KUALA LUMPUR: Malayan Banking Bhd (Maybank) is confident its net interest margin (NIM) will recover by the end of the year, after reporting a slight improvement in the second quarter.
Maybank CEO Khairussaleh Ramli said the outlook comes as Maybank focuses on managing its cost of funds and increasing low-cost deposits to counter earlier compression.
“What we’re saying is that the worst is over for us as far as NIM is concerned. On a quarterly basis, we’re expecting it to improve. And that primarily is from our ability and of course focus to manage our costs of funds better,” he said at Maybank Group’s first-half 2024 financial results today.
Khairussaleh said that the largest decline in NIM occurred in the first quarter of last year.
“And if you recall, back in 2022, it was another year when the fight for deposit was most intense,” he added.
He noted that in the first quarter of this year, Maybank’s NIM stood at around 2%.
“By the second quarter, the bank managed to increase its NIM by 2 basis points to 2.02%, driven by growth in its Current Account Savings Account (Casa) portfolio, which grew by about 2% quarter-on-quarter,” he said.
Additionally, he said the bank worked to reduce reliance on higher-cost deposits.
“We will continue doing this and based on our estimation, the quarterly NIM will continue to improve by the end of the year,” he said.
Khairussaleh said Maybank is focusing on SME services to drive growth in its Casa portfolio rather than competing on deposit rates.
The CEO said Maybank is enhancing its value proposition for SMEs, aiming to drive Casa growth in the second half of the year.
When it comes to deposit, he added the easy way is to throw pricing, but that’s not Maybank’s strategy.
“SME is a huge source of funding. We’ve got 800,000 SME population, about 90% of them have got M2E and M2U biz. So how can we offer a value proposition to make them use us as their primary bank.
“And linking that with our strategy of ecosystem play in terms of beyond banking,” he said.
Khairussaleh also said the group expects loan growth for the year to be around 7% to 8%, which is lower than the current year-over-year growth rate of 10.4%.
“Loan growth will slow down. The pipeline is good, but we also need to take into account our capacity to grow loans with respect to deposit, with respect to capital consumption as well. Maybank net profit rose 8.2% year-on-year in the second quarter of 2024 ended June 30, 2024 (Q2’24) on the back of lower provisions and tax expenses.
Net profit for the three months was RM2.53 billion compared to RM2.34 billion over the same period a year earlier.
