Maybank’s top line growth operating income
KUALA LUMPUR: The country’s largest banking group, Malayan Banking Bhd (Maybank), saw growth in the top line but profit was impacted due to provisions for the impairment of assets in accordance with accounting rules.
For the first-half ended June 30, Maybank registered a net operating income of RM10.74bil, an 8.7% increase year-on-year (y-o-y).
This was mainly attributed to a pick-up in loan growth and a surge in deposits, as well as strong retail franchise in key markets.
The bank’s net profit fell 21.3% to RM2.59bil, due to higher provisions for loan and securities impairments amounting to RM2.06bil.
Under the new regulations of the Classification and Impairment Provisions for Loans or Financing, Maybank undertook proactive restructuring and rescheduling (R&R) of clients’ repayments to better match their projected cash flows.
The R&R action implemented would require these loans to be classified under the ‘Impaired’ category, although they are still ‘Performing’ in nature.
This strategy has been adopted since the beginning of 2016 as a proactive measure to manage asset quality.
As such, the impairments for loans and securities for the half year increased by more than 100% from the corresponding period last year of RM693.6mil.
Maybank’s net impaired loans ratio as at June 2016 stood at 1.72% compared to 1.15% last year.
However, net non-performing loans were at 0.79% compared to 0.7% a year earlier, lower than the 0.98% recorded in March 2016.
Meanwhile, Maybank’s loan growth grew by 4.3% y-o-y.
This came on the back of a 3.9% increase in the Malaysian operations and a 4.3% rise in international operations led by Indonesia, which saw a healthy 7.1% increase, and Singapore a mild 0.4%.
Deposits for the period surged 12.5% y-o-y to a total of RM510.1bil, giving the group a healthy liquidity position.
This was on the back of a 20.8% rise in the international operations and a 7.5% rise in Malaysian operations, and helped improve the loan-to-deposit ratio to 88.5% in June 2016, from 95.4% last year.
Apart from that, Maybank continued to reap the benefits of its strategic cost-management programme, which resulted in overheads expenses growth being managed at 6.8%, well below the income growth.
This resulted in the bank’s cost-to-income ratio improving further to 48.7% in June 2016, from 49.5% last year.
Consequently, pre-provisioning operating profit for the half-year reached RM5.49bil, 10.6% more than the six-month period ended June 2015.
Maybank group president and chief executive officer Datuk Abdul Farid Alias said Maybank expects the second half of the year to see improvement, with the pick-up in loans expected to gather pace and the revenue momentum being maintained.
“We continue to see opportunities especially in Asean, and will be disciplined in managing costs and risks as we seek to strengthen our franchise in the region.
“We will, nevertheless, remain vigilant and maintain the proactive management of asset quality while building on our capital and liquidity positions to cushion ourselves from unanticipated events that could derail economic recovery,” said Farid during the results briefing.
He added that the bank would maintain its financial year 2016 (FY16) key performance indicators (KPI) guidance for the next half of the year.
Maybank’s FY16 KPI guidance for return on equity is 11% to 12%, while loans growth is 8% to 9%.
The board also declared a single-tier interim dividend of 20 sen per ordinary share comprising a four-sen cash portion and a 16-sen electable portion under the dividend reinvestment plan.
This translates to a dividend payout ratio of 77.4% of net profit for the half year.