Maybank’s net profit down 5.4% in Q2, as expected credit loss doubles in view of tough times ahead
Tan Ai Leng
ANTICIPATING a sluggish global environment ahead, Malayan Banking (Maybank) more than doubled its expected credit loss for loans and securities to RM1.16 billion (S$360 million) in the second quarter of this year, from RM567.2 million in the year-ago period.
At a results briefing on Thursday (Aug 25), Maybank Group president and chief executive officer Khairussaleh Ramli said that this was a one-off pre-emptive measure to mitigate any potential need arising from heightened geopolitical tensions.
The higher net impairment loss resulted in the banking group – the fourth largest in South-east Asia by assets – recording a lower net profit of RM1.86 billion for the second quarter ended June 30, down 5.4 per cent from RM1.96 billion in the year-ago quarter.
Revenue in the second quarter fell slightly to RM11.2 billion, from RM11.34 in the same quarter a year before.
But net operating income was higher at RM6.83 billion, up 10.7 per cent from RM6.17 billion in the year-ago period.
For the first 6 months of FY 2022, Maybank’s cumulative net profit was RM3.9 billion, down 10.4 per cent from RM4.35 billion in the year-ago period. Revenue fell 1.8 per cent to RM23.12 billion from RM23.55 billion before.
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But net operating income for H1 2022 rose 2.3 per cent to RM13.3 billion, from RM13 billion previously, as net fund based income expanded 6.1 per cent to RM10 billion on the back of loans growth and net interest margin expansion in a rising rate environment.
At the results briefing, Maybank chairman Zamzamzairani Mohd Isa said that while Malaysia’s economy is in recovery mode, the immediate outlook remains clouded by economic and geopolitical uncertainties.
“We will focus on remaining agile to tap into growth opportunities that emerge, while managing our risks carefully,” he said, adding that in the near term, Maybank will concentrate on strengthening the existing home market – Malaysia, Singapore and Indonesia – to offer more services to local growing businesses.
For the first half of 2022, Maybank Indonesia reported a 30 per cent increase in profit after tax and minority interests to 510 billion rupiah (S$48 million), mainly attributed to reduced loan provisions due to improved loan quality and strong loan demand.
In Singapore, the banking group’s profit before tax surged 184 per cent to S$331.9 million for the first 6 months, from S$116.9 million in the same period a year ago. Zamzamzairani attributed the strong growth to higher income and lower loan loss allowances.
“For the first 6 months of this year, Maybank’s gross loans expanded 6.2 per cent year-on-year with steady growth recorded across all markets. Indonesia’s operations saw loan expansion of 8.2 per cent, Singapore 8.1 per cent and Malaysia 5.6 per cent,” he added.
As for the outlook for the second half of this year, he noted that Maybank expects Malaysia’s central bank to hike interest rates by another 50 basis points, following the US Federal Reserve’s hawkish stance.
Khalijah Ismail, chief financial officer of Maybank Group, said that although rising interest rates might be causing a slowdown in loan growth, the impact will be minimal and the group expects to achieve loan growth of above 5 per cent this year.
Despite declining profit and revenue, Maybank announced the first interim dividend of 28 sen per share, making for a dividend payout ratio of 85.9 per cent.
The group registered further improvement in asset quality with its gross impaired loans ratio declining to 1.81 per cent in June, down from 2.18 per cent a year ago, said Khairussaleh.
“Loan loss coverage remained at a healthy level of 122.3 per cent as newly impaired loan formation remained low,” he added.
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