KUALA LUMPUR (April 6): Malayan Banking Bhd (Maybank) is well prepared for the impact of additional provisions that will arise from the adoption of the Malaysia Financial Reporting Standard (MFRS) 9 come Jan 1 next year.

Group president and CEO Datuk Abdul Farid Alias told reporters that while additional provisions have become a certainty next year, Maybank's capital position is sufficient to withstand the collision to profitability.

"The one-off provisions [are] going to result in higher provisions. That is a certainty, but the provisions can be charged off against our capital, that's why our capital is getting higher over the years, we are preparing for that," he told reporters after the group's annual general meeting today.

MFRS 9 requirements for local banks, for which reporting will commence on Jan 1 next year, are based largely on a forward-looking expected credit loss (ECL) impairment model and a substantially reformed approach to hedge accounting.

ECL is expected to increase the provision amount required, which will potentially impact banks' profitability.

However, Abdul Farid said Maybank, Malaysia biggest lender by asset size, is expecting to see lower provisions in 2017 as compared to 2016, as economic activities pick up again.

"We believe [there will be] slightly faster growth this year; 2017 economic activities are going to pick up. Opportunity for growth is a lot better, [and the] government has more leeway to spend as commodities prices like crude oil has gone up relative to last year," he said.

In FY16, Maybank's full-year dividend per share totalled 52 sen, equivalent to an annual yield of close to 6.3%.

Its full-year net profit was, however, affected by larger net impairment losses, declining 1% to RM6.74 billion. Net impairment losses grew 50% to RM3.02 billion from RM2.01 billion previously.

But net interest income grew to RM11.57 billion from RM11.11 billion a year ago.