Maybank chairman Tan Sri Zamzamzairani Mohd Isa.
KUALA LUMPUR: Malayan Banking Bhd
(Maybank), South-East Asia’s fourth-largest bank by assets, is optimistic about its prospects looking into the second half of 2024 (2H24), aiming to leverage its regional presence as well as sizeable customer base to grow its home markets and selected business lines across the region.
The banking group, also the largest lender in the country, said it will advance the application of values-based banking principles through its solutions and services as a strategic differentiator to further drive economic value, moving forward.
Releasing its results for the second quarter of the year ended June 30 (2Q24) yesterday, Maybank saw net profit for the first six months of 2024 climb 9% year-on-year (y-o-y) to RM5.02bil, as revenue also grew 13.4% to RM35.5bil.
For 2Q24 itself, earnings increased by 8.2% y-o-y to RM2.53bil as turnover also improved 6.4% to RM17.2bil.
Maybank chairman Tan Sri Zamzamzairani Mohd Isa observed that the group’s 1H24 results have been “commendable”, reflecting the lender’s commitment to excellence and resilience in a volatile market environment.
“Maybank’s M25+ strategic initiatives are well-positioned to capitalise on emerging opportunities and drive sustainable growth.
“We are confident that the group’s solid foundation and forward-thinking approach will enable it to navigate any challenges and deliver consistent value to our stakeholders,” he told a media briefing held in conjunction with Maybank’s results release here yesterday.
Meanwhile, president and group chief executive officer (CEO) Datuk Khairussaleh Ramli said Maybank’s strategic priorities for 2024 are centred on embedding the five M25+ strategic thrusts through the respective initiatives, and realising greater value from key growth areas.
Delving deeper into the numbers, he reported that Maybank’s strong 1H24 results have been driven by strong growth in non-interest income (NOII), arising from higher core fees, improved insurance performance as well as an increase in treasury and market gains.
He said 1H24 net operating income grew by 9.4% y-o-y to RM14.9bil, mainly attributable to a 28.4% increase in NOII to RM5.2bil, which itself was boosted by strong growth in core fees which rose 16.5%.
On top of that, Khairussaleh noted: “Net fund-based income also improved to RM9.8bil from RM9.6bil compared to a year earlier, supported by strong loan growth of 10.4% from all key segments in Malaysia, Singapore and Indonesia.”
On the other hand, he added that Maybank’s net interest margin (NIM) declined 15 basis points (bps) y-o-y as a result of higher funding cost across the home markets, although NIM did improve by two bps quarter-on-quarter to 2.02%.
Khairussaleh explained that the NIM compression had been a result of the intense deposit battle between Malaysian banks towards the end of 2022.
Notably, he said: “We believe that the worst (in terms of NIM compression) is over for us, and as the 2Q24 data showed, we have improved our NIM from 2% in 1Q24 to 2.02%.
“So based on our estimation, we are confident that our quarterly NIM will continue to improve towards the end of the year, underpinned by our ability and focus to better manage cost of funds,” he added.
On that, the CEO revealed that group deposits for 1H24 had risen by 7.9% y-o-y despite a marginal 0.2% decrease in fixed deposits, as total deposits supported by a greater increase in current account-savings account (CASA) growth of 9.8%.
Khairussaleh remarked Maybank’s CASA growth had “intentionally” been allowed to increase at a faster rate compared to its group deposits, because the former is basically a cheaper source of funds.
At the same time, he said net impairment provisions for 1H24 stood at RM924.1mil, from RM867.4mil a year earlier due to an increase in net allowances for financial investments and others to RM75mil, reversing a net writeback of RM54.4mil from the same period previously.
Concurrently, its gross impaired loan ratio improved by 18 bps to 1.29% from 1.47% a year earlier, while loan loss coverage remained stable at 128.7% from 130.3%.
Khairussaleh said Maybank is continuing to undertake proactive engagement with clients facing financial challenges by assisting them in managing their commitments effectively.
For 2Q24 itself, the group’s net operating income expanded slightly to RM7.34bil from RM7.31bil a year ago, led by higher net fund-based income by 2.2% to RM4.93bil, although NOII recorded a slight decrease y-o-y to RM2.41bil compared with RM2.48bil in the corresponding period of 2023.
Maybank has declared a first interim full cash dividend of 29 sen per share, which translates into a dividend payout ratio of 69.7%, equivalent to a RM3.5bil payout.
Separately, Khairussaleh commented that Maybank’s loan growth may pull back to between 7% and 8% in 2024, following a 10.4% y-o-y growth for the first six months of the year.
He emphasised that while the pipeline is good, the group needs to account for its capacity to grow loans with respect to deposits, while outlining the importance of juggling loan growth with the ability to fund it at a reasonable cost to protect margin and optimising capital.
On that note, Khairussaleh mentioned that Maybank is also experiencing a positive impact in terms of loans from the growing demand for data centres in Malaysia.
He outlined that the group has benefitted from the data centre wave, before adding that Maybank has captured around RM2.2bil worth of deals so far, and is looking at another RM1bil in the pipeline from three potential projects.
