Maybank posts stellar quarterly results

Maybank posts stellar quarterly results
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com
Thursday, 22 August 2013 11:10

KUALA LUMPUR: MALAYAN BANKING BHD [] (Maybank) has recorded stellar results for the second quarter (2Q) to June 30, posting a 9% rise in net profit to RM1.57 billion against RM1.44 billion previously.

In line with the improved results, Malaysia's biggest banking group rewarded its shareholders with a proposed dividend of 22.5 sen per share. Revenue for 2Q rose to RM8.68 billion from RM7.93 billion in the previous corresponding period.

For the first six months, Maybank registered a net profit of RM3.07 billion, up 10.4% over the corresponding period of financial year 2012. Revenue rose to RM16.91 billion over RM15.79 billion previously.

In a filing with Bursa Malaysia yesterday, Maybank said its net interest income and Islamic banking income for the first six months increased 8.1% largely due to the 9.7% year-on-year (y-o-y) growth in the group's net loans and advances (including Islamic finance).

Non-interest income for the six-month period rose 5.3% to RM3.17 billion on higher gain on sale of financial assets at fair value through profit and loss (FVTPL). Financial assets are classified as FVTPL if they are held for trading or are designated as such upon initial recognition.

Higher brokerage from Maybank KimEng also contributed to the overall improvement in Maybank's first half-year (1H) earnings. The increase, however, was offset by higher unrealised loss on revaluation of financial assets at FVTPL and derivatives of RM326.1 million.

Maybank said the group's overhead expenses for 1H rose 7.2% compared with the previous corresponding period. The major contributors to the increase in overhead expenses were Maybank KimEng, PT Bank Internasional Indonesia Tbk (BII) and the bank itself.

"The group's allowance for impairment losses on loans, advances and financing increased by RM127.4 million to RM512.9 million, mainly due to higher net individual allowance made for the six-month period.

"The group's net impaired loans ratio improved to 1.09% as at June 30, 2013, compared with 1.28% as at June 30, 2012."

Maybank said its investment banking segment saw a marginal 1.9% increase in profit to RM249.3million for the six-month period on lower net interest income and Islamic banking income of RM93.7million, higher overhead expenses and impairment losses on financial investments.

The decrease was, however, mitigated by higher non-interest income of RM156.1 million, primarily from higher brokerage and underwriting income. Maybank KimEng recorded a profit of RM116.5 million, mainly attributable to brokerage income of RM358.9 million.

Profit contribution from international banking operations increased by 15.4% to RM1.197 billion. The increase was driven by lower allowance for impairment losses on loans, advances and financing, higher net interest income.

The increase in international banking profit was mainly contributed by Singapore (RM40.1million), London (RM33.4 million) and BII (RM25.5 million).

Newly appointed president and CEO Datuk Abdul Farid Alias said for 2H, the group will be focusing on loans and deposit growth to close the gaps that had surfaced in 1H.

He said Maybank is eyeing a commercial bank in Thailand in addition to its brokerage business there currently. The bank, he added, has the option of pursuing a merger and acquisition exercise or seeking the Thai government's approval to set up a branch in the country.

"We are not rushing to make decisions until such a deal makes sense to our shareholders," Farid told newsmen after announcing Maybank's 2Q results yesterday. So far, Maybank has not reached anything specific on the Thai expansion plan, which forms part of its Asean strategy.

In Asean, Maybank has already established commercial banking presence in Malaysia, Singapore, the Phillippines, Indonesia, Cambodia, Vietnam and Laos. In Myanmar, it only provides advisory services to its customers and potential clients interested to invest in the country.

Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor said Thailand is an important part of the group's Asean strategy.

"Commercial banking is obviously going to help improve our portfolio there, but there are certain conditions that have to be put in place first. One of them is that we have to be able to exercise the degree of influence in business environment there."

Megat Zaharuddin said Maybank is keeping tabs on the developments in the banking industry in Thailand as well as on competitors in the country and in the region.

He added that Maybank has a relatively strong capital base which could put it in an advantage, and would act when the right opportunity kicks in.



This article first appeared in The Edge Financial Daily, on August 22, 2013.