Malaysia: Bank’s third quarter financial statements

KUALA LUMPUR: Malayan Banking Bhd (Maybank) reported a 28.5 percent increase in net profit to RM2.16 billion for the third quarter ended Sept 30, with a focus on driving loan growth in the bank’s key business units in the domestic market in a rising interest rate environment.

“The group will continue to drive fee-based revenue opportunities in the growth areas of wealth management, global markets, investment banking, asset management and insurance,” the bank said in a filing to Bursa Malaysia.
The bank added that the strategic investments will be used to enhance its digital offerings and IT capabilities in line with the priorities of Malayan Banking’s M25+ corporate strategy, with a particular emphasis on customer centricity.

In terms of sustainability, the group’s focus remains on driving greater financial inclusion, providing sustainable financing solutions and supporting a responsible transition to a low-carbon economy.

“In an uncertain economic environment, the group will maintain its liquidity and capital position to support business growth and stakeholder needs. It will also continue to proactively engage with targeted customers to provide additional support to those in need and as part of its strong asset quality management processes,” it said.

The bank maintained its key KPI of return on equity for FY22 in the range of 9.5% to 10%, taking into account the impact of the one-off prosperity tax announced by the Malaysian Federal Government.

In a separate statement, group president and chief executive officer Datuk Kairu Salinanli said the group would drive revenue growth in its loan portfolio and fee income streams, and maintain discipline in monitoring its asset quality.

The bank added that the strategic investments will be used to enhance its digital offerings and IT capabilities in line with the priorities of Malayan Banking’s M25+ corporate strategy, with a particular emphasis on customer centricity.

In terms of sustainability, the group’s focus remains on driving greater financial inclusion, providing sustainable financing solutions and supporting a responsible transition to a low-carbon economy.

“In an uncertain economic environment, the group will maintain its liquidity and capital position to support business growth and stakeholder needs. It will also continue to proactively engage with targeted customers to provide additional support to those in need and as part of its strong asset quality management processes,” it said.

The bank maintained its key KPI of return on equity for FY22 in the range of 9.5% to 10%, taking into account the impact of the one-off prosperity tax announced by the Malaysian Federal Government.

In a separate statement, group president and chief executive officer Datuk Kairu Salinanli said the group would drive revenue growth in its loan portfolio and fee income streams, and maintain discipline in monitoring its asset quality.

While ASEAN economies are expected to continue to grow next year, albeit at a slower pace, we will maintain a strong liquidity and capital position to manage potential downside risks that may arise in the operating environment.

“We will also accelerate improvements in our five strategic priorities under M25+, including customer centricity, digitalisation, regionalisation, sustainability and Islamic finance, so that the organisation remains a leader beyond 2025 and is able to deliver hyper-personalised customer service offerings, including the customer lifecycle journey,” he said.

Bank Negara Malaysia reported revenue of RM13.42 billion in the third quarter (3Q2022) from RM11.15 billion a year ago, while earnings per share increased to 18.22 sen from 14.41 sen previously.

The bank said higher net fund and fee income and a 25.2% year-on-year reduction in net impairment losses contributed to a 41.4% increase in its profit before tax to RM3.21 billion compared to the same period last year.

Net operating income increased by 20.6% YoY to RM7.41 billion in 3QFY22 mainly due to a 48.0% increase in fee-based net income to RM2.12 billion from RM1.43 billion in the same period last year and a 12.2% increase in fund-based net income to RM5.30 billion from RM4.72 billion.

Its overhead costs expanded to RM3.39 billion from RM2.82 billion a year ago due to normalization of business activities, inflation adjustment expenses and higher IT expenses.

The group’s cost-to-income ratio improved marginally to 45.8% from 45.9% a year ago as revenue growth outpaced cost growth in 3Q22.

Meanwhile, net impairment losses declined by 25.2% to RM840 million from RM1.13 billion a year ago due to increased active provisioning last year due to macroeconomic headwinds and borrower vulnerabilities resulting from long-term action restrictions.

For the nine months ended September 30, Bursa Malaysia’s net profit increased to RM6.07 billion from RM6.04 billion last year, while revenue rose 5.3% to RM36.5 million from RM34.7 billion in the same period last year.

As of September 30, its total group loans grew strongly by 8.2% year-on-year in both Global Banking (GB) and Community Financial Services (CFS), helped by growth of 13.1%, 7.9% and 4.0% in its home market of Indonesia, Malaysia and Singapore respectively.

Meanwhile, the group’s total deposits grew by 4.9%, driven by 8.7% growth in Malaysia and 5.0% growth in Indonesia.

Net interest margin (NIM) widened by 8 basis points from 2.31% to 2.39% for the nine-month period ended September 2022 due to higher interest rates during the year.

As of September 30, 2022, Bank Melayu maintained a solid capital and liquidity position with a CET1 capital ratio of 13.84% and a total capital ratio of 17.15%. The liquidity coverage ratio of 144.2% is well above the regulatory requirement of 100%.

The bank’s asset quality improved, with the gross impaired loans (GIL) ratio decreasing from 1.93% in September 2021 to 1.70% in September 2022.

The loan loss coverage ratio also remained healthy at 122.3% as the formation rate of newly impaired loans remained low.

Nevertheless, Bank Negara Malaysia continues to maintain the management coverage it has built up since the start of the pandemic in response to the expected weakness in borrower credit quality due to the new macroeconomic headwinds.

As of October 31, approximately 3.7% of outstanding loan balances remained under the relief program in Malaysia, compared to 3.3% and 9.2% in Singapore and Indonesia, respectively.

Bank Negara Malaysia said Group CFS continued to strengthen its franchise in the first nine months of 2022, with net operating income growing 15.5% year-on-year to RM12.04 billion.

Total loans in the consumer and SME segments grew by 7.8% to 8.1% and 10.1% respectively.

Wealth Management, a key focus area for the group, maintained its upward trend with total financial assets growing by 6.0% year-on-year to RM413.7 billion on the back of 4.2% growth in investments and 10.6% growth in loans.

In Malaysia, total loans grew by 8.1% as the commercial banking and SME segments grew by 8.2% while the consumer segment grew by 8.1%. Meanwhile, total CFS deposits

rose by 4.0%.

Group Global Banking reported a 9.9% increase in net operating income to RM8.10 billion in 9MFY22, with fee-based net income up 13.4% to RM3.28 billion and fund-based net income up 7.7% to RM4.82 billion.

For Corporate Banking in Malaysia, total loans grew by 7.1% year-on-year to RM84.5 billion due to growth in short-term revolving credit and term loans of 19.3% and 4.3% respectively.

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