Maybank 2Q profit drops 52%

KUALA LUMPUR: Malayan Banking Bhd (Maybank), Malaysia’s largest lender by asset, reported a 51.5% fall in second-quarter (2Q) profit as incomes shrunk and impairments rose, it said in a bourse filing on Thursday.

Maybank’s net profit for the April-June period was RM942 million compared with RM1.9 billion a year ago, lagging behind a RM1.64 billion estimate by analysts in a Refinitiv poll.

Revenue fell 9.7% to RM11.8 billion.

The bank’s net interest income and Islamic Banking income both fell 8.2%, while allowances for impairment losses on loans and financing rose 344.1%.

“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.

Net interest margin is a key measure of bank profitability.

Malaysia’s economy shrunk 17.1% in 2Q, plunging into its first contraction since the 2009 global financial crisis, as the Covid-19 pandemic ravaged business activity, prompting the central bank to sharply cut its gross domestic product forecast for this year.