Maybank Reports 59 Pct Drop In Pre-Tax Profit

Malayan Banking Bhd's pre-tax profit for the financial year ended June 30, 2009 fell 59 per cent to RM1.67 billion from RM4.09 billion last year.
The profit was achieved over an 8.9 per cent rise in revenue to RM17.586 billion against RM16.153 billion previously. The lower profit was largely due to higher loan loss provisions, and interest on the additional RM9.1 billion capital securities and subordinated debts issued in 2008.
In announcing the results here today, its president and chief executive officer, Datuk Seri Abdul Wahid Omar said the interest amount on the capital securities amounted to RM445 million. "We also saw lower capital market activities that contributed to a lower profit from our investment banking arm and insurance front which effected higher claim ratio as well as lower investment income," he said.
The group's performance was mainly impacted by impairment charges of RM1.617 billion arising from the Bank of PT Bank Internasional Indonesia Tbk (BII) banking business operations deal and an impairment loss of RM353.1 million for the investment in MCB Bank, its associate in Pakistan.

In the fourth quarter, Maybank registered a pre-tax loss of RM821.6 million as against a pre-tax profit of RM1.02 billion in the same quarter of 2008, on revenues of RM4.86 billion and RM4.49 billion respectively.

Asked on whether the fourth quarter net loss was the lowest ever recorded, Abdul Wahid said: "I am not able to confirm that."
Maybank has never incurred a loss from an annual perspective, he nevertheless said.
"The lowest profit we ever recorded was just after the last Asian financial crisis with a profit of about RM190 million. So the full year profit this year of RM692 million is still off the low," he added.
Asked on whether there would be other impairment charges in the coming quarters, he said: "We believe that based on the exercise which we've undertaken, we do not expect any further impairments."

For the fourth quarter, Maybank posted a net loss of RM1.118 billion.
This however was partly offset by the write-back of allowance for non-refundable deposit of RM483.8 million arising from the reinstatement of approval by Bank Negara Malaysia and the subsequent completion of the proposed acquisition of Sorak Financial Holdings Pte Ltd, the controlling shareholder of BII.

Maybank declared a final dividend of 8.0 sen per share less 25 per cent tax. For the full year, Maybank's net profit attributable to equity holders was lower by 76.4 per cent to RM691.9 million from RM2.93 billion previously.
Meanwhile, operating profit was reduced by 33 per cent to RM3.06 billion compared with RM4.57 billion previously.
This was mainly due to the higher allowance for impairment of securities of RM197.5 million compared to a write-back of RM66.2 million in the previous year and a higher allowance for losses on loans due mainly to higher specific allowance made, lower recoveries and as a result of consolidation of the loan loss provision of BII for the first time in the current financial year.

"It has been an extremely challenging time for the group in the wake of the global financial crisis and weakened economic situation in the financial year. But we are optimistic of a significant improvement in our performance next year," Abdul Wahid said. For the financial year ending June 30, 2010, the group has set its Key Performance Indicators (KPIs) with a revenue growth target of 8.0 per cent and a return on equity (ROE) of 11 per cent.

The group will also focus on growing its international operations with particular emphasis on BII, which has identified initiatives to improve loans growth and fee-based income as well as derive synergies to enhance revenue generation.
Maybank's net interest income was nine percent higher at RM5.92 billion in financial year ended June 30, 2009 from RM5.43 billion previously.
This was achieved on the back of higher loans growth and improved lending margins contributed by BII.
The group's asset quality continues to improve with gross non-performing loan (NPL) declining to 3.46 per cent from 3.76 per cent, and net NPL easing to 1.64 per cent from 1.92 per cent.
"We undertook a lot of pre-emptive measures and were able to avoid many of the accounts from turning NPL. Therefore, it contributed to the lowering of net NPL ratio to 1.64 per cent," Abdul Wahid said.

The industry NPL average is at 2.2 percent.