PETALING JAYA: Malayan Banking Bhd
(Maybank) is confident of maintaining its robust loan growth despite a rising interest rate environment, according to group president and CEO Datuk Khairussaleh Ramli.
“We think that we can still maintain that robust (loan) growth (seen in the first half), from a few angles. We may see a slowdown in booking of mortgages, for example, but we do have a sizable stock for progressive housing loans.
“And as a lot of auto finance is fixed rate, people will look for nine years potentially,” he told the media at Menara Maybank yesterday.
“Generally, we may see some slowdown in loan growth given the higher interest rate, but we don’t think that the impact is going to be material,” said Khairussaleh.
For the first half ended June 30, 2022 (1H22), Maybank noted that group gross loans expanded 6.2% with steady growth recorded across all markets.
The group’s Indonesia operations saw loans expanding 8.2%, Singapore 8.1% and Malaysia 5.6% while other international markets recorded a 1.4% increase.
Meanwhile, net interest margin (NIM) for 1H22 rose four basis points (bps) to 2.38% from a year earlier, mainly as a result of improved yields on higher interest rates and lower deposit cost.
Khairussaleh pointed out that the group has guided for a five bps NIM improvement this year, as a result of an expected rise in interest rates.
“As a guidance, for every 25 bps increase, that will improve our NIM by about one to two bps. (If there is) another 50 bps increase in interest rates by end of the year, that potentially can improve our NIM by two to four bps,” he said.
Maybank, South-East Asia’s fourth largest bank by assets, saw its net profit for the second quarter (2Q22) come in 5.4% lower at RM1.86bil after the group booked in net impairment charges of RM1.16bil (compared with RM567.2mil last year).
Revenue for 2Q22 was slightly lower by 1.2% to RM11.2bil.
The group said it had increased the expected credit loss for loans and securities to RM1.16bil as a pre-emptive measure to mitigate any potential need arising from heightened geopolitical events.
“This is a pre-emptive provisioning and it is supposed to be one-off, particularly addressing the segments of oil and gas as well as hospitality. We would be comfortable in terms of seeing through any weakness in economic activities, in the near term,” said Khairussaleh.
Earnings per share for 2Q22 was 15.52 sen (versus 17.05 sen a year earlier).
For 1H22, the group’s net profit was 10.4% lower to RM3.9bil while revenue was slightly lower by 1.8% to RM23.12bil.
Maybank said in 1H22, net operating income rose 2.3% to RM13.3bil as net fund based income expanded 6.1% to RM10.08bil, on the back of loans growth across all home markets and NIM expansion from a rising rate environment.
However, the growth in net operating income was mitigated by lower net fee-based income, which declined 7.7% to RM3.23bil mainly due to lower fee income across most business segments as a result of continued weak and volatile markets.
Also, net impairment charges for 1H22 were higher at RM1.75bil (compared with RM1.44bil a year earlier), based on the pre-emptive provisioning made.
Earnings per share for 1H22 was 32.72 sen (versus 38 sen a year earlier).
Maybank declared a a single-tier first interim dividend of 28 sen per share, comprising 21 sen cash and an electable portion of seven sen under its dividend reinvestment plan.
This translates into a RM3.35bil payout, or 85.9% of net profit for 1H22.
In a statement, Maybank chairman Tan Sri Zamzamzairani Mohd Isa said the group continued to deliver a commendable performance with topline growth as economic momentum picked up following the reopening of economies, despite being also impacted by global market volatility.
“Given that the immediate outlook remains clouded by economic and geopolitical uncertainties, we will focus on remaining agile to tap into growth opportunities that emerge, while managing our risks carefully. Arising from evolving trends in the external environment, our M25 Plan is being refined further but will remain the central pillar that ensures we are sustainable over the long term and deliver the right outcomes for the benefit of all our stakeholders.”
Khairussaleh said the group has emerged even more resilient post-pandemic, recording stable growth across its key business segments.
“We will remain disciplined in maintaining our strong liquidity and capital positions which have given us the ability to navigate through the difficult operating environment. At the same time, we are committed to supporting our customers through the current recovery phase, particularly as we are faced with a rising interest rate environment. We will also be ramping up our digital capabilities regionally and driving our sustainability agenda as these will be key in fulfilling our growth agenda,” said Khairussaleh.
