Maybank, Southeast Asia’s fourth largest bank by assets, today (Nov 23) said that its net profit for the third quarter (3QFY22) ended 30 September 2022 rose 28.5% to RM2.17 billion compared to a year earlier as the Group benefitted from the improving economic environment across the region.
Higher net fund and fee-based income as well as a 25.2% Y-o-Y reduction in net impairment losses boosted the Group’s profit before tax (PBT) by 41.4% from a year earlier to RM3.21 billion.
Net operating income for the 3QFY22 increased by 20.6% Y-o-Y to reach RM7.41 billion. This was driven by higher net fee based income of 48.0% to RM2.12 billion from RM1.43 billion a year earlier and a 12.2% rise in net fund based income to RM5.30 billion from RM4.72 billion. The improvement in net fee based income was mainly led by mark-to-market gains in financial liabilities and foreign exchange gains while net fund based income rose on better loans growth across all home markets and net interest margin (NIM) expansion from a rising interest rate environment. Subsequently, this lifted pre-provisioning operating profit (PPOP) by 20.8% to RM4.02 billion compared with a year earlier.
Overhead costs expanded to RM3.39 billion from RM2.82 billion a year earlier on normalising of business activities, inflationary adjusted spend and higher IT expenses. The Group’s cost-to-income ratio improved slightly to 45.8% from 45.9% a year earlier, as income growth outpaced cost growth for 3QFY22.
Meanwhile, net impairment losses declined 25.2% to RM0.84 billion from RM1.13 billion a year earlier as higher proactive provisioning was made last year due to macroeconomic headwinds and potential borrower vulnerabilities owing to prolonged movement restrictions.
3QFY22 vs 2QFY22
PBT for the third quarter came in 20.3% higher at RM3.21 billion compared with the preceding quarter’s (2QFY22) RM2.67 billion as net operating income rose 8.5% and net impairment losses declined by 27.2%. Net profit for the quarter, meanwhile, was 16.6% higher than 2QFY22.
9MFY22 vs 9MFY21
For the nine months to 30 September 2022, the Group’s PBT improved by 8.3% to RM8.85 billion from RM8.17 billion a year earlier driven by better net operating income of RM20.72 billion, which rose 8.2% Y-o-Y from RM19.15 billion. This higher net operating income was led by an increase of 8.1% Y-o-Y in net fund-based income to RM15.37 billion supported by loans growth across all home markets and NIM expansion, while net fee based income rose 8.4% Y-o-Y to RM5.34 billion.
Cost grew to RM9.40 billion from RM8.56 billion a year earlier on higher revenue-related and IT expenses as well as inflationary adjusted items such as personnel costs. The slight increase in net impairment losses by 1.3% to RM2.59 billion was primarily due to lower net impairment losses last year coming from a net writeback of RM0.07 billion in other financial assets. The marginal net profit growth of 0.5% Y-o-Y to RM6.07 billion was attributed to the higher taxes paid for 9MFY22.
Maybank Chairman Tan Sri Dato’ Sri Zamzamzairani Mohd Isa said that with regional economies in ASEAN charting stronger economic growth for the first nine months of 2022 on normalised business activities, Maybank experienced similar expansion across its loan portfolios in its regional markets and remains cautiously optimistic of its growth prospects for the remaining of 2022.
“The commendable results we have achieved demonstrates the Group’s resilience and ability to sustain its growth momentum across all business lines as well as home markets over the past nine months. With the recent unveiling of the Group’s refined corporate strategy, M25+, we will focus on key priorities including intensifying customer centricity and taking a leadership position in sustainability and Islamic Wealth Management.”
Meanwhile, Group President & CEO, Dato’ Khairussaleh Ramli said that the Group will drive income growth across its loan portfolio and fee income streams as well as maintain discipline over its asset quality monitoring.
“While ASEAN economies are expected to continue their growth into next year albeit at a slower pace, we will keep our strong liquidity and capital positions to manage potential downside risks that could emerge in the operating environment. We will also accelerate improvements across our five strategic thrusts under M25+ including customer centricity, digitalisation, regionalisation, sustainability, and Islamic finance so that the organisation remains in the leadership position beyond 2025 and capable of delivering hyper-personalised customer service offerings that encompass the customer’s lifecycle journey.
Loans & Deposits
Total Group gross loans grew strongly by 8.2% Y-o-Y across both sectors of Global Banking (GB) and Community Financial Services (CFS) as at 30 September 2022, lifted by increases of 13.1%, 7.9% and 4.0% in its home markets of Indonesia, Malaysia and Singapore respectively. Meanwhile, the Group’s gross deposits expanded 4.9% primarily led by growth in Malaysia of 8.7% and Indonesia of 5.0%.
Net interest margin (NIM) for the nine-month period to September 2022 expanded 8 bps to 2.39% from 2.31% on the rise of interest rates during the year.
Capital & Liquidity Strength
Maybank maintained robust capital and liquidity positions as at 30 September 2022, with its CET1 capital ratio at 13.84%, and total capital ratio at 17.15%. The Group’s liquidity coverage ratio stood at a healthy 144.2%, well above the regulatory requirement of 100%.
