PETALING JAYA: Malayan Banking Bhd said its loan-to-deposit ratio (LDR), a key measure of the bank’s liquidity, is at a “comfortable” level.
In a statement, the country’s biggest bank said its LDR stood at 94.7% as of end of March, which is much lower than the figure that was quoted by a foreign newswire article last Friday.
“To state that our LDR ratio is approaching 101% is wrong and can lead to misunderstanding among our stakeholders, including our customers, shareholders and regulators,” Maybank group chief financial officer Datuk Amirul Feisal Wan Zahir said.
He added that the report did not give a true picture of Maybank’s careful management of its assets and liabilities.
“Maybank runs its business at the highest level of prudence and transparency and we have clearly disclosed in our quarterly earnings presentations, the levels of both our LDR and liquidity coverage ratio (LCR),” he said.
Feisal said that for Maybank’s Malaysian operations, its LDR as at March 2017 was 90.6%, and had remained stable over the last year from the 90.2% in March 2016.
“It was in fact lower quarter-on-quarter from the 91.3% level recorded in December 2016, arising from deposit growth which outpaced loan growth,” Feisal said.
Maybank’s Singapore operations, meanwhile, had an LDR of 89.5% as at March 2017, while Maybank Indonesia’s LDR at the bank level stood at 88.4%.
Feisal also pointed out that a research report by a banking analyst that was mentioned in the article had also miscalculated its LDR level because it excluded the Islamic investment accounts (IAs) from its computation.
“This is a misrepresentation of LDR computations as IA should be included in the LDR computation for Maybank Group and Maybank Malaysia as provided for under Malaysian banking guidelines,” Feisal said.
“If IA is excluded from the LDR computation, then the associated loan amount should also be excluded in the computation as investment accounts are meant to fund loans,” he added.
Feisal also clarified that the group’s liquidity coverage ratio, which measures how sufficiently banking institutions hold high-quality liquid assets to withstand an acute liquidity stress scenario over a 30-day horizon, stood at 134% as at end-March 2017. This was well above the Bank Negara requirement of 80% for the year 2017.
On the issue of some Malaysian banks’ net interest spread being less than 2% as also stated in article, Feisal said that Maybank’s net interest margin (NIM) stood at a healthy level of 2.43% as at end of the first quarter.
Feisal also refuted claims about Malaysian banks’ growing reliance on foreign currency debt issuances.
He said that Maybank group’s total borrowings, including subordinated debt and capital instruments, was 7.6% of total assets.
“Maybank only raises foreign currency borrowings to fund client requirements in that particular currency,” he said, adding that the bank had always applied a disciplined and prudent credit management in line with its risk appetite.