Maybank sets 8%-9% loan growth target for 2016

KUALA LUMPUR: Malayan Banking Bhd (Maybank), which saw a 14.45% drop in net earnings for the fourth quarter (Q4) of 2015, expects moderate loan growth of 8%-9% for 2016 despite having registered 12% increase for 2015.
"We want to make sure deposit growth is faster than loan growth to have a more responsible loan-to-deposit ratio (LDR)," group president and CEO Datuk Abdul Farid Alias told a press conference yesterday in conjunction with the release of the financial results. Its LDR improved from 95% in Q3 to 91.5% in Q4.
Farid noted that as the entire economy is adjusting to volatility, private investment is projected to slow down as companies will cut investments as a result of the lower earnings cycle.
Deposit growth is estimated to be in the region of 10% to 11%, while return on equity will be at 11% to 12% for 2016.
Maybank's net profit for the fourth quarter ended Dec 31, 2015 fell 14.45% to RM1.65 billion compared with RM1.93 billion in the previous corresponding period, due to higher allowances for impaired loans and lower recoveries.
Revenue, however, was up 14.39% to RM11.05 billion from RM9.66 billion.
Maybank has proposed a final dividend of 30 sen per share, bringing total full-year payout to 54 sen, which is equivalent to a dividend payout ratio of 76.3%.
Full-year net profit rose marginally by 1.78% from RM6.72 billion to RM6.84 billion, underpinned by strong net operating income growth of 14.6% to RM21.24 billion. This was on the back of a 13.57% increase in revenue from RM35.71 billion to RM40.56 billion.
While Maybank's gross loans expanded 12% to RM459.8 billion in 2015, the net impaired loans ratio inched up to 1.38% in Q4 from 1.14% in Q3, due to higher impaired loans.
Commenting on this, Farid said the group will continue to undertake close monitoring of credit portfolios to ensure sound asset quality.
Maybank's net interest margin was unchanged at 2.31% compared with that a year ago, while its capital position remains strong with a total capital ratio of 17.49%.
Meanwhile, group chairman Tan Sri Megat Zaharuddin Megat Mohd Nor highlighted that Maybank's exposure to the oil and gas industry has been well managed amid concerns over a continued slump in global oil prices.
"When you have a situation in the industry like this, obviously there are opportunities for the industry players to look for mergers to enhance the economies of scale. There lies the possibility for people like us to help them out. There are opportunities and likewise risks that we're managing," he said.
On another note, Farid denied news reports of Maybank being approached for a stake in Thai lender Thanachart.
"That's news to me, we haven't been approached and we've no plans to approach. It's a market rumour, there is no basis for that," he stressed.
It was reported that Maybank was approached by Canada's Bank of Nova Scotia for a potential sale of its stake in Thanachart for US$1.7 billion (RM7 billion).
Other potential buyers reportedly include a unit of Bank of China , Fubon Financial Holdings and Japanese lenders.
Nevertheless, Farid said, Maybank will continue to look for merger and acquisition (M&A) opportunities as it is vital for it to become a truly regional organisation, with 40% of its pre-tax profit to be derived from the international operations.
He acknowleged that the lower international business contribution of below 30% in 2015 was due to lack of attractive M&A opportunities.
"We'll continue to monitor the market and opportunities that make sense and are lucrative for us," he added.
Commenting on interest rates, Farid opined that Bank Negara Malaysia might cut the overnight policy rate (OPR) by 0.25% this year to 3%, given the mixed data from the global economy.
"Our policy makers will take into account what's happening globally. Based on what we've seen, we think the OPR will stay at the current level, but there is a slight probability that it will be cut by 25 basis point," he said.
Farid expects the ringgit to rebound to 4.10 against the US dollar by year-end on a better political landscape.