PETALING JAYA: Malayan Banking Bhd (Maybank), which posted a net profit of RM8.1 billion for financial year 2021 (FY21), boosted by lower provisioning on improving regional economies, expects net interest margin (NIM) to settle five basis points (bps) higher on the back of a rising interest rate environment across its three home markets – Malaysia, Indonesia and Singapore.
Maybank recorded NIM of 2.3% for FY21.
Its group president and CEO, Datuk Seri Abdul Farid Alias, disclosed that the bank’s house view anticipates a 25 bps increase in Malaysia’s overnight policy rate (OPR) in the fourth quarter of this year.
“We also expect the benchmark rate in Indonesia to be raised by 75 bps along with a raise in Singapore, but there the interest rate is managed by foreign currency, and of course an interest rate increase of 75 bps in the US this year,” he told the media during Maybank’s FY21 results briefing held virtually yesterday.
Farid said the potential expansion in NIM is a function of the potential increase in interest rates in these three markets. “All in all, we expect NIM to stabilise, as it is a function of many things.”
For FY21, Maybank saw a 22 bps year-on-year (y-o-y) expansion in NIM, driven by a 14.6% y-o-y increase in total net fund based income to RM19.09 billion as a result of stronger loan growth as well as robust improvement in current account and savings accounts.
Its total group gross loans grew 5.7% y-o-y as at Dec 31, 2021, lifted by an 8.7% and a 4.1% increase in its operations in Singapore and Malaysia, respectively. Indonesia operations saw a decline of 3.2%.
For 2022, group CFO Khalijah Ismail expects Maybank’s loan growth to track the industry average in each of their respective markets in tandem with projected gross domestic product (GDP) growth.
Maybank projected that Malaysia and Indonesia will see 6% and 5.4% growth in GDP in 2022 following growth of 3.1% and 3.7% in the previous year, respectively on the back of a recovery in business activities due to Covid-19 vaccination progress. Meanwhile, it forecast that Singapore will post growth of 3.8% this year on the back of an earlier economic recovery which resulted in 7.6% GDP growth in 2021.
For the new financial year, Farid said while all indicators are pointing to a better performance, the bank is guiding return on equity (ROE) of between 9.5% and 10%, from 9.8% in 2021, on the back of lingering economic uncertainty as well as the one-off impact from the government’s Prosperity Tax.
For the fourth quarter ended Dec 31, 2021 the group’s net profit jumped 33.8% to RM2.06 billion from RM1.54 billion in the same corresponding quarter of the previous year mainly attributed to a higher net interest income and Islamic banking income, lower impairment allowances which was offset by a slightly higher overhead expenses, a decrease in earned insurance and takaful premiums, and other operating income.
Revenue for the quarter stood at RM11.26 billion, an 8.1% drop from RM12.24 billion previously.
For the full financial year, it posted a net profit of RM8.1 billion, a 24.9% increase from RM6.48 billion in the previous financial year. Revenue for FY21 declined 9.9% to RM45.96 billion from RM51.03 billion previously.
Maybank has declared a single-tier second interim dividend of 30 sen per share, translating into a full dividend payout of 58 sen per share for the financial year.
