KUALA LUMPUR: Malayan Banking Bhd
(Maybank) is anticipating a slight compression in net interest margins (NIMs) for the rest of the year, mainly weighed by its Singapore and Indonesian segments.
Group loans growth is now seen to come in at around 3% this year in its latest guidance, slightly lower than the previous expectation of a loans growth at around 5% to 6%.
These are weighed by tariff uncertainties that were seen in the first half of the year, whereby the bank said its clients had adopted a wait-and-see approach, delaying any planned investments and capital raising activities.
The largest bank in Malaysia by market capitalisation also said there are ongoing portfolio rebalancing activities happening in Indonesia that could weigh on its outlook there for the time being.
“When we set the (old) guidance earlier this year, we were already doing rebalancing activities in Indonesia. We want to protect our margins there. Our portfolios in state owned enterprises are very marginal in terms of profitability.
“There, the cost of deposits are also quite challenging,” its president and group chief executive officer Datuk Seri Khairussaleh Ramli said at a briefing yesterday.
Given the situation, he said the banking group is better off releasing these loans as and when they mature – and it does not plan to replace them.
“Better not grow the asset and not make any money. But we are also looking at other growth areas, for example large local conglomerate companies from Malaysia and Singapore which are doing business in Indonesia.”
Khairussaleh explained the Malaysian segment loans growth is expected to grow, driven by mortgages and hire purchases, while small and medium enterprises (SMEs) will also grow but to a lesser extent than retail loans.
The Malaysian corporate loans segment is also still expected to grow, he added.
“In Singapore, corporate, SMEs and hire purchases are seen to drive loan growth there. While in Indonesia, we are optimistic that some inbound clients from Malaysia and Singapore will support loan growth.
“Apart from this, Indonesia’s SME, mortgages and hire purchases segments are expected to grow,” Khairussaleh said.
Commenting on its NIM expectations moving forward, he said the Malaysia segment had actually seen a year-on-year (y-o-y) improvement in NIMs in the first half of the year period by about two basis points (bps).
“But in Singapore, there is a decrease in NIMs by about two basis points (bps). While in Indonesia, there is huge liquidity competition there – this is a major factor. So, we have seen a NIM improvement in Malaysia, compared to a reduction in Indonesia and Singapore,” Khairussaleh said.
For Indonesia, Khairussaleh said the group would refocus to compete in certain key segments while it also wants to ensure that deposits would incur reasonable costs as well.
Meanwhile, Maybank’s non-interest income (NOII) segment continues to show strength – driven by wealth management, global markets and debt capital markets.
“With interest rates coming down, a lot more people will be going to the debt market to raise funds,” he said.
In its first half ended June 30, 2025 (1H25), Maybank’s NOII rose 7% to RM5.51bil.
Its net fund based income increased to RM9.89bil from RM9.77bil with net operating income up 3.2% at RM15.4bil.
In 1H25, Maybank recorded a 4% y-o-y rise in net profit to RM5.22bil as revenue in this period moderated to RM33.95bil from RM35.52bil.
Profits were boosted by the NOII, driven by improved investment and trading income and moderation in net impairment provisions, it said.
While its NIMs declined by two bps y-o-y on the softer rate environment especially in Singapore.
For the second quarter of this financial year (2Q25), net profit rose by 3.9% y-o-y to RM2.63bil compared with the same period last year on relatively flattish revenue at RM17.08bil.
Its 2Q25’s net operating income expanded 4.6% to RM7.68bil as NOII rose by 14% to RM2.75bil, while net fund based income was relatively flat at RM4.93bil, it said.
Maybank said its returns on equity in 1H25 improved to 11.5% from 11% in 1H24.
The bank’s board had declared a first interim full cash dividend of 30 sen per share, which represents a dividend payout ratio of 69.5% amounting to some RM3.62bil, it said.
The Malaysian segment’s loans grew 6.8% y-o-y while Singapore was up 4.3% y-o-y.
These were moderated by a decrease of 0.4% y-o-y in Indonesia due to corporate portfolio rebalancing.
Maybank said the group’s loans growth tapered to 1.3% y-o-y across its three home markets in 1H25 on the expected moderation amid global headwinds and tighter financial conditions.
The banking group’s deposits meanwhile rose by 6.1%, led by Singapore, registering an increase of 21.5%, followed by the Malaysia segment of 4.9%.
“This was driven by strong current account savings account balances of RM283.3bil that was up 5.1% from the previous year.
“The loans to deposits ratio has strengthened to 90.2% from 94.5% a year ago with deposits growth of 6.1% that outpaced loans growth of 1.3%,” it said.
