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Maybank Profit Surges To Record, Boosted By Kim Eng Earnings
Malaysia Corporate Digest | 24 November 2011

Malayan Banking Bhd., Malaysia’s biggest lender by assets, said first-quarter profit rose 25 percent to a record, boosted by higher net interest income and fees following its takeover of Kim Eng Holdings Ltd.

Net income grew to 1.29 billion ringgit ($411 million), or 17.2 sen a share, in the three months ended Sept. 30 from 1.03 billion ringgit, or 14.5 sen a share, a year earlier, Maybank said in an exchange filing today. Kim Eng, which it bought in May for S$1.8 billion ($1.4 billion), boosted brokerage income by 125.3 million ringgit.

“Our business segments are continuing to record strong growth in revenue and business generation,” Chief Executive Officer Abdul Wahid Omar said in a separate e-mailed statement. “While we remain cautious of possible impact from any weakening in external demand and will be vigilant in our monitoring, we are cognizant of areas where growth remains strong.”

Malaysia’s economic expansion may have picked up in the third and fourth quarters after growing 4.6 percent in the first half of this year, Prime Minister Najib Razak said on Nov. 13. The central bank left interest rates unchanged this month, joining nations from South Korea to China in keeping borrowing costs steady to sustain spending at home, as the turmoil over sovereign debt in Europe threatens to further weaken the global recovery.

Maybank shares rose 0.5 percent to 8.28 ringgit at the 2:50 p.m. in Kuala Lumpur today after its earnings were released during the midday trading break. The benchmark FTSE Bursa Malaysia KLCI Index gained 0.9 percent.
Profit surpassed the Kuala Lumpur-based company’s previous quarterly record of 1.15 billion ringgit reported for the three months that ended in June.

Every business segment reported a better performance in the three months to September, Maybank said in its statement. The global economic outlook remains “challenging” with continued pressure on narrowing margins, it said, adding that it will be “selective” in pursuing loan growth.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, gained 5.6 percent to 1.87 billion ringgit in the quarter through September, it said. Non-interest income climbed 28 percent to 1.22 billion ringgit.

Profit from Islamic banking jumped 53 percent to 516.3 million ringgit, while earnings from insurance rose 11 percent to 96.5 million ringgit, the bank said. Provisions for bad debts fell 63 percent to 98.7 million ringgit.

Loans growth in Malaysia is expected to be supported by the rollout of the government’s so-called economic transformation program, which includes projects ranging from mass rail to power plants. This may help to cushion the risks of weakening external demand, Maybank said.

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