This article first appeared in The Edge Financial Daily on October 30, 2018

KUALA LUMPUR: Malayan Banking Bhd’s unit PT Bank Maybank Indonesia Tbk’s net profit rose 3.4% to 1.5 trillion rupiah (RM412 million) for the nine-month period ended Sept 30, 2018 (9M18), on the back of higher net interest income (NII) and an improvement in the provisioning level.

Stripping out one-off proceeds from the sale of securities in 2017, recurring profit before tax increased 19% year-on-year (y-o-y), mainly supported by better asset quality, solid growth in the syariah business as well as improvements in subsidiaries, Maybank Indonesia said in a statement yesterday.

It said the bank’s asset quality had improved as reflected by lower gross and net non-performing loans of 2.7% and 1.5% respectively, compared with 3.9% and 2.4% for the previous year.

Syariah banking assets for 9M18 increased 25.5% to 30.2 trillion rupiah, making up 17.4% of the bank’s total assets from 14.2% a year earlier.

Total syariah financing rose 39.6% to 23.8 trillion rupiah, from 17.1 trillion rupiah as of September 2017. Total deposits grew 26.1% to 18.1 trillion rupiah, from 14.3 trillion rupiah previously. Its asset quality also improved with a lower non-performing financing level of 2.9% as at September 2018, compared with 4% this time last year.

“The implementation of the Sharia Leverage Model, whereby the Unit Usaha Sharia has access to the whole bank’s resources to develop and market all syariah products, combined with the Sharia First strategy, has significantly contributed to Maybank Indonesia’s syariah banking’s outstanding performance,” the bank said.

Maybank Indonesia said its NII grew 5.5% to six trillion rupiah in September 2018, compared with 5.7 trillion rupiah in the previous corresponding period. Its net interest margin expanded six basis points to 5.2%. Overhead costs decreased 0.3% y-o-y to 4.5 trillion rupiah, thanks to cost management initiatives across business lines and support units, it said.

Meanwhile, loan growth grew 7.8% to 131.2 trillion rupiah as at Sept 30, from 121.8 trillion rupiah in the previous year. Global banking booked a 10.4% loan growth to 31.1 trillion rupiah, from 28.2 trillion rupiah, mainly contributed by infrastructure projects undertaken by state-owned entreprises, the bank said.

Community financial services (CFS) non-retail loans — comprising micro, small and medium enterprises and business banking — grew 8.6% to 55.8 trillion rupiah, from 51.4 trillion rupiah a year ago. CFS retail loans grew 5% to 44.3 trillion rupiah, from 42.2 trillion rupiah previously.

As the bank focuses on transactional banking and cash management services, Maybank Indonesia’s current accounts grew 13.6% y-o-y, helping to improve its current account savings account ratio to 41.6%, from 38% previously. Its total capital stood at 25.3 trillion rupiah.

“Total customer deposits were lower at 110.8 trillion rupiah as of September 2018, compared with 119.1 trillion rupiah a year earlier, in line with the bank’s strategy in managing its cost of funding by reducing its dependence on high-cost time deposits,” it added.