Maybank paints softer outlook for FY15
KUALA LUMPUR: Malayan Banking Bhd (Maybank), which delivered on its main key performance indicators for the financial year ended Dec 31, 2014 (FY14) despite the challenging year, sees a softer outlook for FY15 with lower guidance on the group loan growth, return on equity and group deposits growth.
Maybank group president and CEO Datuk Abdul Farid Alias (pix) said it is expecting a slower group loan growth of 9% to 10% for FY15, from 13.4% achieved in FY14.
The outlook for FY15 include some pressure on corporates depending on how price weakness in commodities persists, continued deposit cost pressure resulting in net interest margin (NIM) compression and tighter consumer spending with the Goods and Services Tax implementation.
"From a loan growth's perspective, we were trailing the market in the first half of last year and we find it challenging to grow loans in Malaysia during the first half period, specifically on the global banking side. In the second half of the year, we expect this to turn around in as we saw similar trends in FY13," he told a press conference after announcing its Q4 financial results here yesterday.
For FY14, the group achieved loan growth of 13.4% ahead of its FY14 guidance of 13%, on the back of robust loan growth in international operations (20.6%) and Malaysian operations (9%). For Malaysia's loan growth, all business segments recorded year-on-year growth, with corporate loans picking up momentum in Q414.
Farid said the bank expects an 8bps to 10bps compression in NIM for FY15, as NIM stood at 2.31% in December 2014. It saw a lower NIM in FY14 with a 12bps compression due to higher cost of funding on home markets and a one-time reclassification on Bank Internasional Indonesia's (BII) marketing expense.
He added that the focus for 2015 will be on four key areas, namely strengthening revenue growth, focusing on group wide productivity, deploying capital efficient strategy and to continue its international market performance. Maybank is also intensifying efforts to solidify its position to tap extensive opportunities within the Asean Economic Community and to be deemed a qualified Asean bank.
"We want to enhance our Singapore business and BII and look at further expansion into the Philippines and Greater China," said Farid.
He added that given Malaysia's gross domestic product (GDP) growth projection of 5% and Asean being one of the strongest regions in terms of GDP growth, Maybank should be able to achieve a return on equity of 13% to 14% in FY15, from 13.8% in FY14. It also expects group deposits growth to register 9% to 10%, compared with 11.1% in FY14.
In Q4, Maybank's net profit came in 11.5% higher at RM1.93 billion compared with RM1.73 in the previous year boosted by increase in fee income as well as a rise in net fund based income. Revenue was also 17% higher at RM9.66 billion from RM8.27 billion a year ago.
For FY14, its net profit grew 2.5%, reaching a record RM6.72 billion, compared with RM6.55 billion in FY13, lifted by the strong 11.5% rise in net earnings for Q414. It saw revenue increase 7.4% to RM35.71 billion from RM33.25 billion in FY13.
It saw greater traction as a result of various regional initiatives that helped the bank overcome the impact of the slower capital market activities as well as margin compression.
The group saw overall income for FY14 growing steadily across most of its business lines with international operations recording the highest year-on-year income growth of 6.5%, helping boost its contribution to the group income to 36.1%. This is in line with its target to obtain 40% of its profit from international operations.
The board is proposing a single-tier final dividend of 33 sen per share, which together with the interim dividend of 24 sen per share earlier, would bring the total dividend payout for FY14 to 78.5% of net profit, above its policy rate of 40% to 60%.