Maybank's net profit up 29.9% to US$787m in 1H17

Thanks to a 43% earnings jump in Q2.

Maybank, South East Asia’s fourth largest bank by assets, said in a release that net profit for the half year ended 30 June 2017 rose 29.9% to RM3.36 billion (US$787m) from RM2.59 billion (US$606m) a year earlier, buoyed by a 43.0% year-on-year (Y-o-Y) jump in second quarter earnings. Profit before tax for the half year was 27.8% higher at RM4.49 billion from RM3.52 billion a year earlier.

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The significantly higher profits came on the back of a 5.8% rise in net operating income, improved net interest margin by 13 bps as well as a significant 33.1% decline in net impairment losses compared with a year earlier.

For the second quarter of financial year 2017 (Q2FY17) net profit came in at RM1.66 billion compared with RM1.16 billion in Q2FY16, while profit before tax rose 41.7% to RM2.24 billion from RM1.58 billion a year ago.

The Board of Directors has rewarded shareholders with a single-tier interim dividend of 23 sen per share, under the Group’s Dividend Reinvestment Plan. Consisting of a cash portion of 5 sen per share and an electable portion of 18 sen per share, the interim dividend amounts to a payout of RM2.4 billion, and represents 72.2% of net profit for the period.

For the half-year under review, net operating income reached RM11.36 billion compared with RM10.74 billion a year earlier underpinned by a robust 25.6% increase from Insurance & Takaful and 8.0% from Group Community Financial Services. Net fund based income rose 10.9% to RM8.26 billion from RM7.45 billion a year earlier, more than offsetting a marginal decline in net fee based income of RM3.10 billion from RM3.29 billion last year.

Notwithstanding the challenges in the operating environment, the Group recorded a 6.4% year-on- year (Y-o-Y) increase in loans led by Malaysia (6.4%), Singapore (4.9%) and Indonesia (3.2%). Gross deposits, meanwhile, rose 1.2%, on the back of a 3.8% rise in International Operations, in line with the Group’s strategy to focus strictly on lower cost CASA deposits while moving away from more costly portfolios. This, together with strict pricing discipline, enabled the Group to mitigate pressures on net interest margin which improved to 2.41% in June 2017 from 2.28% in June 2016, and from 2.27% in December 2016.\

The Group’s Loan-to-Deposit Ratio (LDR)as at June 2017 improved to 93.8% from 93.9% as at December 2016, in line with continuous efforts to maintain an efficient balance between assets and liabilities. Maybank Malaysia’s LDR stood at 90.9%, Maybank’s Singapore operations at 91.4%, while Maybank Indonesia’s LDR at the bank level stood at 86.7%.

Liquidity coverage ratio stood at a healthy 146%, well above the 80% minimum requirement set by Bank Negara Malaysia with loan loss coverage (including regulatory reserve) of 92.6%. Maybank remains one of the strongest capitalised banks in the region with a total capital ratio of 18.98% and CET1 ratio of 13.56% (after the proposed dividend and assuming an 85% dividend reinvestment rate).

For the half-year, net impairment losses declined substantially to RM1.38 billion from RM2.06 billion a year earlier, as the Group continued with the proactive stance taken since early 2016 to restructure and reschedule (R&R) the credit facilities particularly from the market segments which were affected due to the challenging economic environment.

Notwithstanding this, the Group continued to maintain vigilance over possible deterioration in specific accounts during the period under review, and where necessary, undertook proactive restructuring and rescheduling (R&R) of their repayments to better match their projected cash flows. The Group’s net impaired loans ratio as at June 2017 stood at 1.73% compared with 1.72% a year earlier while the gross impaired loans ratio was 2.53% from 2.34%.