PETALING JAYA: Malayan Banking Bhd’s (Maybank) net profit for the third quarter ended Sept 30, 2020 decreased 2.3% to RM1.95 billion from RM2.00 billion a year ago as it recorded lower net operating income mainly due to the continued impact from the Covid-19 pandemic, although this was partly offset by reduced overhead expenses and a decline in impairments.
Revenue dropped 0.6% to RM13.76 billion from RM13.83 billion in the same quarter last year.
Net operating income declined by 6.5% to RM6.08 billion from RM6.50 billion previously. This was on the back of an 8.7% year-on-year (y-o-y) drop in total net fund based income to RM4.13 billion, as a result of a 27 basis points (bps) y-o-y net interest margin compression due to the cuts in the Overnight Policy Rate. In addition, the group saw a 1.3% dip in total net fee-based income to RM1.95 billion, particularly from lower core fees following slower business activity due to the pandemic, as well as lower investment gains.
As part of the strategy to mitigate the decline in income, the group continued to uphold disciplined control on expenses resulting in overhead costs maintaining its downward trend from a year ago, registering an 8.7% reduction to RM2.70 billion in Q3’20 from RM2.96 billion in Q3’19.
Additionally, net impairment losses for the quarter saw a 13.8% decline to RM805.9 million as the group benefitted from its earlier prudent stance in accelerating its forward looking assumption provisioning.
For the nine months period, Maybank’s net profit fell 14% to RM4.94 billion from RM5.75 billion a year ago mainly as a result of lower net fund based income following the interest rate cuts and impact of the day-one modification loss owing to the blanket loan moratorium, as well as a 76.4% increase in net impairment losses to RM3.57 billion from RM2.02 billion a year earlier. The rise in impairments was attributable to the group’s proactive provisioning through management overlay and forward looking assumptions for weakening macroeconomic variables, as well as topping up for existing impaired accounts.
Revenue dropped 2.7% to RM38.77 billion from RM39.86 billion previously.
The board of directors has declared an interim dividend of 13.5 sen per share for the nine-month period to Sept 30, 2020, which will be made under the bank’s dividend reinvestment plan (DRP). The dividend is fully electable and can either be reinvested into new ordinary shares or paid in cash.
Maybank chairman Tan Sri Zamzamzairani Mohd Isa (pix) said given the improvement in the Q3 results, Maybank has decided to continue with its practice to pay an interim dividend to shareholders, albeit at a lower rate compared to the past owing to the impact of the Covid-19 pandemic.
“While Maybank’s capital position remains robust, we have nevertheless ensured that we continue to take a prudent approach with a DRP in which the entire portion is electable. Our key priority has always been to balance shareholder interests with the need to maintain sufficient buffers in case of prolonged uncertainties, as well as to fund our growth plans for the future.”
Meanwhile, group president & CEO Datuk Abdul Farid Alias said Maybank had endeavoured to mitigate the impact from the modification loss, interest rate cuts and higher provisioning through various initiatives such as ensuring growth in the community financial services segment, realising value from some investments, reducing funding costs and closely managing overheads while making sure the group continued to invest in areas that are required.
“Our focus moving forward will be to leverage our risk management capabilities, diversified operations and digital strengths to drive our business in the coming year. At the same time, we remain committed to supporting our stakeholders through this period so that they can remain sustainable in the long run.”
