Maybank 2Q net profit slips below RM1b as impaired loans allowance spikes

Maybank 2Q net profit slips below RM1b as impaired loans allowance spikes
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KUALA LUMPUR (Aug 27): Malayan Banking Bhd (Maybank) reported today that net profit for the second quarter ended June 30, 2020 (2QFY20) fell 51.55% to RM941.73 million from RM1.94 billion a year earlier as net interest income and Islamic banking income dropped as well as due to significantly higher allowance for impaired loans amid a Covid-19 pandemic-driven weaker economic outlook.

In a statement to Bursa Malaysia today, Maybank said group revenue declined to RM11.79 billion in 2QFY20 from RM13.05 billion.

"The group's net interest income and Islamic banking income for the quarter ended June 30, 2020 decreased by RM351 million or 8.2% to RM3,949.5 million as compared to the previous period corresponding quarter ended June 30, 2019.

"The group's allowances for impairment losses on loans, advances, financing and other debts increased by RM1,347.7 million or 344.1% to RM1,739.3 million as compared to the previous period corresponding quarter ended June 30, 2019.

"[In quarterly terms] the group's profit after tax and zakat attributable to equity holders for the quarter ended June 30, 2020 decreased by RM1,108 million to RM941.7 million against the preceding quarter ended March 31, 2020 of RM2,049.7 million," Maybank said.

For the first half of FY20, Maybank said cumulative net profit fell to RM2.99 billion from RM3.75 billion a year earlier while revenue was lower at RM25.01 billion versus RM26.03 billion.

Given the weakening outlook for the economic landscape arising from the Covid-19 pandemic and evolving developments in the marketplace, Maybank said the group has revised its headline key performance indicator for return on equity to about 7.5% for FY20 on the back of lower income due to softer loan growth, net interest margin compression and day-one modification loss.

"Also, the group's loan loss provisioning is expected to remain elevated.

"The group will moderate its expected lower income by stepping up its strategic cost management programme to limit the increase in overheads," Maybank said.

At Bursa's 12.30pm break today, Maybank's share price settled down one sen or 0.13% at RM7.45 for a market value of RM83.86 billion. The stock saw some three million shares traded.

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