Maybank’s Q1 net profit plunges 16.1% on provisions

SINGAPORE — Malayan Banking (Maybank) yesterday reported a 16.1 per cent drop in quarterly net profit as Malaysia’s largest lender by assets set aside higher provisions. The bank signalled a mixed outlook in its key markets, as it cautioned of slowing economic growth in Malaysia and Singapore, while highlighting a potentially brighter environment in Indonesia.

Net profit for its first quarter ended March fell to RM1.43 billion (S$483.8 million) from RM1.7 billion in the same period last year, said the company in a statement yesterday.

“The increase in provisioning was primarily owing to the rise in the number of corporate loans undergoing restructuring and rescheduling of their repayment to better match their projected cash flows arising from the subdued operating environment,” it said. Allowances for impairment losses on loans, advances, financing and other debts increased by RM617.1 million to RM865.1 million.

Net operating income for the quarter rose 8.1 per cent to RM5.39 billion on-year, said the bank, on the back of an 11.9 per cent increase in fund-based income to RM3.82 billion, while fee income was almost unchanged at RM1.57 billion. The net interest margin improved 8 basis points to 2.34 per cent compared with a year earlier.

The group also saw its liquidity position strengthen in line with its funding-led growth strategy, with loan-to-deposit ratio improving to 89.9 per cent compared with 93.5 per cent in previous corresponding quarter. Financial performance for the year is expected to be “satisfactory in a more challenging regional environment”, it said.

In Maybank’s home base of Malaysia, first-quarter economic growth was the slowest in nearly seven years due to weak exports and tepid domestic demand. Malaysia’s gross domestic product (GDP) is expected to ease this year, on slower domestic demand from moderating consumer spending and private investment. The bank noted loans growth is expected to moderate in Malaysia to about 6-7 per cent in 2016 from 7-8 per cent in 2015, on the back of easing household loans growth. As such, Maybank Malaysia’s loans growth is expected to track industry loans growth.

In Singapore, Maybank noted that while GDP growth has been affected by the ongoing restructuring of the economy, services and construction are expected to be supportive of growth. In the first quarter, Maybank Singapore saw net income rise 6.3 per cent to S$204.81 million, on the back of a 6.5 per cent rise in net fund-based income and a 6 per cent rise in net fee-based income. Total loans rose 4.9 per cent year-on-year, bucking the industry, which saw a 5.4 per cent contraction.

As for Indonesia, Maybank is positive on economic growth for the country, citing higher government expenditure, economic stimulus and reform packages. AGENCIES