KUALA LUMPUR: Malayan Banking Bhd (Maybank) foresees an uptick in economic activity this year, which will bode well for gross domestic product (GDP) growth as well as the finance industry.
The banking giant expected GDP to grow to 4.4% this year with the recovery in trade playing a major factor, said group president and chief executive officer Datuk Abdul Farid Alias.
“One of the things that can make a real difference is external trade, which looks like it is going to rebound. We believe GDP growth is going to be slightly better than last year, as the Government has a bit of leeway to increase spending based on the current oil price,” he told reporters after Maybank’s AGM here yesterday.
The group’s performance last year was underpinned by its community financial services (CFS) segment.
According to Farid, its group regional wealth-management division recorded a strong 26% yearly growth in profit before tax, while total assets under management have risen to over RM250bil.
“In 2016, we grew the CFS business a lot faster compared with wholesale banking. In the first half of last year, we barely had growth on the wholesale banking side, as we were more selective from a pricing perspective,” he explained.
On the other hand, the group expected a slowdown in loan growth to 4.7% this year from 5.3% in 2016. It also expected stiff competition for deposits, while at the same time cost and capital management would remain key priorities.
The group reported a marginal decline in earnings for its financial year ended Dec 31, 2016 (FY16). Its net profit for the year was at RM6.74bil compared with RM6.84bil the year before. However, its revenue grew to RM44.66bil from RM40.56bil in FY15.
Farid explained that the group’s earnings per share (EPS) decline to 67.84 sen in FY16 from 72.03 sen the year before was partly due to capital requirements.
“The EPS fell partly because the equity base has increased to comply with capital regulatory requirements. When you have more equity, growth in profit is not so much. Hopefully, once we have a comfortable level of equity, we can rebalance this,” he said.
From an operational standpoint, Maybank has set a return on equity target of between 10% and 11% this year. It also aimed to record a group loan growth as well as a group deposit growth of between 6% and 7%.
The group achieved several milestones in the cashless transactions space last year. It recorded a growth of more than 30% in Maybank2u transactions and over 50% growth in mobile transactions.
The group is also leading the way in digital banking through a number of first-to-market digital initiatives including MaybankPay, SamsungPay and Maybank Heart, which is a digital social fundraising platform. Additionally, it has also partnered with Western Union for mobile remittance via Maybank2u.
The group’s latest digital endeavour was the recent memorandum of understanding with China’s AliPay to provide payment services for mainland Chinese tourists in Malaysia.
“The intention is to help them use the payment infrastructure when they engage with Malaysian vendors. From our perspective, it is a business that we did not have before, so there is an upside,” said Farid.