Dip in Maybank quarterly net profit

PETALING JAYA: MALAYAN BANKING BHD (Maybank), has recorded a dip in net profit for the first quarter, at a time when the industry is facing stiff competition and headwinds from softening economic prospects.

Malaysia’s largest lender announced that its net profit for the quarter ended March 31 had dropped 3.3% to RM1.81bil compared with RM1.87bil in the corresponding quarter last year.Most of its smaller counterparts, which released their results during the week, also recorded lower net profits for the January-to-March quarter.

CIMB GROUP HOLDINGS BHD saw an 8.7% drop in its quarterly net profit, while HONG LEONG BANK BHD and Alliance Bank Malaysia Bhd declined by 8.1% and 1%, respectively.

Affin Bank Bhd, which also announced its first-quarter results yesterday, saw a 3% drop in its net profit.

Although PUBLIC BANK BHD recorded a slight increase in net profit, it was flat at 0.34% while RHB Bank Bhd’s quarterly net profit rose 6.7%.

AMMB HOLDINGS BHD (AmBank) might have recorded an impressive 81.4% growth in net profit for its fourth quarter ended March 31 but this was due to a substantial net write-back for impairment for loans, advances and financing amounting to RM271.556mil.

According to an analyst, the situation is already demanding and unless loan growth picks up momentum, it will remain challenging, moving forward.

“The main problems are the slowdown in loan growth, net interest margin (NIM) compression and lower overall non-interest income. However, the positive part is that NIM compression should be able to stabilise in the coming quarters as deposits reprice.

“Fixed deposits haven’t really been repriced following the cut in the overnight policy rate (OPR). Competition will continue but essentially, banks will have to manage costs and asset quality,” the analyst said.

Meanwhile, MIDF Research senior analyst Imran Yassin Yusof said it might not necessarily signal tough times for 2019, as a number of factors on declining quarterly net profits were bank-specific.

“CIMB gained last year from its sale of CIMB Securities International Pte Ltd (CSI). That bumped up its quarter last year.

“For Maybank, there was, of course, the situation it had in Singapore with Hyflux Ltd. It had to provide more for that and also other loans. So, that’s why there was the drag in terms of earnings,” he said.

Imran added that the pressure on net interest income was in a way, an effect of the OPR hike on Jan 25 last year, which began to normalise this year.The central bank has since cut the OPR by 25 basis points on May 7 to 3%.

He expected the situation to improve from the second quarter, where banks can expect to see better performance in non-interest income and net interest income.

“In general, it’s more bank-specific rather than an industry-wide effect, but if you’re looking at the industry, the trend seen is the weakness in non-interest income.

“It is expected because of the soft market conditions. This should improve in the coming quarters,” said Imran.

Maybank’s lower net profit for the quarter of RM1.81bil was on a 12.6% higher revenue of RM12.97bil, on the back of prudent measures it undertook amid the challenging operating environment.

Its net operating income grew 0.7% to RM5.86bil compared with RM5.82bil a year earlier, on the back of a 4.8% expansion in loans.

Profit before tax, however, came in 4.2% lower at RM2.45bil as the group took a conservative stance in setting aside additional provisioning for clients impacted by the challenging operating environment.

Maybank chairman Datuk Mohaiyani Shamsudin said in a statement that the results were within expectations, given the softer outlook that had been expected because of on-going geo-political issues globally.

“We will nevertheless remain focused in 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,” she said.

President and CEO Datuk Abdul Farid Alias said 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.

”We continue to see opportunities that we can tap into, particularly as we drive our digital agenda forward,” he said.

In its filing with Bursa Malaysia yesterday, Maybank said its Malaysian market is expected to maintain a stable growth of 4.7% in 2019 on rebounds in the mining and agriculture sectors, as well as the stimulus to domestic demand from Bank Negara’s interest rate cut and the revival of major infrastructure as well as government development spending projects previously put under review.

It added that some factors that could impact the country’s economic growth included the outcome of the US-China trade talks and the government’s long-term economic growth policy.


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