KUALA LUMPUR (May 6): While the imposition of the latest movement control order (MCO 3.0) will impact both the loan growth as well as asset quality of the bank, Malayan Banking Bhd (Maybank) says it has already “factored in” the impact as the banking group is anticipating an uneven recovery during the pandemic.
Maybank group president and chief executive officer Datuk Abdul Farid Alias said today the bank’s key performance indicators (KPIs) will remain unchanged for the year. These include the net credit charge of 70 to 80 basis points (bps) and return on equity (ROE) of around 9% for 2021.
Noting that the country’s largest lender by market capitalisation has factored in the possibilities of another MCO, such as the current one, Farid said Maybank is “adjusting to this better than before”.
“Even during the previous MCO, we have a high percentage of the economy open, over 70%, compared with the first MCO we had last year of 30%,” he said.
Farid highlighted that Maybank has made a whopping non-performing loan provision of RM4.6 billion in 2020 which has also taken into account the likelihood of impairment this year.
“Most of it is done on the basis of macroeconomic variables to prepare Maybank for the eventual possibilities that there will be impairment come 2021.
“That is why the level of provisions was heightened in 2020, compared with 2019,” he told reporters in a virtual briefing following its 61st annual general meeting (AGM) held earlier
“To some extent, if you've seen some of the banks in the US, especially, they have reversed some of the provisions in the fourth quarter, but we did not make such a reversal,” said Farid, explaining that the macroeconomic variables have to be sustainable before the bank shall make any reversal.
Thus, he mentioned that the most recent imposition of MCO 3.0 is consistent with what the bank has anticipated from last year.