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Singapore Investment


 MAYBANK 1155 MALAYAN BANKING BERHAD 2Q net profit down 5.4% despite higher net interest income, declares 28 sen dividend

KUALA LUMPUR (Aug 25): Malayan Banking Bhd's (Maybank) net profit dropped by 5.36% to RM1.86 billion for the second quarter ended June 30, 2022 (2QFY22), from RM1.96 billion a year ago hit by higher impairments and unrealised mark-to-market losses.

The bank declared a first interim dividend of 28 sen per share, to be paid no later than in three months. It is to be accompanied by an applicable dividend reinvestment plan — whereby seven sen can be elected to be reinvested in new shares.

The banking giant's net interest income grew 16.5% to RM3.52 billion in 2QFY22 from RM3.01 billion a year ago. This helped lift its net operating income to RM6.83 billion from RM6.17 billion.

Notably, Maybank's other operating income shrank substantially to RM366.9 million in the quarter under review from RM1.15 billion a year ago as a result of unrealised mark-to-market loss of RM781 million. It was a mark-to-market gain of RM990.9 million a year ago.

Meanwhile, its allowances for impairment losses on loans swell by RM312.8 million or 59.6% to RM837.5 million from RM524.7 million a year ago. On top of that, the allowances for impairment losses on financial investments surged to RM320.8 million in the quarter under review compared with RM43.99 million previously.

However, a sharp drop in net insurance benefits and claims incurred being halved to RM1.09 billion in 2QFY22 from RM2.12 billion cushioned the impact of lower operating income and the increase in impairment. .

Earnings per share fell to 15.52 sen from 17.05 sen, its Bursa Malaysia filing showed.

Maybank said that its overhead expenses for the quarter under review increased by RM135.3 million — or 4.6% year-on-year — to RM3.06 billion, mainly due to higher personnel expenses, establishment costs as well as administrative and general expenses.

For the cumulative six months ended June 30, 2022, Maybank's net profit fell 10.39% to RM3.9 billion from RM4.35 billion.

Nonetheless, its net interest income grew 15.5% to RM6.84 billion against RM5.92 billion in the previous corresponding period, while total operating income fell slightly to RM16.2 billion from RM16.6 billion.

Commenting on its outlook, Maybank noted that capital and liquidity conservation remains key priorities given external headwinds and market volatility.

The banking group said it will focus on proactively engaging with customers on a targeted basis to extend additional support for those in need and as part of its robust asset quality management.

"The group is maintaining its headline KPI (key performance indicator) of return of equity of between 9.5% and 10% for FY22, factoring the impact from the one-off prosperity tax announced by the federal government of Malaysia," Maybank commented.

The group stressed that it will selectively grow its loan book across its key markets while defending its low-cost deposit base against the backdrop of rising interest rates. "It will continue to look for fee-based income opportunities within the wealth management, global markets, investment banking, asset management and insurance segments."

Touching on sustainability initiatives, the bank said it will focus its efforts on driving greater financial inclusion, offering more sustainable financing and solutions to support the move towards a responsible transition to a low carbon economy.

At noon break on Thursday (Aug 25), shares in Maybank were up three sen to RM8.84, giving the bank a market capitalisation of RM105.81 billion.


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