KUALA LUMPUR (May 27): Malayan Banking Bhd (Maybank) saw its net profit for the first quarter ended March 31, 2021 (1QFY21) rise 16.71% year-on-year (y-o-y) to RM2.39 billion, from RM2.05 billion in 1QFY20.

In a statement today, the largest bank in the country said the improved results were due to loans picking up pace on the improving economic outlook, while overhead expenses and impairments declined.

Maybank's return on equity stood at 11.7% in 1QFY21 compared with 10.6% a year ago, while earnings per share rose 15% to 21 sen from 18.2 sen previously.

Given the "continued impact of the Covid-19 pandemic", the group has said it is setting its headline KPI of return on equity of about 9% for FY21.

For 1QFY21, Maybank's loans rose 3.1% compared with 0.3% last year while overhead expenses declined by 4.1% to RM2.82 billion.

Maybank Group's cost-to-income ratio improved to 41.3% from 43.7% a year earlier, as income growth of 1.5% outpaced the decline of 4.1% in overhead costs during the quarter.

Gross impaired loan ratio improved to 2.2% from 2.71% in March 2020. Loan loss coverage was at 112.6% in March 2021 from 81.5% a year earlier as a result of the higher provisioning undertaken during the year.

Maybank's total capital ratio was at 17.51% on March 31, 2021, and its fully loaded CET1 ratio was 14.18%.

The bank noted in a Bursa filing that its 1QFY21 net interest income (NII) and Islamic banking income increased by 5.7% y-o-y to RM4.79 billion, while its net insurance premiums earned increased by 30% y-o-y to RM2.52 billion.

The filing also showed its latest quarterly revenue declined to RM12.22 billion, from RM13.24 billion in the corresponding quarter of its previous financial year.

In terms of quarter-on-quarter (q-o-q) performance, Maybank said its 1QFY21 net profit rose 55.6% to RM2.39 billion from RM1.54 billion in 4QFY20.

It noted NII and income from Islamic Banking Scheme operations increased to RM4.79 billion, from RM4.46 billion in 4QFY20.

Meanwhile, its net insurance premiums earned decreased to RM2.53 billion, from RM2.78 billion in the immediately preceding quarter.

On a q-o-q basis, the group saw its revenue slightly dip to RM12.22 billion, from RM12.24 billion in 4QFY20.

No dividend was declared in its most recent financial quarter.

On its prospects, Maybank noted in its filing with Bursa that it would continue to prioritise maintaining its capital and liquidity strength.

In a separate statement, Maybank chairman Tan Sri Zamzamzairani Mohd Isa said: "While we see the re-emergence of more Covid-19 infections in a number of markets, we remain hopeful of a gradual economic recovery for the region, as governments work to address this setback and ramp up the roll-out of their vaccination programmes. Maybank is well positioned to support the expected improvement in economic activity and we will continue to strengthen our business, stand by our stakeholders and support our customers so that we can collectively emerge stronger."

Meanwhile, group president and chief executive officer Datuk Abdul Farid Alias said: "One of the risks financial institutions are facing is that credit implications arising from the movement restrictions due to Covid-19 are still camouflaged owing to the flexibilities under the Repayment Assistance (RA) and Targeted RA programmes. Banks need to continue monitoring the situation closely, and provide loan loss provisions that are sufficient to address any unexpected outcome. In view of this, we must continue to remain vigilant in order to protect the banking system."

"Meanwhile, we will continue to be guided by our M25 Plan, and seek to drive our digitalisation strategy further as it will be key in helping us achieve better efficiencies and offer new frontiers in customer experience."

As at May 10, 2021, some 16.9% of the outstanding loan balance in Malaysia remained under relief such as the RA programme, while the proportion in Indonesia and Singapore stood at 20.3% and 5.7% respectively.

As at the time of writing, shares in Maybank traded 0.36% or three sen higher at RM8.36, valuing it at RM95.42 billion.