KUALA LUMPUR: Malayan Banking Bhd
posted net profit of RM1.81bil in the first quarter ended March 31, 2019 on revenue of RM12.97bil as it undertook prudent measures amid the challenging operating environment.
Southeast Asia's fourth largest bank by assets announced on Thursday the net profit was down 3.3% from the RM1.87bil a year ago.
This was due to higher allowance of RM604mil for impairment losses on loans, advances,financing and other debts compared with RM509.31mil a year ago. It also set aside RM24.61mil as allowance for impairment losses on financial investments compared with a writeback of RM14.87mil a year ago.
On its revenue, Maybank recorded a 12.6% increase to RM12.97bil from RM11.51bil a year ago. Earnings per share were 16.37 sen compared with 17.26 sen.
Maybank also said group net operating income revenue grew by 0.7% to RM5.86bil compared with RM5.82bil a year ago on the back of a 4.8% expansion in loans.
“Profit before tax (PBT), however, came in at RM2.45bil for Q1 FY19 compared with RM2.56bil a year earlier, as the group took a conservative stance in setting aside additional provisioning for clients impacted by the challenging operating environment,” it said.
Revenue increased on the back of a 1.6% rise in fund based income to RM4.31bil. However, this was partly offset by a marginal dip in net fee based income to RM1.55bil from RM1.58bil a year ago. The factors were due mainly to lower commission, service charges and fees as well as mark-to-market losses in financial liabilities.
Maybank chairman Datuk Mohaiyani Shamsudin said the results were within expectations given the softer outlook that had been expected as a result of on-going geo-political issues globally.
“We will nevertheless remain focused on driving our growth agenda through disciplined pricing of credit, ensuring sound cost and risk management, as well as driving productivity and efficiency for sustainable future growth.”
Group president and CEO Datuk Abdul Farid Alias said that while the first quarter was relatively benign, the recent revision in interest rates is expected to support economic expansion in the coming quarters and lead to a stronger growth path for Malaysia.
“Within the region, Asean continues to be an important market for the group with its growing population and stable economic growth, and we continue to see opportunities that we can tap into, particularly as we drive our digital agenda forward.”
The banking group recorded steady loans growth across key home markets with its Indonesian operations growing a robust 11.3% on-year, other international markets at 4.7%, Malaysia 3.7% and Singapore 3.4%. Overall group loans growth was 4.8% in the first quarter.
As for gross deposits, they expanded by 4.8% on-year despite intense competition. Taking the lead was its Singapore operations at 6.6%, Indonesia 6.4% and Malaysia at 2.2%.
This led to an improvement in the loan-to-deposit ratio of 92.4% from 92.7% in December 2018. “However, the stiff competition resulted in a compression of the group’s net interest margin to 2.30% in March 2019 compared with 2.38% in December 2018,” it said.
Maybank group’s liquidity coverage ratio was also a healthy 134.2% - also well above the regulatory requirement of 100%.
As for its asset quality, the gross impaired loans ratio as at March 2019 rose to 2.48% from 2.41% in December 2018 in line with the group’s proactive asset quality management.
“Impairments for the period were higher at RM637.3mil compared with RM500.8mil a year earlier mainly owing to top-up of provisioning for existing impairments and some provisioning made for new impairments. Notwithstanding this, the group expects to maintain its full year net credit charge off guidance of 40bps for FY2019,” it said.
Community financial services
Maybank's group community financial services’ (GCFS) recorded a 1.6% increase in net operating income to RM3.38bill.
Net fee based income rose 1.9% to RM795mil aided by the growth in its wealth management bancassurance fee income.
Net fund based income grew 1.5% to RM2.58 billion buoyed by strong loans growth across its home markets namely Malaysia (+6.1%), Indonesia (+5.3%) and Singapore (+0.6%).
Loans growth in key portfolios within the Malaysian operations saw healthy increases with SME loans expanding 12.2%, mortgages 8.6%, auto finance 4.5%, unit trust 6.3% and credit cards 3.3%.
Group global banking (GGB) recorded a 2.9% on-year rise in pre-provision operating profit to RM1.54bil.
Maybank attributed this due to a strong performance of its corporate banking and global markets business which reocrded a 11.4% rise to RM1.53bil. Net fee-based income rose by 0.9% to RM973 million while loans growth remained strong in key home markets of Indonesia and Singapore.
Its Islamic Banking business reported a 96.9% increase in profit before tax of RM896.6mil from lower provisioning levels and higher write backs for the quarter as well as on the back of a 9.3% rise in total income.
Maybank Islamic recorded a 7.3% increase in gross financing of RM180bil, aided by a 9% increase in CFS financing and a 3% rise in GB financing.
“As at March 2019, Islamic financing constituted 59.7% of Maybank’s total domestic financing, with Maybank Islamic ranked No 1 in Malaysia in terms of market share of Islamic assets at 31%,” it said.
Etiqa Insurance & Takaful registered a solid 58.9% rise in net operating income to RM478.3mil. The increase was supported by a 12.3% rise in net interest income as well as a 7.6% increase in net earned premiums, mainly as a result of a 4.1% increase in total life insurance/family premium.
Profit before tax more than doubled to RM274.4mil from RM120.8mil a year earlier, helping Etiqa maintain its top position in the general insurance and Takaful segment with a 12.3% market share and fourth in the life/family (new business) segment with an 11.2% market share.