The Maybank Group today announced a pre-tax profit of RM3.07 billion for the nine months ended 31 March 2008, an increase of 1.2% compared with the RM3.03 billion recorded in the previous corresponding period.
Group profit after tax for the nine months period was 4.7% higher at RM2.23 billion compared with RM2.12 billion previously.
Q3 2008 vs Q3 2007
For the quarter ended March 2008, Group profit before tax was RM1.02 billion, 0.8% lower than the RM1.03 billion recorded in the quarter ended March 2007. Profit after tax was similarly lower by 0.8% at RM758.6 million compared with RM764.6 million previously.
Overview of result
Maybank Chairman Tan Sri Mohamed Basir Ahmad said the Group continued to record growth in revenue from its consumer banking, insurance and international operations as well as significantly lower loan loss and provisions during the period.
However, he said the results were impacted by the challenging market conditions arising from the slowdown in the US economy and consequent credit crunch as well the volatile equity and bond markets. This caused an increase in unrealized losses from marked-to-market derivatives and securities held for trading as well as fewer opportunities in the capital markets.
He added that Group revenue after interest expense for the nine months grew 2.4% to RM6.65 billion from RM6.49 billion previously, led by consumer banking (up 13.1% to RM2.96 billion), insurance (up 3.1% to RM532.6 million) and international operations (up 12.6% to RM1.08 billion).
However, the higher revenue was moderated by the RM353.4 million in unrealized losses from derivatives recorded during the period compared with only RM90.4 million previously. If these figures were excluded, adjusted revenue would have grown 6.4% to RM7 billion against RM6.58 billion previously while Group profit before tax would have registered a 9.5% rise to RM3.42 billion compared with RM3.12 billion previously.
Commenting on the Group’s international operations, Maybank President and Chief Executive Officer Dato’ Sri Abdul Wahid Omar said that its higher revenue translated into a 32.6% rise in profit before tax which reached RM656.7 million against RM495.1 million previously.
“The contribution from our international operations in terms of profit before tax to the Group continues to grow, reaching 18.7% in March 2008 compared with 15.6% in March 2007. This is a result of our strategy to steadily expand this area of business and tap on the significant growth potential in the region,” he said.
He added that the proposed acquisitions of equity in banks in Vietnam, Indonesia and Pakistan which were announced recently, would further accelerate the Group’s expansion regionally, and generate even greater value in line with the target of having international operations contribute 20% of Group profit by the financial year 2009/2010.
The results of the investment banking group was 36% lower in profit tax which totalled RM120.8 million due to more challenging market conditions which resulted in fewer investment banking opportunities. In addition, the previous corresponding period had included the sum of RM52.5 million which was received for the surrender of the licence of Mayban Discount.
The insurance & takaful group recorded a 6.5% increase in profit before tax totalling RM241.2 million compared with RM226.5 million previously.
For the nine months period ended March 2008, the Group saw gross loans growing stronger at an annualised rate of 9.7%. The Malaysian operations saw overall loans expand 6.1% on an annualized basis. Overall consumer loans grew by 7.8% led by a strong increase in automobile financing (+15.3%), credit card receivables (+20.5%) and securities (11.5%). Loans to the business sector increased by 4.6% on an annualized basis with SME lending registering growth of 13%. Loans growth in Maybank’s Singapore operations grew at an annualised rate of 19.2% (in Singapore Dollar terms) whilst other overseas locations collectively recorded a 11% rise, with higher growth coming from Hong Kong/China and the United Kingdom which saw a major portion of the loans growth emanating from the Middle East.
Group net interest income for the nine month increased on the back of the larger gross loan base, rising 6.3% to RM4.08 billion compared with RM3.83 billion previously. This was despite a 10 basis points tightening in net interest margin to 2.70% from 2.80% for the nine months period. For the March quarter, the net interest margin was at 2.72%.
Non-interest income for the period declined 5.7% to RM1.88 billion owing mainly to the unrealised losses from the marking to market of derivatives and provisions for diminution in value of securities. Transactional non-interest income, however, grew 16.0% to RM1.99 billion due to the Group’s strong customer franchise.
The Group’s Islamic Banking operations registered a 4.5% rise in gross income for the nine months period to RM691.5 million from RM662 million previously. For the quarter to March 2008, gross income increased by 41.6% to RM267.8 million attributable mainly to higher business volumes.
The Group continues to have strong market share in most Islamic banking segments such as overall financing (23.9%), trade financing (40.9%) overdraft (53.1%), automobile financing (23%), home financing (31.4%) and deposits (15.6%).
Group asset quality continued to improve steadily with loan loss and provisions for the nine months period declining by 30.2% to RM451.9 million compared with RM647.7 million previously. In addition, newly classified non-performing loans (NPLs) as at 31 March 2008 fell by 7.3% compared with the previous corresponding period.
Consequently, the net NPL ratio of the Group as at 31 March 2008 fell to 2.43% compared with 3.03% in June 2007. Loan loss coverage rose further to 87.2% in March 2008 against 80.3% in June 2007. The risk weighted capital ratio of the Bank as at March 2008 stood at 12.68%.
Total assets of the Group grew in the nine months period to RM258.9 billion compared with RM256.7 billion last year while total deposits from customers expanded 17.52% to reach RM185.2 billion.
The prospects of a slowing US economy that threatens to slide into recession presents a downside risk to Malaysia’s external sector especially in curbing manufacturing exports growth. Nevertheless, domestic and business spending is expected to remain resilient, upheld by sturdy consumer spending, despite some risk of inflationary pressures.
However, overall, the slightly restrained economic performance would still provide sustained growth in interest income and recurring non-interest income. The Group remains confident in sustaining its financial results for the current financial year.