KUALA LUMPUR: Malayan Banking Bhd’s (Maybank) net profit for its fourth quarter ended Dec 31, 2021 rose 33.8% to RM2.06bil from RM1.54bil in the previous corresponding period as earnings were mainly driven by the gradual reopening of the economy during the quarter.
Revenue in the fourth quarter stood at RM11.26bil compared with RM12.24bil a year earlier
Maybank chairman Tan Sri Zamzamzairani Mohd Isa said the group is heartened by signs of gradual recovery across the region.
“We are seeing the resumption of more economic activities, improving vaccination rates and accommodative policies, which are good signs.
“We will stay ahead in managing our key business risks and be prepared for any resurgence in Covid-19 cases,” he said yesterday during a virtual press conference on Maybank’s financial performance for 2021.
Maybank chairman Tan Sri Zamzamzairani Mohd Isa said the group is heartened by signs of gradual recovery across the region.
Maybank group president and chief executive officer Datuk Seri Abdul Farid Alias said he expects the group to remain stable in 2022.
“We will continue to drive income growth from previous opportunities in wealth management, global markets, investment banking, asset management and insurance by leveraging on our digital capabilities,” he said.
Abdul Farid said Maybank also aims to preserve capital liquidity, as the group moves into the recovery phase and continues to provide support to its customers in need.
“Our expectation is for us to be stable in 2022, with the possibility of an expansion of five basis points, given the possibility of a rising rate environment.
“Although all indicators are pointing to a better year, we are guiding for return on equity to be between 9.5% and 10% in 2022, partly because we are not really out of the woods yet, as well as the impact of the one-off prosperity tax imposed by the government.”
For its financial year ended Dec 31, 2021, Maybank’s net profit surged to RM8.10bil from RM6.48bil in the previous corresponding period, while revenue stood at RM45.96bil against RM51.03bil a year earlier.
In a filing with Bursa Malaysia yesterday, Maybank, South-East Asia’s fourth-largest bank by assets, said its financial performance in 2021 was driven by the improving regional economic outlook that supported the group’s higher operating income.
Total group gross loans grew 5.7% year-on-year as at Dec 31, 2021, lifted mainly by increases of 8.7% and 4.1% respectively in its Singapore and Malaysia operations.
Meanwhile, its Indonesian operations saw a slight decline of 3.2% in 2021.
Maybank
“Steady growth was recorded in the global banking segment across all three home markets while the community financial services franchise recorded good growth in Singapore and Malaysia.”
Commenting on its loan growth target for this year, group chief financial officer Khalijah Ismail said Maybank will be “tracking against industry growth” in 2022.
“If you refer to some of the published numbers in terms of the growth for Malaysia, similarly for Singapore and Indonesia, our target has always been along those lines.”
Maybank said total current account and savings accounts (Casa) deposits rose 17.2%, driven by strong growth across all home markets.
“Consequently, the Casa ratio expanded to 47.1% as at December 2021 from 42.8% a year earlier. The strong Casa growth also helped lower the group’s cost of funds and lifted net interest margin for the full year by 22 basis points to 2.32%.”
Meanwhile, total group deposits expanded 6.5%, led primarily by a 10.2% growth in Malaysia.
Maybank however said this was moderated by a decrease of 6.9% and 0.4% in Singapore and Indonesia respectively, as part of their strategy to reduce dependency on costlier fixed deposits.
The group also said it continued with its strategy to maintain robust capital and liquidity positions, with its common equity Tier 1 capital ratio at 15.40% and total capital ratio at 18.83% as at Dec 31, 2021, making it one of the best capitalised banks in the region.
“The group’s liquidity coverage ratio stood at a healthy 136.4%, way above the regulatory requirement of 100%.”
The group also registered an improvement in asset quality with its gross impaired loans ratio declining 24 basis points to 1.99% in December 2021 from 2.23% a year ago.
Meanwhile, loan loss coverage improved to 111.9% in December 2021 from 106.3% previously, as a result of the additional provisioning undertaken and as several older impaired accounts were written-off throughout the year.
“Notwithstanding this, Maybank continues to maintain stringent monitoring of its credit portfolios while at the same time, undertaking proactive engagement with clients facing financial distress to assist them in managing their commitments effectively,” it said.
Additionally, Maybank said its impairment losses had reduced by 36.6%, as the bank had taken pre-emptive provisioning for potentially bad loans and financial investments since the pandemic started in 2020.
Maybank said net operating income grew 2.8% to RM25.45bil, tracking Malaysia’s economic growth of 3.1% in 2021.
“This was achieved on the back of a 14.6% year-on-year increase in total net fund based income to RM19.09bil as a result of stronger loan growth as well as robust improvement in Casa.
“It was, however, partially offset by a 21.6% decline in net fee based income to RM6.36bil, mainly from lower net gain in investment income and marked-to-market losses on the fixed income portfolio held by its insurance unit due to rising yields.”
Additionally, Maybank said growth in cost was contained at 2.6%, well below income growth, resulting in pre-provisioning operating profit coming in higher at RM13.93bil from RM13.54bil a year ago.
Maybank also declared a single-tier second interim dividend of 30 sen per share, comprising an electable portion of 7.5 sen per share under its dividend reinvestment plan.
This brings the full-year dividend to 58 sen per share and translates into a payout ratio of 84.5% or RM6.84bil in total.
Separately, the group’s Islamic banking business saw a sterling 90.3% rise in pre-tax profit to RM4.43bil compared with RM2.33bil a year earlier, boosted by a 24.8% increase in total income to RM6.68bil.
As at December 2021, total Islamic financing constituted 64.9% of Maybank’s total Malaysia financing, while Maybank Islamic’s market share of Islamic assets in Malaysia stood at 29.8%.
Meanwhile, its insurance arm, Etiqa Insurance & Takaful, saw a 5.4% rise in total net adjusted premium on the back of an 8.4% increase in total life and family premium.
However, pre-tax profit declined 8.3% year-on-year to RM909.7mil, owing to lower marked-to-market value of its fixed income portfolio arising from the rise in yields in 2021.