PETALING JAYA: The country’s largest bank by assets, Malayan Banking Bhd (Maybank), posted net profit of RM1.29 billion for 1QFY12 ended Sept 30, 2011, an increase of 25% or RM258.3 million from RM1.03 billion a year ago. The results announced yesterday were within analysts’ expectations.
The higher net earnings were due to the 21.4% rise in revenue to RM6.07 billion for 1Q compared with the previous corresponding period’s revenue of RM5 billion, largely due to the better performance by its domestic business divisions as well as operations in Indonesia through PT Bank Internasional Indonesia (BII) and Singapore through its investment banking arm, Kim Eng Holdings Ltd, whose acquisition was completed in May 2011.
In terms of profitability, its Indonesian operations via BII saw its profit before tax (PBT) surge 250.8% from a year ago to RM74 million.
The Malaysian banking operations recorded PBT of RM1.43 billion, a 42.4% increase from just a little over RM1 billion in the previous corresponding period, while its Singapore banking operation posted a growth of 56.4% year-on-year (y-o-y) to RM283 million.
The group’s net interest income for 1Q improved by RM99.1 million or 5.6% to RM1.87 billion from RM1.77 billion a year ago. According to the announcement, this increase is largely due to the growth in the group’s loans and advances (excluding Islamic finance), at 17.8% on an annualised basis.
Income from its Islamic banking operations rose 52.7% to RM516.3 million y-o-y mainly due to the growth in financing and advances of RM2 billion during the period, which was at the rate of 18.4% y-o-y,and the adoption of Bank Negara Malaysia’s Revised Guidelines of Profit Equalisation Reserve.
The group recorded a 28.1% rise in its non-interest income to RM1.22 billion for 1QFY12.
Commission, service charges and fees grew by RM117 million or 29.9% due to better contribution from trade finance, cards and remittance businesses. Brokerage income increased by RM132.8 million, of which RM125.3million was contributed by Kim Eng.
The Islamic operations of Maybank Investment Bank Bhd posted an increase in its fee base income of RM38 million due to sizable sukuk capital market transaction, the group said. It also benefited from higher net gain on sale of securities, contributing an additional income of RM96.9 million.
On a quarter-on-quarter (q-o-q) basis, Maybank’s 1QFY12 net interest income increased by RM46.8 million or 2.6% to RM1.87 billion against the preceding quarter, due to growth in loan-base assets. Income from its Islamic banking operations expanded RM73.3 million or 16.5% to RM516.3 million compared to the preceding quarter, mainly due to higher fee base income from its Islamic investment banking operations.
Non-interest income for 1Q grew by RM26 million or 2.2% q-o-q to RM1.22 billion, mainly due to higher gain on sale of securities and foreign exchange profit and brokerage income, but mitigated by the unrealised loss on revaluation of securities held for trading and derivatives, the group stated.
Net income for its insurance business however, plunged by RM248.9 million or 72% q-o-q to RM96.5 million due to the higher transfer of actuarial surplus from insurance and takaful revenue account during the preceding quarter, Maybank said.
During 1Q, Maybank’s overhead expenses shot up by RM385.8 million or 25.7% y-o-y to RM1.89 billion as a result of the consolidation of Kim Eng’s overhead expenses which amounted to RM199.3 million. Personnel costs during the period rose by RM192.7 million or 23.1% over the year to RM1.03 billion, due to employee’s share scheme expenses, higher sales incentives and incorporation of Kim Eng’s personnel costs.
“Administration and general expenses increased by RM117.8 million or 36.5% to RM440.6 million y-o-y mainly due to higher information technology consultancy fees, higher brokerage expenses and consolidation of Kim Eng’s cost of development property. Establishment cost increased by RM65.6 million or 25.3% to RM325 million. Marketing costs increased by RM9.9 million or 11.34% to RM97.2 million,” the group said.
Allowance for losses on loans, advances and financing decreased significantly by RM166 million or 62.7% to RM98.7million. The decrease is mainly due to higher recoveries and lower allowances in the Malaysian banking operations as a result of lower individual allowance.
Asset quality continued to improve with net impaired loans ratio improving to 2.18% as at Sept 30 compared with 2.25% as at June 30, it said.
On its prospects, Maybank said the global economic outlook remains challenging, with the continuing concerns over the eurozone sovereign debt crisis and the stalling economic recovery in the United States. However, despite the risks of weakening external demand, domestic demand in Asean countries is expected to be resilient and continue to support credit growth.
“Loans growth in Malaysia is expected to be mainly driven by the rollout of Economic Transformation Programme projects and domestic consumption. Credit demand in Singapore is anticipated to moderate with growth remaining broad-based. In Indonesia, the strong loans growth is expected to be sustained by robust domestic demand,” it stated.
It said the group will continue to leverage on its resources and boost its regional organisational structures to drive value creation across business segments within the group. It will also continue to adhere to sound capital management practices through risk based asset underwriting, balanced funding mechanisms and capital conservation via the dividend reinvestment plan.
“Barring any unforeseen circumstances, the group expects to record better performance for the financial period ending Dec 31 compared with the same period a year ago, with current first quarter annualised return on equity (normalised for expected actuarial surplus) of 15.8% (KPI target Dec 31:16%) and annualised growth in financial assets of 20.5% (KPI target Dec 31: 12%),” the group said.
