponding period a year ago.
The group's Islamic banking business accounted for 35.7% of the industry's total Islamic loans and 20.7% of total deposits at the end of December 2003.
Non-performing loans rose marginally to 6.32%, but Amirsham said provisions for such loans had already been made and had no effect on group profitability.
He said the group incurred a RM48mil loss from bond trading during the October-December 2003 quarter.
Although group loans grew at an annualised rate of 2.1%, net interest margin improved to 2.91% from 2.87%. “To some extent, our strategy of going into businesses that give us the right return is working for us. Under the current scenario of high liquidity and competition in the business, one would expect margins to come down. For us to improve on the business is something else,'' he said.
“In a nutshell, we are looking for more profitable areas of business. Where margins are uninteresting, we try to get out of the business.''
Cost to income ratio for the group continues to rise, and has touched 40.7%. Amirsham said the group was looking at bringing it down to 38.9%.
“This year, it is slightly higher because we had major investments for the future. Business is getting very competitive, the economy is improving, and everybody is coming up with new products and services,'' he said.
“We need to invest on skills enhancement, including technology investment. Our hope is, with the economy growth, we will be able to improve on productivity with the infrastructure we have put in place.''
On loans growth, Amirsham said: “We are looking at 6%-8% for the coming financial year.''
Amirsham said the group's strategy was to push its customers with money to higher yield investment paper, and if not for such efforts, the group's loans to deposit ratio would have been lower than the current 83.6%.
“The economy is growing and we are seeing opportunities for loan growth that are much better that two to three years ago. In a way, that will take some of the liquidity away,'' he said.
Amirsham reiterated the group's stance on acquiring a rival local bank, saying that Maybank would look at opportunities that made sense to the group.
“At the moment, we are not seeing anything that is of interest to us,'' he said.
Amirsham, nonetheless, said Maybank could not shut its eyes to what was happening in the market.
“We see competitors moving in, so we have to think of the strategy we have to take, of at least maintaining our current market position,'' he added.
The group was not limiting potential acquisitions to commercial banks alone, he said. The insurance business was also looking “interesting” to the bank.
Did you find this article insightful?