Asset Quality
The Group registered an improvement in asset quality with its Gross Impaired Loans (GIL) ratio declining to 1.70% in September 2022 from 1.93% in September 2021. Loan loss coverage also remained at a healthy level of 122.3% as newly impaired loan formation remained low.
Notwithstanding this, Maybank continues to maintain its management overlay built since the pandemic began for anticipated weakness in credit quality of borrowers, arising from new macroeconomic headwinds.
Maybank continues to closely monitor the credit quality of its portfolios and assist affected customers in managing their financial obligations.
As at 31 October 2022, some 3.7% of the outstanding loan balance in Malaysia remain under relief programmes, while the portion in Singapore and Indonesia stood at 3.3% and 9.2% respectively.
Sectoral Review
Group Community Financial Services (GCFS) continued to strengthen its franchise in the first nine months of 2022, registering a 15.5% Y-o-Y increase in net operating income to RM12.04 billion. This was backed by a steady growth in both its net fund and fee based income by 17.7% and 8.1% respectively compared with a year earlier.
Total loans expanded 7.8% contributed from the Consumer and SME segments at 8.1% and 10.1% respectively. Wealth Management, a key focus segment for the Group, maintained its upward trajectory with Total Financial Assets rising 6.0% from a year earlier to reach RM413.7 billion contributed by investments growth of 4.2% and loans growth of 10.6%.
For the Malaysian operations, total loans expanded by 8.1% as the Business Banking and SME segment rose 8.2% while the Consumer segment recorded an increase of 8.1%. Meanwhile, total CFS deposits rose 4.0%.
Group Global Banking (GGB) recorded higher net operating income of 9.9% to RM8.10 billion for 9MFY22, on stronger net fee based income of 13.4% to RM3.28 billion and net fund based income increase of 7.7% to RM4.82 billion.
The revenue growth was attributed to higher fund-based income from Group Corporate Banking and Global Markets and stronger fee based income from regional Global Markets operations. Total Group Corporate Banking loans continued to register steady growth of 9.8% Y-o-Y, lifted mainly by increases across key home markets of Malaysia, Singapore, and Indonesia. For Corporate Banking operations in Malaysia, total loans expanded 7.1% Y-o-Y to RM84.5bil on the back of a 19.3% and 4.3% rise in short term revolving credit and term loans respectively.
The Group’s Islamic Banking business saw a rise in PBT by 14.1% to RM3.53 billion in 9MFY22 compared with RM3.09 billion a year earlier as total income came in 14.7% higher at RM5.67 billion.
Within this business, Maybank Islamic’s total gross financing for Malaysia rose to RM236.5 billion contributed by a steady growth in its CFS and GB sectors by 13% and 8% respectively. As at September 2022, Islamic financing constituted 66.1% of Maybank Malaysia’s total financing while Maybank Islamic’s market share of Islamic assets in Malaysia stood at 29.9%. In terms of MYR Sukuk league table ranking, Maybank ranked top with a 26.3% market share and a market share of 8.4% for the Global Sukuk League table.
Meanwhie, Etiqa Insurance & Takaful registered a PBT of RM303.3 million for 9MFY22 compared with RM690.2 million a year earlier on lower net operating income and higher impairment charges.
Net operating income declined 16.6% on lower mark-to-market value of the fixed income portfolio and net realised losses on investment income. However, total net adjusted premiums rose 6.7% lifted by a healthy 24.7% increase in Total General premiums, offsetting the slight decline of 4.0% Y-o-Y in Total Life & Family premiums for the period.
Total assets as at September 2022 meanwhile, rose slightly by 0.2% Y-o-Y to hit RM50.8 billion from RM50.6 billion a year earlier. Etiqa maintained its top position in terms of market share for General Insurance and Takaful (Gross Premium) and third in terms of Life/Family (New Business).
Key Home Markets
Maybank Indonesia recorded a PBT of Rp1.48 trillion and Profit after Tax and Minority Interest (PATAMI) of Rp1.06 trillion for the nine months ended 30 September 2022. The Bank’s PBT and PATAMI remained comparatively stable from a year ago owing to well-contained overheads and lower provisions as loan quality improved. Despite a growth in loans, interest income was lower from reduced loan yields arising from tight loan competition.
Maybank Singapore’s 9MFY22 PBT more than tripled to S$530.01 million from S$156.71 million a year ago, mainly arising from higher income and lower loan loss allowances due to significant recoveries.
Net fund-based income improved by 24.4% Y-o-Y to S$582.64 million driven by loans growth and improving margins while net fee-based income was significantly higher by 68.2% at S$330.16 million compared with S$196.28 million a year earlier due to higher treasury fees and credit related fees.
Loans expanded 4.0% Y-o-Y driven by a 2.5% increase in CFS loans and 6.4% growth in GB loans. Deposits, however, declined 3.4% Y-o-Y to S$47.8 billion on outflow of current and savings accounts deposits.
