Kuala Lumpur: Malayan Banking Bhd (Maybank) has posted a lower pre-tax profit of RM1.93 billion for the first quarter ended March 31, 2016 compared with RM2.24 billion reported in the previous corresponding quarter.In a statement, the banking group said net profit for the period amounted to RM1.43 billion compared with RM1.70 billion in the same quarter in 2015.However, net operating income for the quarter rose 8.1 per cent to RM5.39 billion, year-on-year, on the back of an 11.9 per cent increase in fund-based income to RM3.82 billion while fee-income was almost unchanged at RM1.57 billion.
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At the same time, disciplined cost management efforts continued to bear fruit as income growth of 8.1 per cent outpaced overheads growth of 5.3 per cent, resulting in the group's cost-to-income ratio improving further to 48.4 per cent from 49.7 per cent a year earlier. The strong revenue growth and managed costs lifted the group's pre-provisioning operating profit (PPOP) by 10.9 per cent to RM2.77 billion compared to a year earlier.
The group said it continued to book strong growth in revenue, register better net interest margin, as well as, slower overhead growth in the first quarter of 2016.The performance was commendable despite having to contend with the impact of economic volatility on some of its customer segments, it said.
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In addition, the group saw a stronger capital position and improved liquidity which helped support business growth across the region, said Maybank, the fourth largest bank by assets in Southeast Asia.It explained that the lower pre-tax profit was due to the increase in provisioning in respect of some corporate banking and business banking accounts in selected markets which were affected by the weakening operating environment.
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Meanwhile, all key business sectors registered higher net operating income in the quarter, led by Group Global Banking (+21.1 per cent, year-on-year), Group Community Financial Services (+12.4 per cent) and Group Insurance & Takaful (+8.4 per cent).Group loans grew at a reasonable pace, expanding 5.6 per cent compared with a year earlier, led by international operations which rose 8.9 per cent and Malaysian operations which saw a 3.1 per cent rise."This growth was, however, moderated owing to large repayments by some corporates during the quarter," said Maybank.The group also saw its liquidity position strengthen in line with its funding-led growth strategy, with loans-to-deposit ratio improving to 89.9 per cent compared with 93.5 per cent in the quarter to March 2015.This was on the back of a 9.9 per cent year-on-year expansion in deposits, with international operations registering a 17 per cent, year-on-year, increase and Malaysia, 5.6 per cent.Maybank also said its asset quality remained stable for the group's consumer portfolio although business banking and corporate banking saw an uptick owing to identified accounts affected in certain overseas markets.The group's net impaired loans ratio, as at March 2016, was 1.64 per cent compared with 1.38 per cent in December 2015 while net impairment losses for the quarter totalled RM878.4 million from RM521.9 million in the preceding quarter.Meanwhile, Group President and Chief Executive Officer Datuk Abdul Farid Alias said the group had decided in 2015, and will continue in 2016, to focus more on strengthening its capital and liquidity.
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"The group will also be more vigilant in managing asset quality by identifying sectors and customers which may be vulnerable to market volatilities," he said.Efforts are also continuing to ensure that the group leverages on its competitive advantages such as its diversified footprint and income streams, sound capital and liquidity positions, as well as, its comprehensive range of services to ensure sustainable growth for the future, said Abdul Farid. – Bernama