May 24, 2023
10 min read
FY23 Q1 Overview (YoY)
- Fund based net income of RM4.8b
- NOII up 12.4% to RM1.53b
- Net operating income increased by 1.1% to RM6.32b
- Operating profit before provision fell 7.1% to RM3.27b
- Net impairment loss improved significantly by 50.9% to RM292.9 million
- Profit before tax rose from RM2.98 to RM3.06
- Net profit grew by a healthy 10.7% to RM2.27b
- Liquidity position is stable, group LCR is 145.8%
- Robust capital position: 15.09% CET1 capital ratio and 18.48% total capital ratio
Maybank, Southeast Asia's fourth-largest lender by assets, reported a 10.7 per cent rise in net profit to RM2.27 billion for the financial period ending March 31, 2023 (1QFY23). Meanwhile, profit before tax (PBT) rose to RM3.06 billion from RM2.98 billion a year ago. The steady performance was driven by continued improvement in asset quality and financial and market gains supporting the Group's net operating income.
Despite the challenging global economic environment, net operating income for the quarter rose to RM6.32 billion, helped by derivatives and foreign exchange gains, non-interest income (NOII) rose 12.4% year-on-year to RM1.53 billion and investment and trading gains . However, this was more than offset by lower net fund income of 2.0% as net interest margin (NIM) fell 15 basis points year-on-year due to intense competition for deposits.
Administrative expenses increased to RM3.05 billion from RM2.73 billion a year ago due to higher staff costs due to the recently signed collective agreement and higher provision for IT, marketing and revenue related expenses.
Asset quality improved with a 50.9% reduction in net impairment losses to RM292.9 million in March 2023. Gross impaired loans fell 45 basis points to 1.50% from 1.95% and 1.57% a year earlier due to write-offs, repossessions and a lower formation rate of new impaired loans in December 2022. As a result, the Group's net credit charge-off ratio was 25 basis points, while loan loss coverage improved to 133.5% in the quarter from 106.4% a year earlier and 131.2% as of December 2022. The Group continues to actively engage with and address financial challenges by helping clients effectively manage their commitments.
For the first quarter, Maybank adopted MFRS 17 for insurance contracts, which has replaced MFRS 4, effective 1 January 2023. Comparative information for the first quarter of fiscal 2022 has been restated accordingly.
Maybank Group President and Chief Executive Officer Dato Khairusalee Ramlisaid the first quarter results are a testament to Maybank's underlying strength and resilience despite a challenging market environment amid high inflationary pressures and weak global growth. With a solid capital and liquidity position, as well as a diversified footprint and income sources, the Group will continue to stay the course and weather uncertain headwinds unswervingly to achieve sustainable growth in the future.
“The execution of our M25+ strategy is progressing well, based on strengthening our customer focus, accelerating digitalization and technology modernization, strengthening Maybank’s business presence in the region, advancing our leadership in the sustainability agenda and establishing our These five key strategic priorities for global leadership are in Islamic banking. This is in line with our purpose of humanizing financial services as we deliver a differentiated customer experience and serve the community as a force for good in ASEAN."
Maybank further improves its digital offerings and agile way of delivering products and services to provide better services by launching several innovative online banking applications, restructuring its RSME, SME+ and business banking divisions, and a new branch operating model in Malaysia Quality, speed and customer experience.
Other financial highlights:
Loans and deposits continue to grow
As at 31 March 2023, the group's total loans grew at a faster pace of 5.3% year-on-year, with Indonesia and Malaysia growing by 7.2% and 5.1% respectively, while other international markets recorded a modest increase of 0.3%.
Meanwhile, total group deposits rose by 3.0%, mainly driven by growth of 5.2% in Malaysia and 0.3% in Singapore, mainly due to the expansion of the fixed deposit portfolio. As a result, the group CASA ratio fell to 39.1% from 46.2% a year ago, but continued to remain above pre-pandemic levels.
Capital and liquidity strength remains strong
Maybank continues to maintain a solid capital and liquidity position, with a CET1 capital ratio of 15.09% and a total capital ratio of 18.48% as at 31 March 2023, making it one of the best capitalized banks in the region. The Group's liquidity coverage ratio remained at a healthy level of 145.8%, well above the regulatory requirement of 100%.
Group Community Financial Services (GCFS)Continuing to strengthen its franchise for the full year, net operating income rose 9.0% year-on-year to RM3.93 billion, driving PPOP up 0.6% to RM1.74 billion. This was helped by steady growth in its net fund-based income and NOII of 9.5% and 7.3%, respectively, from a year earlier. Wealth management, a key focus segment for the group, maintained its upward trend with total financial assets rising 6.6% year-on-year to RM431. For its Malaysia business, loans rose 6.4%, led by a 7.6% increase in the commercial banking and SME division and a 6.0% increase in the consumer division.
Group Global Bank (GGB)Net operating income for 1QFY23 fell 18.1% YoY to RM2. Performance in Global Markets and Investment Banking was impacted by challenging market conditions in the United States and Europe and recent instability in the banking sector. Meanwhile, corporate lending maintained healthy year-on-year growth in its three home markets of Indonesia (10.1%), Singapore (5.4%) and Malaysia (0.6%).
groupislamic bankbusiness sawTotal revenue rose 3.2% year-on-year to RM1.8 billion.However, PBT in the first quarter fell to RM939.7 million from RM1.05 billion in the same period last year due to higher overheads in the domestic market. in business,Maybank IslamicMalaysia's total financing grew to RM245.9 billion, supported by a solid 10% increase in its CFS and a 4% increase in its GB segment. Islamic financing accounted for 67.6% of Maybank's total loans and financing in Malaysia as of 31 March 2023, while Maybank Islamic led Malaysia's Islamic assets with a 29.3% market share. 8.75% market share and 30.12% market share for the MYR Sukuk leaderboard ranking.
Etiqa Insurance and TakafulPBT recorded a strong growth of RM237.9 million in 1QFY23 compared to RM14 million in the same period last year. This was driven by a strong 48.4% increase in net operating income to RM263.3 million, mainly driven by a 17.8% increase in net fund income. Total net adjusted premiums/contributions rose 1.5%, driven by a 7.4% increase in general insurance and takaful business. Etiqa maintained its leading position in general insurance and takaful (Malaysia) with a 15.3% market share and third in life and home (new business) with a 12.5% market share.
main domestic market
Maybank Singapore1QFY23 PBT more than doubled YoY to S$231.22 million from S$114.0 million due to the recovery of loan loss provisions compared to the provisioning of loan loss provisions in 1QFY22 and the previous quarter. Appropriation and net fund income increased by 17.6%, driven by growth in total asset scale and improvement in net interest margin. NOII meanwhile fell 15.0% YoY due to a slowdown in treasury revenue and wealth management revenue.
maybank indonesiaofPBT in Q1 2023 rose 33.3% YoY to Rs 75,000 crore, while profit after tax and minority interests also jumped 45.7% YoY to Rs 56,600 crore. This was due to better yields from banks' improved asset mix due to higher lending, higher fee income and improved asset quality. Fund-based net income rose 6.7% year-on-year, as NIM rose 35 basis points year-on-year to 5.1%, while NOII rose 20.7% to Rs 57,400 crore from Rs 47,500 crore.
Maybank's 1QFY23 net profit up 10.7% to RM2.27