Malaysia’s Maybank second-quarter profit drops 52pct due to coronavirus

29-Aug-2020 Intellasia | Reuters | 6:02 AM Print This Post

Malaysia’s largest lender by assets, Malayan Banking Bhd (Maybank), said on Thursday its second-quarter profit dropped 51.5%, hurt by pandemic-induced movement restrictions and interest rate cuts in its operating markets.

Maybank’s net profit for the April-June period was 942 million ringgit ($225.95 million), compared with 1.9 billion ringgit a year ago, and lagging behind a 1.64 billion-ringgit estimate by analysts in a Refinitiv poll.

Revenue fell 9.7 percent to 11.8 billion ringgit, but bank bosses said the worst of the economic impact may have passed.

Net fund-based income fell 7.8 percent due to a blanket moratorium for fixed rate financing and a cut in interest rate, it said.

Allowances for impairment losses on loans and financing rose 344.1%, as the bank said provisioning is expected to remain elevated given heightened possibility of a drawn out pandemic.

Maybank expects a 20 bps compression of the 2020 net interest margin, a key measure of bank profitability, to 2.07%. NIM for Q2 was 1.95%, 24 bps lower than a year ago.

“Given the significant interest rate cuts in 2020 across our key markets, the group’s net interest margin will compress,” Maybank said, adding that it will seek to offset the impact by growing current and savings deposits which carry a lower cost.

“Based on the data we know today, we’ve probably seen the worst from an economic standpoint in the second quarter of the year,” Group President and CEO Abdul Farid Alias told a briefing, adding that the bank does not expect another rate cut in Malaysia this year.

Chair Mohaiyani Shamsudin said “the outlook continues to remain uncertain given that a vaccine has yet to be found, although there are some indications of green shoots”.

Malaysian economy shrunk 17.1 percent in the second quarter, plunging into its first contraction since the 2009 financial crisis, as COVID-19 ravaged businesses and prompted the central bank to sharply cut its GDP forecast for this year.

https://in.reuters.com/article/maybank-results/malaysias-maybank-second-quarter-profit-drops-52-due-to-coronavirus-idINKBN25N0MB

 

Category: Malaysia

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