Maybank's 2Q Pre-Tax Profit Slips 26.5 Per Cent On Impairment Losses, Overhead Expenses

KUALA LUMPUR, Aug 25 (Bernama) -- Maybank's pre-tax profit slipped by 26.5 per cent to US$392.24 million (RM1.58 billion) for the second quarter ended June 30, 2016, from US$534.77 million (RM2.15 billion) in the same quarter last year, due to a higher allowance for impairment losses and an increase in overhead expenses. (US$1 = RM4.02) Revenue, however, increased to RM10.94 billion from RM8.94 billion previously. For the cumulative six-months, Maybank's pre-tax profit declined to RM3.51 billion from RM4.39 billion for the same period last year, while revenue jumped to RM22.12 billion from RM18.12 billion. Maybank is Southeast Asia's fourth largest bank by assets. In a filing to Bursa Malaysia (Malaysia's Stock Exchange), it said the group's overhead expenses for the second quarter increased by RM205.1 million or 8.5 per cent, compared with the previous corresponding quarter ended June 30, 2015. "The increase was mainly contributed by an increase in establishment costs of RM105.9 million, administration and general expenses of RM102.4 million and personnel expenses of RM45.0 million," it added. The Group's allowance for impairment losses on loans, advances, financing and other debts, also increased by RM680.7 million to RM981.7 million for the quarter ended June 30, 2016, compared with the same quarter last year. The increase was mainly due to higher net individual allowance of RM268.4 million and collective allowance made of RM387.2 million. The Group's allowance for impairment losses on financial investments for the quarter also increased by RM105.6 million compared with the corresponding quarter of 2015.. Elaborating on operations, Maybank said the Group's net interest income and Islamic Banking income for the quarter ended June 30, 2016 increased by 7.4 per cent compared with the previous corresponding quarter. This was largely due to growth in the Group's gross loans, advances and financing. The Group's other operating income increased by 20.6 per cent to RM1.44 billion for the quarter ended June 30, 2016 compared with the previous corresponding quarter of 2015. As for its insurance operations, Maybank said the Group's net insurance benefits and claims incurred, net fee and commission expenses, change in expense liabilities and taxation of life and takaful fund increased by RM71.2 million to RM1,075.7 million, compared with the previous period corresponding quarter ended June 30, 2015. "The increase was mainly attributable to higher net insurance benefits and claims incurred by the Insurance and Takaful subsidiaries of RM84.2 million. The increase was, however, mitigated by lower net fee and commission expenses of RM13.9 million," it said. On outlook, it said Maybank Group's three home markets of Malaysia, Singapore and Indonesia is expected foresee the respective real Gross Domestic Product growth to undergo a more mixed trend. "Building on its franchise across ASEAN, the Group's strategic priorities for 2016 will be to increase cross-sell and collaboration, improve network productivity, enhance automation and operational excellence, and invest in digital initiatives," it said. Operationally, the Group will also continue to strengthen its balance sheet by managing liquidity and preserving margins, while maintaining vigilance over asset quality. As the Group has proactively restructured and rescheduled borrowers' facilities in the first half of 2016 financial year, the Group continues to monitor the impaired status of these loans with the intention of recognising some recoveries in 2H FY2016. It is also seeking to maintain strong capital levels, well above regulatory requirements. It has also set two Headline Key Performance Indicators of Return on Equity of 11-12 per cent and group loans growth of 8-9 per cent. --BERNAMA