Malaysia's Maybank Second-quarter Profit Drops 52% Due To Coronavirus

KUALA LUMPUR: Malaysia’s largest lender by assets, Malayan Banking Bhd (Maybank), said on Thursday its second-quarter profit dropped 51.5%, hurt by pandemic-induced movement restrictions and interest rate-cuts in its operating markets.

Maybank’s net profit for the April-June period was 942 million ringgit ($225.95 million), compared with 1.9 billion ringgit a year ago, and lagging behind a 1.64-billion-ringgit estimate by analysts in a Refinitiv poll.

Revenue fell 9.7% to 11.8 billion ringgit.

The bank’s net interest income fell 6.9% and Islamic Banking income dropped 10.8%, its income statement showed. Net fund-based income fell 7.8% due to a blanket moratorium for fixed rate financing and a cut in interest rate.

But fee-based income rose 5%, buoyed by better investment and trading returns, and better unrealised gain on financial assets and investments.

Allowances for impairment losses on loans and financing rose 344.1%, as the bank said provisioning is expected to remain elevated given heightened possibility of a drawn out pandemic.

Maybank also expects a squeeze in its net interest margin, a key measure of bank profitability.

“Given the significant interest rate-cuts in 2020 across our key markets, the group’s net interest margin will compress,” Maybank said, adding that it will seek to offset the impact by growing current and savings deposits which carry a lower cost.

Chairman Mohaiyani Shamsudin said the quarter was among the most challenging ones the bank has experienced, “and unfortunately, the outlook continues to remain uncertain given that a vaccine has yet to be found, although there are some indications of green shoots.”

Malaysian economy shrunk 17.1% in the second quarter, plunging into its first contraction since the 2009 financial crisis, as COVID-19 ravaged businesses and prompted the central bank to sharply cut its GDP forecast for this year.

($1 = 4.1690 ringgit)

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