What You Need to Know About Maybank's Earnings Report

Non-interest income experienced a significant increase, climbing 79.2% to RM2.74 billion compared to the first quarter of the previous fiscal year (Q1FY2023). The growth was mainly due to RM995.5 million in mark-to-market accounting gains from revaluing financial liabilities at fair value.

Meanwhile, core fee income saw a 17.3% year-over-year increase, largely driven by higher wealth management, credit card, and advisory fees. Treasury and markets income more than doubled year-over-year. This significant rise was driven by realized gains from bond sales owing to advantageous yield curve shifts, enhanced foreign exchange sales, and unrealized gains on financial assets measured at fair value through profit or loss (FVTPL).The insurance business reported a RM40 million profit, a turnaround from last year's RM12 million loss, mainly due to increased mark-to-market gains from lower interest rates and stronger stock market returns.

Due to higher funding costs across the home markets, the bank's net interest margin (NIM, an indicator measuring profitability after deducting interest paid to depositors from loan interest) declined by 19 basis points year-on-year to 2% in the first quarter of the fiscal year 2024.

However, the group's total loans across all key sectors in Malaysia, Singapore, and Indonesia experienced a robust increase of 11.2%. In the same vein, deposits in these three regions also saw substantial growth, with Indonesia recording a 13.1% increase, Singapore 9.8%, and Malaysia 6.2%, culminating in an overall deposit expansion of 8.9%.

In terms of asset quality, the total Gross Impaired Loan (GIL) Ratio, which represents the percentage of impaired loans out of the total loans, improved by 18 basis points year-on-year to 1.32%, indicating that the bank's loan quality is improving and the risk of default is decreasing.

Regarding operational expenses, although the group's operating expenses for the quarter increased by 19.8% compared to the same period last year, reaching MYR 3.66 billion, mainly due to increases in personnel costs, administrative and general expenses, establishment costs, and marketing expenses, the Q1FY2024 Group cost-to-income ratio was 48.3%; below the full-year 2024 guidance of less than 49%.

Malayan Bank's Common Equity Tier 1 (CET1) capital, a standard that measures the bank's capital strength based on the highest quality of regulatory capital, stood at 14.87%, while the liquidity coverage ratio remained stable at 127.3%, well above the regulatory requirement of 100%.

The bank has announced an annualized ROE of 10.8% and is confident in achieving an 11% ROE in the FY2024."

"Barring any unforeseen circumstances, the group targets to achieve a headline key performance indicator of return on equity of 11 percent for the financial year 2024," Maybank said.

The bank expects loan growth to remain stable against a backdrop of a steady economic environment. In Malaysia, after a significant contraction in 2023, NIMs are expected to stabilize. In Singapore, loan demand is projected to gradually increase in the second half of 2024 due to potential rate cuts and rising demand. NIMs are expected to narrow moderately at a slower pace; however, the cost of funds is anticipated to increase due to liquidity competition. In Indonesia, system loan growth is forecasted at 10% for 2024, and the cost of funds may remain high due to ongoing funding competition, potentially leading to a reduction in NIM. Overall, loan book quality is also expected to improve.

Moreover, Maybank is leveraging growth opportunities by expanding its community financial services, global banking, and insurance and takaful sectors in its core markets, spurred by an improved regional economic forecast.

"Our leadership in sustainability puts us in a good position to exceed our set targets to deploy sustainable financing and decarbonization solutions, not only to our large corporate customers, but also to mid-sized and small firms," chief executive officer Datuk Khairussaleh Ramli said in a statement.