Maybank slightly up on higher 1Q net profit

by **Cals** Fri 30 May 2014, 19:43

Business & Markets 2014

Written by Levina Lim of theedgemalaysia.com

Friday, 30 May 2014 09:37

KUALA LUMPUR: Shares in Malayan Banking Bhd (Maybank), the country’s largest lender, closed slightly higher yesterday, after it reported quarterly results that showed slight improvement despite a more subdued operating environment.

The stock closed up 4 sen or 0.4% at RM9.98, giving it a market capitalisation of RM88.53 billion.

The banking group reported a 6.33% rise in net profit to RM1.6 billion for the first quarter ended March 31, 2014 (1QFY14) from RM1.51 billion a year ago, on enhanced performance in its consumer and international businesses as well as continued cost management initiatives under its strategic cost management programme.

Revenue was also up 2.96% to RM8.36 billion from RM8.12 billion in 4QFY13. Maybank’s earnings per share came in at 18.09 sen compared with 17.87 sen.

In a statement yesterday, Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor said 1QFY14 results came in relatively softer for the group in the face of continued economic uncertainties in the global market.

“The impact, however, is cushioned off by our well-diversified regional footprint and strong consumer franchise, which enabled us to sustain a steady pace of growth in the quarter,” he said.

“With our new regional organisational structure now firmly in place, we expect to see stronger momentum in our earnings for the rest of 2014, and remain focused on achieving the targets set for the year, among them being a return on equity of 15% and group loans growth of 13%,” said Maybank group president and chief executive officer Datuk Abdul Farid Alias (pic) in the statement.

He added that in its efforts to sustain business growth, the group will continue to deepen its business portfolio region-wide, improve client interface, especially in the global banking segment, as well as promote more cross-border banking solutions.

“We will do this while also maintaining rigorous risk management oversight to manage any volatility in the operating environment,” Abdul Farid said.

The group’s community financial services (CFS) saw its pre-tax profit surge 14.9% year-on-year (y-o-y) to a record RM954.2 million, while international operations saw pre-tax profit rise 6.7% to RM703.2 million compared with a year earlier.

“These helped mitigate the softening in corporate banking businesses, particularly in the two key home markets of Malaysia and Indonesia as a result of a more subdued operating environment,” said Maybank.

The group’s global banking division faced a challenging quarter. It saw net income dip 11.1% to RM1.22 billion from a year earlier, while corporate banking loans declined 17.1% y-o-y, mainly owing to corporates de-gearing in expectation of an imminent interest rate increase.

The group booked a 2.4% y-o-y rise in net income, supported by a 7.6% increase in fund-based income, on the back of a 13.9% y-o-y growth in group loans led by Islamic financing, which grew 36.8%.

Income growth was also supported by international banking activity which posted a 5.4% y-o-y rise on the back of positive loans growth in Singapore, Indonesia, China and the Philippines.

On an annualised basis, group loans growth for 1QFY14 was 5.3%, with international operations showing a 15.3% increase, while Malaysian operations registered a marginal decline of 0.7%.

“This was mainly owing to some corporates which moved their funding sources from the domestic to international market, based on their requirements as well as to leverage the more competitive pricing options.

“Among the main beneficiaries in this movement was the group’s offshore banking unit, Maybank International Labuan Ltd, where a significant portion of the loans were booked,” said the group.

Fee-based income, however, contracted 8.3% y-o-y mainly due to a decline in investment banking and treasury activities in the quarter.

This article first appeared in The Edge Financial Daily, on May 30, 2014.