Strong loans growth boosts Q4 earningsKUALA LUMPUR: Malayan Banking Bhd's (Maybank) net profit grew by 27% to RM1.154bil for the fourth quarter ended June 30, 2011, from RM912.47mil in the same period a year earlier, boosted by strong loans growth and a decline in allowance for losses on loans.
The largest lender's record profit was supported by strong loans growth in all its markets in Malaysia, Singapore and Indonesia, and better performances across all business segments.
In addition, the continued decline in the allowance for losses on loans , which fell by more than half, contributed to the bank's stronger bottom line. Revenue for the period surged to RM5.721bil from RM4.737bil, while earnings per share rose to 15.54 sen from 12.89 sen.
For the full year, Maybank's net profit jumped 16.6% to RM4.45bil from RM3.82bil. Group profit before tax for the year rose 16.8% to RM6.27bil from RM5.37bil previously. Revenue for the 12 months stood at RM21.04bil compared with RM18.56bil previously. Group loans grew at its fastest pace in the last decade, touching 21.7%. This was a result of robust overseas loans growth of 29.4%, and a 16.8% rise locally, which was well above the industry average of 13.5%.
Indonesia and Singapore saw loans rising 25.8% each while other international operations were up 38.6%.
Analysts said the stronger net profit was within expectations in view of stronger interest income from its local and overseas operations.A banking analyst from MIDF Research said: “Maybank's earnings for FY11 exceeded our expectation by 5% and consensus estimate by 1.5%. Fee-based income growth also exceeded our expectation, in particular net income from insurance business. Net income from the insurance business increased by RM261.3mil or 310.8% quarter on quarter.”
Asked whether the record results was sustainable, Maybank president and CEO Datuk Seri Abdul Wahid Omar said the activities from the Economic Transformation Programme (ETP) would help sustain the group's strong performance, adding that there was enough momentum in Singapore and Indonesia to continue to drive growth as well.
The bank's current focus would be organic growth rather than mergers and acquisitions, Wahid said at a press conference when announcing the group's performance for the year.
Asked whether the restriction on foreign shareholding would impact Maybank's performance in Indonesia, Wahid said the move by the authorities there was not to restrict foreign shareholding but to enhance corporate governance.
“The issue is still revolving and no decision has been made on the matter to date,” he added.
Key drivers for its record performance included a 16.3% increase in non-interest income (including income from Islamic and insurance businesses), led by a doubling of fee income from Islamic operations (127.1%), insurance business (31.2%), investment and trading income (48.4%), commissions, service charges and fees (12.8%) and foreign exchange income from customer transactions (8.6%).
The bank also achieved a higher net interest income, which rose 6.1% to RM7.19bil despite a tightening in net interest margin. Allowance for losses on loans fell 59% to RM502.2mil from RM1.23bil previously.
Maybank's continued improvement in asset quality saw its net impaired loan ratio decline to 2.25% in FY11 from 2.83% a year earlier. The board proposed a final dividend under the dividend reinvestment plan of 32 sen per share, less 25% tax.
This brings the total dividend for the year, including the gross interim dividend of 28 sen per share, to 60 sen, representing a total payout ratio of 74.9% for the year, exceeding the group's dividend payout policy of 40%-60%.
The group also announced that its financial year-end would be changed to Dec 31 with effect from FY12 from the current year-end of June 30 in order for it to be comparable with other public-listed companies and to streamline the group operations.
In corporate banking, its results for the year was boosted by a 21.2% rise in revenue, which reached RM1.28bil. Its gross impaired loan ratio, meanwhile, continued its downward trend to touch 3.3% from 4.2% previously.
Maybank's Islamic banking business was boosted by a 54% rise in total income to RM1.49bil while the allowance for losses on financing shrank to RM10mil from RM350.4mil last year.
Maybank Investment Bank saw its revenue more than double to RM482mil from RM236mil a year ago, on the back of an almost 49% rise in fee-based income to RM292mil. Brokerage activities contributed 43% to its income, while arrangers' fees made up 21%, underwriting/placement fees, 20% and corporate advisory fees, 7%.
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