Business

Friday November 13, 2009

Four divisions push Maybank profit up 54%

By YEOW POOI LING


CEO: Loan growth, asset quality have improved

PETALING JAYA: Malayan Banking Bhd (Maybank) posted a 54% jump in net profit to RM881.8mil for the first quarter ended Sept 30 from RM572.2mil in the previous corresponding period, driven by treasury, international, insurance and investment banking operations.

Revenue was RM2bil compared with RM1.6bil a year earlier while earnings per share improved to 12.46 sen from 11.72 sen previously after adjustment for rights issue in March.

President and chief executive officer Datuk Seri Abdul Wahid Omar said the group achieved “good loan growth” as well as improved asset quality.

“Our accelerated efforts to turn around Bank of Indonesia (BII) bear much fruit and earlier than anticipated. We are confident of sustaining the current growth momentum,” he said in a statement.

During the period, BII contributed RM48.9mil in net profit, MCB Bank Ltd of Pakistan RM22.9mil and AnBinh Bank of Vietnam RM2.6mil.

Net non-performing loan ratio fell to 1.6% and capital adequacy ratio stood at 14.3% as of end September.

Net income grew 54% to RM3.2bil from RM2.1bil a year ago. Net interest income expanded almost 29% to RM1.6bil based on an annualised 11.2% growth in loans and higher lending margins, especially in BII.

Domestic consumer loans grew 12.5%, corporate up 20.3% while loans for small and medium-scale enterprises (SMEs) fell 22.4%. Consumer deposits grew 8.6% year-on-year to RM218.8bil and total assets increased 8.2% to RM317bil.

Non-interest income doubled to RM1.1bil from RM495mil thanks to robust growth in investment and trading income, which soared to RM104.4mil from RM11.5mil previously, and transactional income, which rose to RM624.6mil versus RM460.3mil the year before.

Overhead costs, excluding claims, increased 31.8% from a year ago due to consolidation of BII. Excluding that, overhead costs were up by 4.7%.

The allowance for losses on loans, advances and financing rose to RM417.7mil on higher provisions in Malaysia and inclusion of BII. The figure, nonetheless, was lower by almost 47% than the preceding quarter.

Maybank’s loan loss coverage improved to 113.2% as of end-September versus 112.9% as of end-June. Treasury business achieved 179% jump in total income due to 346% increase in net interest income and 98% surge in non-interest income. The investment banking, meanwhile, saw higher fee-based income, arising from arranger’s fees and brokerage fees.

The group’s Islamic banking posted almost 24% increase in gross attributable income to RM465.7mil on growth in financing although pre-tax profit fell 35% to RM63.1mil on higher loan loss and provision.

Insurance and asset management grew 61% in pre-tax profit to RM80mil, due to higher gross premium and investment yield, as well as lower management fees and stable loss ratio.

Maybank said the domestic sector was expected to remain resilient with loans growth staying positive, albeit at a slower pace, while asset quality and capitalisation continued to be healthy amid excess liquidity.

Competitions remain with the gradual liberalisation while the recent measures from Budget 2010, including the introduction of annual RM50 service tax for credit and charge cards and the reintroduction of real property gains tax, are likely to have an impact.

The improving capital market should, however, provide better performance for the investment banking and insurance divisions. International operation is expected to improve on the global recovery and business expansion.

Jupiter Securities head of research Pong Teng Siew said Maybank’s earnings were back on the growth track after the weaker fourth-quarter performance. “Overall, interest income has improved on the back of better interest margins. It’s a reasonable good start for Maybank for the new fiscal year,” he told StarBiz.

The group’s Indonesian operation was likely to ride on the country’s economic economy amid a low interest rate environment, he added.

An analyst at a local brokerage said Maybank’s performance was higher-than-expected and its outlook remained optimistic.


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