Strong liquidity, capital to spur Maybank’s growth

The first-quarter result showcased Maybank’s strength and resilience despite the challenging market conditions amid high inflationary pressure and the softening global growth, said Khairussaleh.

PETALING JAYA: While acknowledging persisting global challenges and uncertain headwinds, Malaysia’s largest bank Malayan Banking Bhd (Maybank) says it would continue to focus on opportunities for growth across its consumer and business segments within its Asean franchise, backed by sound capital and liquidity positions.

The group said it would maintain its solid liquidity setting to support asset expansion, underpinned by its diversified footprint and income streams for sustainable expansion in the future.

Maybank, also South-East Asia’s fourth largest lender by assets, released its earnings yesterday for the first quarter ended March 31 (1Q23), revealing that net profit had risen 10.7% year-on-year (y-o-y) to RM2.27bil, in tandem with a 29.5% y-o-y surge in revenue to RM14.8bil.

Overall, it said the positive results were driven by continued improvement in asset quality as well as treasury and market gains that supported the group’s net operating income.

The bank further reported that net operating income for the quarter in review grew to RM6.3bil, on the back of a 12.4% y-o-y increase in non-interest income to RM1.5bil, supported by gains on derivatives and foreign exchange as well as investment and trading profits.

“This was however negated by a lower net fund based income of 2% as net interest margin declined 15 basis points (bps) y-o-y as a result of intense deposit competition,” it noted in a filing with Bursa Malaysia in conjunction with its results release.

Overhead costs rose to RM3.1bil compared with RM2.73bil in the corresponding quarter of 2022, as a result of an expansion in personnel cost owing to higher provisioning for the recently concluded collective agreement as well as information technology, marketing and revenue related expenses.

Meanwhile, delving deeper into asset quality figures, Maybank said net impairment losses plunged by 50.9% to RM292.9mil in March 2023, as gross impaired loans also declined by 45 bps to 1.5% from 1.95% a year earlier and 1.57% as at December 2022 due to write-offs, recoveries and low formation of newly impaired loans.

It added: “As a result, the group’s net credit charge-off rate stood at 25 bps while loan loss coverage strengthened to 133.5% in the quarter from 106.4% compared with a year earlier and 131.2% as at December 2022.”

Commenting on the bank’s positive 1Q23 performance, group president and chief executive Datuk Khairussaleh Ramli said that the first-quarter result showcased Maybank’s strength and resilience despite the challenging market conditions amidst high inflationary pressure and the softening global growth.

“At the same time, execution of our M25+ strategy is well underway, anchored on the five key strategic thrusts of intensifying customer centricity, accelerating digitalisation and technological modernisation, strengthening Maybank’s business presence across the region, driving our leadership position in the sustainability agenda as well as claiming our global leadership in Islamic banking.

“This is in line with our purpose of humanising financial services as we deliver a differentiated customer experience and serve the community as a force for good in Asean.”

Concurrently, the bank saw group gross loans expand at a faster pace of 5.3% y-o-y as for the three months ended March 31, led by respective increases in Indonesia and Malaysia of 7.2% and 5.1%, while other international markets recorded a slight 0.3% increase.

Group gross deposits, meanwhile rose 3%, driven primarily by a 5.2% growth in Malaysia and 0.3% in Singapore, led by expansions in fixed deposits portfolio.

Consequently, Maybank’s current account-savings account or CASA ratio moderated to 39.1% from 46.2% a year ago, which is nevertheless still above pre-lockdown levels.

Quarter-on-quarter (q-o-q) numbers were also encouraging, as net earnings inched up 4.5% from the RM2.17bil garnered for the three months ended Dec 31, supported by a marginal 1.9% q-o-q growth in turnover from RM14.5bil.

Moving forward, the bank stressed that asset quality management remains a priority and it will continue to monitor its loan portfolio and offer targeted support to customers, if necessary.

More importantly, the group said that to date, the expiry of repayment assistance programmes have not led to any material effect on its asset quality.

“The group will actively prioritise customer centricity through enhancing end-to-end customer journeys by providing financial solutions and services across various touchpoints. Strategic investments will be channelled to further integrate its digital and physical networks, enhance IT capabilities, and drive regional cross-selling synergies aligned to the M25+ corporate strategy,” it said.

Other top lenders in the country are also expected to release their 1Q23 numbers imminently as May draws to a close.

A local banking analyst told StarBiz that following Bank Negara’s recent data confirming improving loans and asset conditions, major players in the banking sector should also be posting similar results.

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