KUALA LUMPUR, Malaysia—Maybank, South East Asia’s fourth-largest bank by assets, said on Friday it continued to book strong growth in revenue, registered better net-interest margin, as well as slower overhead growth in the first quarter of 2016, although it had to contend with the impact from the economic volatility on some of its customer segments.
The Group saw a stronger capital position and improved liquidity, which helped support business growth across the region.
Net-operating income for the quarter rose 8.1 percent to RM5.39 billion year-on-year on the back of an 11.9-perent increase in fund- based income to RM3.82 billion, while fee income was almost unchanged at RM1.57 billion.
Disciplined cost-management efforts continued to bear fruit, as income growth of 8.1 percent outpaced overheads growth of 5.3 percent, resulting in the Group’s cost-to-income ratio improving further to 48.4 percent, from 49.7 percent a year earlier. The strong revenue growth and managed costs lifted the Group’s preprovisioning operating profit by 10.9 percent to RM2.77 billion, compared to a year earlier.
Profit before tax, however, stood at RM1.93 billion for the quarter compared with RM2.24 billion in the previous corresponding quarter, as the Group set aside more provisioning in respect of some corporate banking and business banking accounts in selected markets, which were affected by the weakening operating environment. Net profit for the period came in at RM1.43 billion, compared with RM1.7 billion in the previous corresponding quarter.
The increase in provisioning was primarily owing to the rise in number of corporate loans undergoing restructuring and rescheduling of their repayment to better match their projected cash flows arising from the subdued operating environment. Under the new regulatory regime pertaining to Classification and Impairment Provisions for Loans/Financing, which took effect from April 1, 2015, such action taken in regards to corporate loans would require them to be classified under the “Impaired” category, notwithstanding that they are still “Performing” in nature.
All key business sectors registered higher net-operating income in the quarter, led by Group Global Banking (+21.1 percent year-on-year), Group Community Financial Services (+12.4 percent) and Group Insurance and Takaful (+8.4 percent). Group loans grew at a reasonable pace, expanding 5.6 percent compared with a year earlier, led by International, which rose 8.9 percent; and Malaysian operations, which saw a 3.1-percent rise. This growth was, however, moderated owing to large repayments by some corporates during the quarter.
The Group saw its liquidity position strengthen in line with its funding-led growth strategy, with loan-to-deposit ratio improving to 89.9 percent compared with 93.5 percent in the quarter to March 2015. This was on the back of a 9.9-percent YoY expansion in deposits, with International registering a 17-percent YoY increase and Malaysia, 5.6 percent. The ratio of the Group’s CASA (current account and savings account) deposits to total deposits also remained at a relatively stable rate of 33.3 percent.