KUALA LUMPUR – Malayan Banking Bhd’s (Maybank) net profit rose to RM2.39 billion for the first quarter ended March 31, 2021 (Q1 2021) from RM2.05 billion in the same period last year, as loans picked up pace on improving economic outlook while overhead expenses and impairments declined.
However, revenue slipped to RM12.22 billion from RM13.24 billion in the same quarter previously.
In a statement today, the bank said the results translated into a return on equity of 11.7% compared with 10.6% a year ago, while earnings per share rose 15.0% to 21.0 sen from 18.2 sen previously.
It said spurred by the improving economic outlook, loan demand picked up pace in Q1 2021 with group gross loans coming in 3.1% higher compared with 0.3% last year.
“This was led by the Malaysian operations which saw a steady 4.9% increase in loans, underpinned by a healthy 7.4% rise in Community Financial Services (CFS), on the back of strong demand in the Consumer as well as Business Banking and Small Medium Enterprises (SME) segments.
“The Singapore operations also posted an increase, with loans growing 2.1%, supported mainly by its CFS business but Indonesia operations declined by 18.3% primarily as a result of write-offs and repayments, as part of an ongoing strategy to rebalance its portfolios to mitigate risks,” it noted.
Maybank also shared that sustained efforts in cost management had resulted in overhead expenses declining 4.1% to RM2.82 billion in Q1 2021 from RM2.94 billion previously.
This helped to improve the group’s cost-to-income ratio further to 41.3% from 43.7% a year earlier, as income growth of 1.5% outpaced the decline of 4.1% in overhead costs during the quarter, it said.
Consequently, it said the group’s pre-provisioning operating profit came in at RM4 billion from RM3.78 billion in Q1 2021 while net impairment losses stood at RM868.5 million compared with RM1.02 billion previously.
“Notwithstanding this, the group continues to adopt a conservative stance, making top-ups for existing impaired accounts on account of devaluation of collaterals, as well as additional management overlay for the retail portfolio, where necessary,” it said.
To maintain a robust liquidity base and expand its low-cost funding structure, gross deposits expanded 10.3% year-on-year, on the back of a 10.0% increase in Malaysia and 9.6% in Singapore.
Consequently, the group said it current account and savings accounts (CASA) ratio to total deposits expanded further to 44.5% as of March 2021 from 38.4% a year earlier.
Coupled with the rate cuts seen throughout the financial year 2020, the healthy growth in deposits and CASA ratio helped to lift the group’s net interest margin (NIM) by 8.0 basis points to 2.31% from 2.23% a year earlier, Maybank said.
Commenting on the performance, chairman Tan Sri Zamzamzairani Mohd Isa said the encouraging Q1 2021 performance continued to validate the group’s strong operational resilience and affirmed the proactive strategies the bank had adopted over the last year, despite the uncertain economic climate caused by the pandemic.
“Maybank is well positioned to support the expected improvement in economic activities, and we will continue to strengthen our business, stand by our stakeholders, and support our customers so that we can collectively emerge stronger,” he said.
Meanwhile, group president and chief executive officer Datuk Abdul Farid Alias viewed that there remained a general sense of caution given that the pandemic is not fully contained, therefore, Maybank will remain agile and alert to tap into emerging opportunities, while always maintaining a disciplined approach in managing its business.
“One of the risks financial institutions are facing is that credit implications arising from the movement restrictions due to Covid-19 are still camouflaged owing to the flexibilities under the Repayment Assistance (RA) and Targeted RA programmes.
“Banks need to continue monitoring the situation closely and provide loan loss provisions that are sufficient to address any unexpected outcome. In view of this, we must continue to remain vigilant in order to protect the banking system,” he added. – Bernama, May 27, 2021
