Kuala Lumpur - Maybank, South East Asia’s fourth largest bank by assets,today announced that the Group achieved a net profit of RM2.39 billion for the first quarter ended 31 March 2021 (1QFY21) compared with RM2.05 billion last year, as loans picked up pace on the improving economic outlook,while overhead expenses and impairments declined. Profit before tax (PBT) for the quarter stood at RM3.17 billion compared with RM2.80 billion in 1QFY20.
The results translate into a return on equity of 11.7% compared with 10.6% a year ago, while earnings per share rose 15.0% to 21.0 sen from 18.2 sen previously.
The Group’s net operating income came in at RM6.83 billion, which was slightly higher than a year earlier, lifted by a 7.0% rise in net fund based income to RM4.65 billion. This was on the back of a 3.1% rise in loans, although it was partly offset by a dip in net fee based income to RM2.18 billion from RM2.38 billion a year earlier.
Sustained efforts in cost management resulted in overhead expenses declining 4.1% to RM2.82 billion in 1QFY21 from RM2.94 billion previously. This helped improve the Group’s cost-to-income ratio further to 41.3% from 43.7% a year earlier, as income growth of 1.5% outpaced the decline of 4.1% in overhead costs during the quarter.
Consequently, the Group’s pre-provisioning operating profit (PPOP) came in at RM4.00 billion from RM3.78 billion in 1QFY20. Net impairment losses, meanwhile, stood at RM868.5 million compared with RM1.02 billion previously. Notwithstanding this, the Group continues to adopt a conservative stance, making top-ups for existing impaired accounts on account of devaluation of collaterals, as well as additional management overlay for the retail portfolio, where necessary.
Spurred by the improving economic outlook, loan demand picked up pace in 1QFY21 with Group gross loans coming in 3.1% higher compared with 0.3% a year ago. This was led by the Malaysian operations which saw a steady 4.9% increase in loans during the first quarter, underpinned by a healthy 7.4% rise in Community Financial Services (CFS) on the back of strong demand in the Consumer as well as Business Banking and SME segments. The Group’s Singapore operations also posted an increase, with loans growing 2.1%, supported mainly by its CFS business. Maybank’s Indonesia operations, however, registered a decline of 18.3% primarily as a result of write-offs and repayments as it continued to manage its exposure as part of a non-going strategy to rebalance its portfolios to mitigate risks.
In line with the Group’s strategy to maintain a robust liquidity base and expand its low-cost funding structure, gross deposits expanded 10.3% Y-o-Y, on the back of a 10.0% increase in Malaysia and 9.6% in Singapore. Consequently, the Group’s current account and savings accounts (CASA) ratio to total deposits expanded further to 44.5% as at March 2021 from 38.4% a year earlier. Coupled with the rate cuts seen throughout FY2020, the healthy growth in deposits and CASA ratio helped lift the Group’s net interest margin (NIM) by 8bps to 2.31% from 2.23% a year earlier.
Comments from Maybank Chairman and Group President & CEO
Maybank Chairman, Tan Sri Dato’ Sri Zamzamzairani Mohd Isa said that the encouraging first quarter performance continues to validate the Group’s strong operational resilience and affirmed the proactive strategies Maybank has adopted over the last year, despite the uncertain economic climate caused by the pandemic.
“While we see there-emergence of more COVID-19 infections in a number of markets, we remain hopefulof a gradual economic recovery for the region, as governments work to address this setback and ramp up the roll-out of their vaccination programmes. Maybank is well positioned to support the expected improvement in economic activity and we will continue to strengthen our business, stand by our stakeholders and support our customers so that we can collectively emerge stronger."
Meanwhile, Group President & CEO Datuk Abdul Farid Alias said there remains a general sense of caution given that the pandemic is not fully contained. Therefore, Maybank will remain agile and alert to tap into emerging opportunities, while always maintaining a disciplined approach in managing its business.
“One of the risks financial institutions are facing is that credit implications arising from the movement restrictions due to COVID-19 are still camouflaged owing to the flexibilities under the Repayment Assistance (RA) and Targeted RA programs. Banks need to continue monitoring the situation closely, and provide loan loss provisions that are sufficient to address any unexpected outcome. In view of this, we must continue to remain vigilant in order to protect the banking system,” he said. “Meanwhile, we will continue to be guided by our M25 Plan, and seek to drive our digitalisation strategy further as it will be key in helping us achieve better efficiencies and offer new frontiers in customer experience.”
Liquidity & Capital strength
The Group continued to maintain robust liquidity and capital positions, built over the years as part of its proactive and prudent approach to mitigate any potential volatility in the business environment. Its fully loaded CET1 ratio strengthened to 14.18% while total capital ratio stood at a comfortable 17.51% (assuming 85% reinvestment rate), maintaining its position as one of the best capitalised banks in the region. Maybank’s liquidity coverage ratio, meanwhile, was at a healthy 138.5% - above the regulatory requirement of 100%.
Asset quality during the quarter under review remained healthy with the Group’s Gross Impaired Loans ratio improving to 2.20% from 2.71% in March 2020 while net credit charge off also saw an improvement at 65 bps compared with 73 bps last year. The Group remains vigilant in monitoring its credit portfolios to detect any signs of weakness from an early stage so that proactive engagement can be taken together with affected clients to assist them in managing their financial commitments effectively.
Meanwhile, loan loss coverage for the year saw a significant improvement, reaching 112.6% in March 2021 from 81.5% a year earlier as a result of the higher provisioning undertaken during the year.
Continuing support for customers impacted by the movement restrictions and pandemic
In line with the Group’s purpose of humanising financial services, Maybank continued to offer various RA packagestocustomers still impacted by the COVID-19 pandemic movement restrictions,following the end of the loan moratorium schemes last year. As at 10 May 2021, some 16.9% of the outstanding loan balance in Malaysia remains underrelief, while the proportion in Indonesia and Singapore stood at 20.3% and 5.7% respectively.
Issued by Maybank Group Corporate Affairs
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Wan Nazdy +6012 3517561 | Irwan +6019 2787719 | Rishvan +6012 2360024| Prakash +6019-2787625