Maybank attributed the strong three quarters performance to steady income growth and significant improvement in net impairment provisions.
PETALING JAYA: Malayan Banking Bhd
(Maybank) has laid out strategies to pursue opportunities for growth across its consumer and business segments within its Asean franchise, as it remains cautious about global macroeconomic challenges.
Among the strategies are maintaining its strong liquidity position to support asset growth, while reiterating that asset quality management is a priority, as Maybank will monitor its loan portfolio and offer targeted support especially to small and medium enterprises.
The country’s largest bank’s outlook announcement was made following a strong quarterly performance from the group for its third quarter ended Sept 30, 2023 (3Q23), which saw net profit grow by 12.3% year-on-year (y-o-y) to RM2.36bil, as revenue also surged 22.9% y-o-y to RM16bil.
Cumulatively, for the nine months ended Sept 30 (9M23), Maybank’s performance was even better as net earnings saw a 21% y-o-y surge to RM6.96bil, underpinned by a turnover boost of 37.7% y-o-y to RM47.3bil.
Maybank attributed the strong three quarters performance to steady income growth and significant improvement in net impairment provisions, as net operating income for the nine months increased by 3.6% y-o-y to RM20.38bil, driven by higher non-interest income (NOII) of 37.8% to RM5.95bil compared with a year earlier.
“Net fund based income, meanwhile, was lower by 6% as net interest margin (NIM) compressed 25 basis points due to higher funding costs led by interest rate hikes in the past year and continued deposit competition,” it said.
Another noteworthy positive point for the lender was the reduction in net impairment provisions by more than half – or 53.4% – to RM1.21bil following a writeback in financial investments of RM152.5mil, coupled with lower net loan provisions of 27.6% to RM1.36bil on writeback for corporate borrowers, recoveries and stable impairment balances.
As a result, the group revealed that gross impaired loan ratio declined by 27 basis points to 1.43% from 1.7% a year earlier while loan loss coverage strengthened to 127.1% in 9M23 from 122.3% compared with a year earlier.
“The improvement in the loans department came amid Maybank crossing the RM1 trillion mark in terms of total assets as of September, signifying a 6% growth from RM945bil back in December last year,” it said. Despite the net profit rise, the group announced that net operating income had decreased by 5.2% y-o-y to RM6.75bil in 3Q23, due to a decrease in net fund based income of RM4.81bil compared with RM5.29bil in the corresponding quarter of 2022, as NIM compressed due to persisting funding competition.
On the other hand, NOII was up 6.1% y-o-y at RM1.94bil while net impairment provisions improved with a 59.3% decrease to RM342.2mil.
In comparison with the preceding quarter ended June 30, net profit for the third quarter inched higher by 0.8% compared with 2Q23’s RM2.34bil, as net impairment provisions declined by 40.4% following a net write-back in financial investments as well as lower loan loss provisions by 21.6%.
In the meantime, the take-up for loans and deposits also improved, as total group gross loans grew strongly by 5.1% y-o-y as at Sept 30, lifted by increases of 3.7% and 3% in its markets in Malaysia and Singapore respectively, while other markets contributed a rise of 5.5%.
This group gross deposits also expanded 3.5% as fixed deposits grew 20.3% offsetting a decline of 8.8% in other deposits and 8.9% in current accounts and savings accounts.
Maybank noted that despite the challenging market conditions, its group global banking’s pre-tax profit for 9M23 rose by 31.9% y-o-y to RM4.62bil, led by lower loan loss provisions, although net operating income, however, was lower y-o-y by 13.1% at RM6.89bil, mainly impacted by the slowdown in its Global Markets and Investment Banking Group businesses amid global macroeconomic headwinds.
The group’s Islamic banking business saw a dip in pre-tax profit at RM2.88bil in 9M23 compared with RM3.52bil a year earlier as total income fell 1.6% y-o-y at RM5.57bil.
Within this business, the group’s Islamic total gross financing for Malaysia rose to RM252.3bil led by a steady growth in its community financing services sector by 10%.
It added: “As at September 2023, Islamic financing constituted 68.1% of Maybank Malaysia’s total financing while Maybank Islamic’s market share of Islamic assets in Malaysia stood at 29.2%.”
Group president and chief executive, Datuk Khairussaleh Ramli said while global challenges remained, as Maybank deepens its M25+ strategy execution, coupled with the agile ways of working, it has taken encouraging strides to become forward-looking, innovative and customer-centric.
“Providing benefits to customers and uplifting customer experience via relevant product and solutions as well as process improvements facilitating account openings and loan applications have resulted in broader services uptake.
“We continue to drive digitalisation and operational efficiencies as well as building on the momentum for future revenue growth boosted by the 12 Strategic Programmes under the M25+ strategy and its targeted investments,” he said.
Additionally, Khairussaleh said the lender would continue to undertake proactive engagement with clients facing financial challenges by assisting them in managing their commitments effectively.
