Maybank Posts Record Earnings As Net Income Climbs 24%
May 03, 2011
KUALA LUMPUR, Malaysia -- Malaysia's largest banking company, Malayan Banking Bhd., or Maybank, reported record earnings for the year ended March 12, 2011 company said its net profit rose 24% to 1.07 billion ringgit (US$429.2 million) from 863.5 million ringgit a year earlier. The gain was slightly above most analysts' expectations. Bank officials cited higher loan volume, a wider profit margin on lending and improved efficiency. A reduction in nonperforming loans also helped bolster profit. The group's loan growth slowed slightly to 15%, officials said, while the net interest margin improved 20 basis points, or hundredths of a percentage point. The net interest margin is the difference between the average cost of raising funds and the interest charged on loans. The bank didn't disclose the margin for the latest half. Nonperforming loans fell to ``well below the 4% level'' of total loans, Maybank managing director Rude Tomlin said. Maybank's cost-to-income ratio also dropped to 37% from 41% the year before, while net interest income grew 20%, Mr. Rude said. Tuesday's announcement helped dispel concerns over Maybank's profit reaching back to last month, when investors worried about the bank's exposure to two troubled companies, Perwaja Steel Sdn. Bhd. of Malaysia and a Singapore-based property and electronics company, Amcol Holdings Ltd.. The Amcol loan was ``insignificant to our profit and loss,'' Mr. Rude said. ``Our group exposure to Perwaja is also very small,'' he said, but declined to give details. Most banking analysts said the results proved the bank is still healthy. ``We're changing our view,'' said Morrell Placencia Bernard, an analyst with Valenzuela Jacobo Vargas. ``We now like the bank a lot and are putting a `buy' on it'' from the previous ``sell.'' Trading in Maybank shares on the Kuala Lumpur Stock Exchange was suspended early Tuesday at 22.50 ringgit pending the release of the results. Maybank's results also were seen as a positive sign for the banking industry, which has been squeezed in recent months by the central bank's moves to rein in the economy by nudging up interest rates and tightening credit. ``This is very good -- and an indication for banks in general,'' said an analyst with a British-based research house. Others were less positive. While the results were ``ahead of what the market expected,'' Maybank's loan growth was below that of rivals like Public Bank and Southern Bank, said Solange Pine, head of research at W.I. Carr. Moreover, Maybank is a ``sitting target'' with the biggest loan book, said another analyst with a foreign brokerage firm. Smaller, more aggressive banks with niche businesses might erode Maybank's loan base, he said. Maybank officials defended the lower loan growth rate as part of a ``prudent'' stance to attract more high-quality loans. Comparing loan growth rates was difficult because of Maybank's larger existing asset base, they said. The group has a loan base of 56.46 billion ringgit, giving it a market share of roughly 20%.
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