Did Bank Malaysia's net profit for the first quarter meet expectations?

The increase in Islamic banking business and other operating revenue contributed to a 9.85% year-on-year increase in MAYBANK (MAYBANK)'s net profit for the first quarter of fiscal year 2024 to RM2,48,472,000.

Revenue for the quarter ending March 1 was recorded at RM18.346.63 million, an annual increase of 20.81%.

Bank of Malaysia's net interest income for the first quarter fell slightly to RM3.154 billion from RM3,228 billion in the same period last fiscal year, mainly due to increased financing costs in the local market, and net interest earnings (NIM) fell 19 basis points year over year.

Due to strong growth in loans from Malaysia, Singapore and Indonesia in major markets, total loans increased 11% in the first quarter; total deposits expanded 8.9%.

In addition, the bank's insurance/Islamic insurance business had net revenue of RM182 million, compared with a net loss of RM8 million in the previous period.

The revenue of Islamic banks increased to RM2,090 billion, compared to RM1,791 billion in the previous period.

Financial asset appreciation

Meanwhile, other operating income increased to RM2,868 billion, an increase of 66.8% compared to the previous RM1,719 billion, mainly due to an increase in the value of some financial assets.

These include higher unrealized returns brought about by the fair value measurement (FVTPL) revaluation of financial liabilities and financial investments, as well as increases in investment income and fee income.

According to the bank, this completely offset the decline in unrealized and realized gains from derivatives and the decline in foreign exchange earnings.

On the operating side, bank operating expenses increased by 19.8% to RM3,657.5 billion, mainly due to increases in personnel costs, administrative and general expenses, facilities and marketing expenses.

According to Bank of Malaysia, the net impairment provision also increased from RM292.9 million to RM544.3 million, mainly due to an increase of nearly 30% in net provision for loans, as well as an increase in financial investment and other provisions.

However, gross impairment loans (GIL) improved by 18 basis points to 1.32%; loan loss coverage remained strong, falling to 127.3% from 133.5% in the first quarter.

Liquidity remains steady

In addition, the bank's liquidity is still stable. The Tier 1 capital adequacy ratio (CET1) is 14.87%, while the total capital ratio is 18.21%

As of March 1, liquidity coverage improved by 127.2% as the bank's high-quality liquid assets maintained a strong liquidity buffer to offset potential shocks.

Bank of Malaysia President and CEO Dato' Kailu Saleh said that the outstanding performance in the first quarter was supported by strong revenue growth, good deposit growth and stable asset quality, which proved the bank's resilience and focus on implementing the M25+ strategy.

In terms of sustainable development, he is optimistic about providing sustainable financing and decarbonization solutions to large enterprise customers and small and medium-sized enterprises through the bank's leadership position in this field.

If there are no surprises, the bank aims to achieve an 11% return on equity in the 2024 fiscal year, a key key performance indicator.