Maybank posts higher Q1 profit but cautions virus impact later

Kuala Lumpur

MALAYAN Banking Bhd (Maybank) reported on Thursday higher profits for the first quarter but flagged that the performance did not reflect expectations for the rest of the year as the full impact of the Covid-19 pandemic was not yet known.

The largest lender in Malaysia by assets posted a 2.05 billion ringgit (S$668 million) profit in the January-March period, compared with 1.81 billion ringgit a year earlier and beating 1.68 billion ringgit forecast by analysts' in a Refinitiv poll.

However, group president and chief executive Abdul Farid Alias said in a statement that the performance was "not representative of the way we will perform for the rest of the year".

He said the gains from selling some liquid assets and fixed income instruments, which raised net fee based income, contributed largely to the better quarterly performance.

The bank said that added provisions were made for possible impairments to credit portfolios potentially vulnerable in the foreseeable future, to mitigate risks from expected supply and demand disruptions.

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Net impairment losses for the quarter came in 60.7 per cent higher as a result. Revenue rose 1.85 per cent to 13.22 billion ringgit. Group loans grew marginally by 0.3 per cent while deposits fell 2.5 per cent.

The bank said it managed to contain pressures on net interest margin - a key measure of bank profitability - which narrowed by 7 basis points to 2.23 per cent, but expects that to remained compressed in the low interest rate environment.

Earlier this month, Malaysia's central bank slashed its overnight policy rate to a historic low of 2.00 per cent and loosened liquidity rules to support the banking system. REUTERS