Maybank, South East Asia’s fourth largest bank by assets, said that net profit for the first quarter ended 31 March 2017 rose 19.3% to RM1.7 billion from RM1.43 billion a year earlier, as it booked more loans, and benefitted from an improved net interest margin as well as substantially lower net impairment losses. Profit before tax was 16.5% higher at RM2.25 billion from RM1.93 billion a year earlier.
Gross loans rose 10.1% year-on-year (Y-o-Y), with financing from both the Community Financial Services (CFS) and Global Banking (GB) segments showing healthy expansion. Malaysian operations led this growth with a 7.2% increase, followed by Indonesia and Singapore at 7.0% and 6.4% respectively.
Net operating income for the quarter came in 3.0% higher at RM5.55 billion compared with a year earlier – boosted by a 21.4% rise from Islamic Banking, 18.3% from Insurance & Takaful and 9.0% from Community Financial Services. This was attributable to a strong 8.6% increase in net fund based income to RM4.12 billion from RM3.79 billion a year earlier. It was, however, partly offset by a decline in net fee based income to RM1.44 billion from RM1.6 billion arising mainly from unrealised losses on derivatives which are marked-to-market.
The Group registered a steady rise in deposits of 4.5% Y-o-Y to RM513.4 billion, on the back of a 7.1% increase in the International operations and a 2.8% increase from Malaysian operations. This helped lift the Group CASA ratio to 37.1% from 33.3% a year earlier, and reduced the cost of funding which helped improve the net interest margin for the quarter by 9 bps to 2.43% compared with 2.34% a year earlier.
Net impairment losses for the quarter dropped significantly by 38.2% to RM542.8 million, as the Group continued to realise the benefits from the proactive stance taken since early last year to restructure and reschedule (R&R) the credit facilities of customers impacted by the challenging economic environment.
As part of efforts to manage asset quality, Maybank has maintained this prudent stand of R&R from an early stage to ensure that customers are sufficiently supported to weather any continuing adverse changes in the market in 2017. Given this approach, the Group registered a slight uptick in its gross impaired loans ratio to 2.40% in the first quarter of 2017, from 2.28% in December 2016. Notwithstanding this, the Group maintained a healthy liquidity coverage ratio of 134%, well above the 80% minimum requirement set by Bank Negara Malaysia.
Maybank also remained as one of the region’s best capitalised banks with its CET1 ratio strengthening 28bps to 13.02% from 12.74% in March 2016, and total capital ratio of 18.50% from 17.63% (after proposed dividend and assuming an 85% dividend reinvestment rate).