This article appeared in The Edge Financial Daily, November 15, 2011.
The higher net earnings were due to the 21.4% rise in revenue to RM6.07 billion for 1Q compared with the previous corresponding period’s revenue of RM5 billion, largely due to the better performance by its domestic business divisions as well as operations in Indonesia through PT Bank Internasional Indonesia (BII) and Singapore through its investment banking arm, Kim Eng Holdings Ltd, whose acquisition was completed in May 2011.
In terms of profitability, its Indonesian operations via BII saw its profit before tax (PBT) surge 250.8% from a year ago to RM74 million.
The Malaysian banking operations recorded PBT of RM1.43 billion, a 42.4% increase from just a little over RM1 billion in the previous corresponding period, while its Singapore banking operation posted a growth of 56.4% year-on-year (y-o-y) to RM283 million.
The group’s net interest income for 1Q improved by RM99.1 million or 5.6% to RM1.87 billion from RM1.77 billion a year ago. According to the announcement, this increase is largely due to the growth in the group’s loans and advances (excluding Islamic finance), at 17.8% on an annualised basis.
Income from its Islamic banking operations rose 52.7% to RM516.3 million y-o-y mainly due to the growth in financing and advances of RM2 billion during the period, which was at the rate of 18.4% y-o-y,and the adoption of Bank Negara Malaysia’s Revised Guidelines of Profit Equalisation Reserve.
The group recorded a 28.1% rise in its non-interest income to RM1.22 billion for 1QFY12.
Commission, service charges and fees grew by RM117 million or 29.9% due to better contribution from trade finance, cards and remittance businesses. Brokerage income increased by RM132.8 million, of which RM125.3million was contributed by Kim Eng.
The Islamic operations of Maybank Investment Bank Bhd posted an increase in its fee base income of RM38 million due to sizable sukuk capital market transaction, the group said. It also benefited from higher net gain on sale of securities, contributing an additional income of RM96.9 million.
On a quarter-on-quarter (q-o-q) basis, Maybank’s 1QFY12 net interest income increased by RM46.8 million or 2.6% to RM1.87 billion against the preceding quarter, due to growth in loan-base assets. Income from its Islamic banking operations expanded RM73.3 million or 16.5% to RM516.3 million compared to the preceding quarter, mainly due to higher fee base income from its Islamic investment banking operations.
Non-interest income for 1Q grew by RM26 million or 2.2% q-o-q to RM1.22 billion, mainly due to higher gain on sale of securities and foreign exchange profit and brokerage income, but mitigated by the unrealised loss on revaluation of securities held for trading and derivatives, the group stated.
Net income for its insurance business however, plunged by RM248.9 million or 72% q-o-q to RM96.5 million due to the higher transfer of actuarial surplus from insurance and takaful revenue account during the preceding quarter, Maybank said.
During 1Q, Maybank’s overhead expenses shot up by RM385.8 million or 25.7% y-o-y to RM1.89 billion as a result of the consolidation of Kim Eng’s overhead expenses which amounted to RM199.3 million. Personnel costs during the period rose by RM192.7 million or 23.1% over the year to RM1.03 billion, due to employee’s share scheme expenses, higher sales incentives and incorporation of Kim Eng’s personnel costs.
“Administration and general expenses increased by RM117.8 million or 36.5% to RM440.6 million y-o-y mainly due to higher information technology consultancy fees, higher brokerage expenses and consolidation of Kim Eng’s cost of development property. Establishment cost increased by RM65.6 million or 25.3% to RM325 million. Marketing costs increased by RM9.9 million or 11.34% to RM97.2 million,” the group said.
Allowance for losses on loans, advances and financing decreased significantly by RM166 million or 62.7% to RM98.7million. The decrease is mainly due to higher recoveries and lower allowances in the Malaysian banking operations as a result of lower individual allowance.
Asset quality continued to improve with net impaired loans ratio improving to 2.18% as at Sept 30 compared with 2.25% as at June 30, it said.
On its prospects, Maybank said the global economic outlook remains challenging, with the continuing concerns over the eurozone sovereign debt crisis and the stalling economic recovery in the United States. However, despite the risks of weakening external demand, domestic demand in Asean countries is expected to be resilient and continue to support credit growth.
“Loans growth in Malaysia is expected to be mainly driven by the rollout of Economic Transformation Programme projects and domestic consumption. Credit demand in Singapore is anticipated to moderate with growth remaining broad-based. In Indonesia, the strong loans growth is expected to be sustained by robust domestic demand,” it stated.
It said the group will continue to leverage on its resources and boost its regional organisational structures to drive value creation across business segments within the group. It will also continue to adhere to sound capital management practices through risk based asset underwriting, balanced funding mechanisms and capital conservation via the dividend reinvestment plan.
“Barring any unforeseen circumstances, the group expects to record better performance for the financial period ending Dec 31 compared with the same period a year ago, with current first quarter annualised return on equity (normalised for expected actuarial surplus) of 15.8% (KPI target Dec 31:16%) and annualised growth in financial assets of 20.5% (KPI target Dec 31: 12%),” the group said.
This article appeared in The Edge Financial Daily, November 15, 2011.
