MALAYAN Banking Bhd (Maybank), Southeast Asia’s fourth largest bank by assets has proven its resilience by posting a commendable net profit of RM1.95 bil for its 3Q FY2020, although this came in slightly below the RM2 bil it achieved in the same period a year ago.
According to the bank, such outcome was due to a lower net operating income mainly caused by the continued impact from the COVID-19 pandemic although this was partly offset by reduced overhead expenses and a decline in impairments.
Net operating income for 3Q FY2020 declined by 6.5% to RM6.08 bil from RM6.50 bil previously. This was on the back of an 8.7% year-on-year (yoy) drop in total net fund based income to RM4.13 bil as a result of a 27 basis points yoy net interest margin compression due to the cuts in the overnight policy rate.
In addition, the banking group saw a 1.3% dip in total net fee-based income to RM1.95 bil, particularly from lower core fees following slower business activity due to the pandemic as well as lower investment gains.
As part of the strategy to mitigate the decline in income, Maybank said it continued to uphold disciplined control on expenses, resulting in an 8.7% reduction in overhead costs to RM2.70 bil in 3Q FY2020 (3Q FY2019: RM2.96 bil).
Additionally, net impairment losses for the quarter saw a 13.8% decline to RM805.9 mil as the group benefitted from its earlier prudent stance to accelerate its forward looking assumption provisioning.
On a quarterly basis, 3Q FY2020 saw net profit increase to RM1.95 bil from RM941.7 mil the previous quarter.
This came on the back of a 7.8% increase in total fee based income and a 7.5% rise in total fund-based income which collectively lifted net operating income by 7.6% as business activities resumed and mobility picked up following the easing of the movement control restrictions in the quarter.
However, for the 9M FY2020 period, Maybank posted a 14% drop in net profit to RM4.94 bil from RM5.75 bil in the same period last year. The group has declared a 13.5 sen dividend for the nine-month ended Sept 30, 2020 under its dividend reinvestment plan.
Group president & CEO Datuk Abdul Farid Alias said Maybank had endeavoured to mitigate the impact from the modification loss, interest rate cuts and higher provisioning through various initiatives.
These include ensuring growth in the community financial services segment, realising value from some investments, reducing funding costs and closely managing overheads while making sure the Group continued to invest in areas that are required.
“Our focus moving forward will be to leverage our risk management capabilities, diversified operations and digital strengths to drive our business in the coming year,” he noted in a media statement.
“At the same time, we remain committed to supporting our stakeholders through this period so that they can remain sustainable in the long run.”
At 12.30pm, Maybank was down four sen or 0.49% at RM8.15 with 1.47 million shares traded, thus valuing the bank at RM91.61 bil. – Nov 27, 2020
