PETALING JAYA: MALAYAN BANKING BHD (Maybank), the country’s biggest bank by assets, reported a slightly higher bottom line of almost RM2bil in its third quarter, 2% up from RM1.96bil a year ago even as it remains vigilant and cautious on its outlook for the rest of the year and the next.
“Earnings were lifted by a 14.1% rise in net operating income during the quarter, which came on the back of a robust 38.6% rise in net fee-based income and a 6.0% increase in net fund-based income, ” Maybank, which is also South-East Asia’s fourth-largest bank by assets, said in its statement yesterday.
Its third quarter ended Sept 30 saw revenue rising by a bigger quantum of 14.68% to RM13.83bil from RM12.06bil in the same quarter a year ago.
Group president and chief executive officer Datuk Abdul Farid Alias said the group would focus on pricing discipline, strong capital and liquidity positions, as well as sound risk management and operational efficiency in the coming months.
“This year has proven to be relatively challenging for some of our clients due to the slower growth in global trade. We are therefore proactively working with them to restructure their facilities. In the meantime, we will continue to be vigilant in managing our asset quality while growing our portfolio, ” Abdul Farid said.
When compared with the preceding quarter, net profit rose 3.0%, driven by a 10.3% increase in net operating income, the bank said.
This was attributable to stronger investment and trading income as well as a 13-basis-point (bps) expansion in net interest margin (NIM) quarter-on-quarter (q-o-q), it said.
“The operating environment continues to be unpredictable and we remain cautious, given the prolonged geopolitical uncertainties. Nevertheless, we are encouraged by our steady results and will focus on realising opportunities across the region, especially in Asean and Greater China, ” chairman Datuk Mohaiyani Shamsudin said.
The group saw NIM in its third quarter expanding to 2.32% from 2.19% in the preceding quarter. However, Maybank said that for the nine-month period, its NIM was marginally lower by five bps to 2.27% from 2.32% a year earlier.
This was due mainly to the impact of the base lending rate reduction and tapering off of low-cost deposits in its Indonesian operations.
Loan growth in the year-to-date period, meanwhile, stood at 3.4% year-on-year (y-o-y), driven by the Malaysian operations, which grew 5.3%, ahead of the industry’s loan growth of 3.8%, it said.
Maybank said deposits rose at a faster pace of 5.5%, led by strong growth of 7.5%, 6.0% and 4.5% in Malaysia, Singapore and Indonesia, respectively, in line with the group’s strategy to focus on lower-cost funds as well as maintaining a strong liquidity position.
“This resulted in an improvement in the loan-to-deposit ratio to 92.5% as at September 2019 from 94.4% a year earlier, ” it said.
Abdul Farid had told StarBiz in an interview published earlier last week that it expects the operating environment for 2020 to be similar to that of 2019, following the prolonged trade war between the United States and China.
“Given this outlook, the bank will continue to prioritise liquidity and capital strength to ensure we can navigate through the continued challenging landscape, while at the same time leveraging on the opportunities that are present or will arise, particularly in this region, ” he had said.
TA Research in its banking sector report earlier in the month maintained its 2019 loan growth projection at 4.5%, based on consumer and business loan growth assumptions of 5.5% and 3.2%, respectively.
The research house has retained its neutral stance on the sector, noting also that the industry’s business loans that are largely supported by small and medium enterprises continue to remain soft.
It noted that the industry’s loan growth in the third quarter had been supported by the consumer segment, which had grown 4.8% y-o-y in the quarter.
Other analysts are also hopeful that the move by Bank Negara earlier this month to reduce the statutory reserve requirement by 0.5% to 3.0% to ensure sufficient liquidity in the banking system would aid system liquidity.
“We are positive on the cut, as it will release extra liquidity into the system, mitigating downward pressure on NIM. Easing monetary conditions is supportive of loan growth and helps to stabilise asset quality, ” Kenanga Research said when rating the industry an overweight in its report.
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