KUALA LUMPUR: Malayan Banking Bhd appears to have recovered from a difficult 2016, posting a 30 per cent increase in net profit in the first half of this year.
Maybank noted its net profit rose to RM3.36 billion in the six months ended June 30 2017, from RM2.59 billion in the same period a year ago.
This is on the back of 5.8 per cent rise in net operating income, improved net interest margin and significant decline in net impairment losses.
Last year, Maybank’s net profit dropped to RM6.74 billion from RM6.83 billion as it set aside an unusually large amount of funds to cover losses from loans to the oil and gas sector.
This year, as the bank’s business and regional segments have shown signs of improvement, an analyst expects Maybank’s strong performance to continue in the remaining months.
For the second quarter ended June 2017, net profit came in at RM166 billion, 43 per cent higher than RM1.16 billion in the same period a year ago.
Maybank’s net operating income reached RM11.36 billion compared with RM10.74 billion a year ago, underpinned by 25.6 per cent increase from insurance and takaful as well as eight per cent increase from Group Community Financial Services.
The gross loan growth of 6.4 per cent year-on-year is mainly supported by the mortgage segment.
Maybank group president and chief executive officer Datuk Abdul Farid Alias said the focus for the rest of the year will be to ensure responsible growth in its key markets and core businesses.
“We will also continue to be watchful over asset quality pressures that may persist as well as the risk heightened credit costs in some industries,” he said.
MIDF Research banking analyst believes the good performance can be carried to the second half of the year.
“Our only concern was the elevated level of impairments especially as the it continued to be affected by weakness in the oil and gas sector. However, we understand that loan exposure to this sector had came off which elevated our concerns somewhat,” the analyst the told NST Business via a telephone interview today.
Bloomberg Intelligence said Maybank’s oil and gas exposure may keep asset quality stressed in the near term and provisions elevated. “While credit costs may be lower than last year, the bank’s target of 50 basis points for 2017 may be a challenging task,” it said.
Farid, however, said the bank is optimistic that this year’s credit charge off is expected to be better than last year.
Meanwhile, Maybank is still considering Permodalan Nasional Bhd's (PNB) idea to convert a portion of the bank’s shares into Islamic shares (i-shares).
PNB has a 48 stake in Maybank. Earlier this month, PNB group chairman Tan Sri Abdul Wahid Omar proposed that 20 per cent of Maybank’s shares be designated as i-shares. "It is an interesting idea but we are still in the discussion over this matter,” Farid said.
He, however, stressed that Maybank will not compromise on certain things. This includes setting up a new subsidiary and having different class of shareholders with different rights.
Asked if there is a potential spin-off of its unit Maybank Islamic Bhd for the idea to materialise, Farid said: “No”.
If the i-shares plan materialised, it will create RM20 billion worth of new shariah-compliant instruments, three times bigger than the market capitalisation of BIMB Holdings Bhd.