Maybank Performance by fpd11543


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									Strong performance for Maybank in Q1FY10
with net profit 54% higher at RM882 million
November 12, 2009

Maybank Group today recorded profit after tax attributable to shareholders of RM881.8 million
for the three months ended 30 September 2009, 54.1% higher than the RM572.2 million in the
same period last year.

Group pre-tax profit for the period rose to RM1.16 billion, 31.1% higher than the RM881.77
million achieved in the previous corresponding period.

With the improving business environment, the Group's treasury, international, insurance and
investment banking operations were the key drivers in the strong performance registering growth
in pre-tax profit by 87%, 50%, 61% and 201% respectively.

The results included profit after tax contribution from Bank Internasional Indonesia (BII), MCB
Bank Ltd of Pakistan and AnBinh Bank of Vietnam of RM48.9 million, RM22.9 million and
RM2.6 million respectively. There was no profit contribution from BII in the previous
corresponding quarter as the acquisition was only completed on 30 September 2008.

Earnings per share for the quarter rose to 12.46 sen from 11.72 sen previously after adjustment
for the rights issue in March 2009. Asset quality continued to improve with net the non-
performing loan ratio declining to 1.60% as at 30 September 2009 whilst capital remained strong
with capital adequacy ratio of 14.28% as at 30 September 2009.
Overview of Financial Results

The performance of the Group was buoyed by an overall growth of 54% in net income for the
period which rose to RM3.15 billion from RM2.05 billion in the previous corresponding period.

Net interest income for the Group grew 28.7% to RM1.63 billion from RM1.27 billion
previously, on the back of an annualised 11.2% growth in loans as well as higher lending
margins particularly in BII.

The net interest margin for the quarter improved by 30 basis points to 2.82% compared to 2.52%
in September 2008. The better margin is attributed mainly to lower cost of customer deposits as a
result of the rights issue proceeds as well as improved margins on loans and from overseas

Non-interest income (including marked to market gain/loss on derivatives and securities held for
trading) more than doubled to RM1.14 billion from RM495 million previously mainly arising
from robust growth in investment and trading income as well as transactional income including
transactional fees, foreign exchange profit and net premiums written. Investment and trading
income soared to RM104.4 million from RM11.5 million previously while transactional income
rose to RM624.6 million from RM460.3 million previously.

Overhead costs for the Group (excluding claims) increased by 31.8% over that of the
corresponding period as a result of the consolidation of BII overhead costs. Excluding BII,
overhead costs increased by 4.7%.

The Group's allowance for losses on loans, advances and financing rose by RM232.3 million to
RM417.7 million due mainly to the incorporation of BII provisioning for this quarter and
increase in provisions in the Malaysian domestic operations during the period. BII consolidated
figures were not included in the previous corresponding quarter as the acquisition was only
completed on 30 September 2008.

However, compared to the preceding quarter ended June 2009, loan loss and provisions for the
current quarter was 46.6% lower.
Overall, the Group's loan loss coverage continued to be comfortable improving from 112.9% in
June 2009 to 113.2% as at September 2009.

Loans & Deposits

Gross loans for the Group grew at an annualised rate of 11.2% during the quarter compared to
June 2009. Excluding BII, annualised loan growth was 10.1%. The Malaysian operations
registered an annualised loan growth of 9.7%. BII recorded an annualised loan growth of 12.1%
while Singapore operations saw loans grow by 12.3%.

Loans in the Malaysian operations were boosted by a 12.5% rise in consumer loans led by
increases in securities financing (+13.9%), automobile financing (+11.4%), credit card
receivables (+10.6%), and mortgages (+4.9%). Loans to the corporate sector continued to grow
strongly at 20.3% while SME loans registered a contraction of 22.4%.

Total deposits from customers grew at a rate of 8.6% from a year earlier to reach RM218.8
billion, while total assets increased by 8.2% to RM317.0 billion. The Group's loan to deposit
ratio was stable at 87.3%.

Sectoral Review - Highlights

Consumer Banking

Consumer Banking saw revenue for the quarter increase to RM1.06 billion from RM1.0 billion
in the previous corresponding period. The Group has a market share of 13.8% in mortgage and
17% in automobile financing. Maybank also continues to be the leader in credit card and internet
banking. In credit card, the Group ranks top in card base, billings and merchant sales and second
in receivables. The Group outperformed industry growth on a year-on-year basis in the area of
card base (5.1% vs 3.3%), billings (17.5% vs 5.2%), receivables (11.8% vs 6.1%) and merchant
sales (28.5% vs 3.2%). Maybank2u remains Malaysia's leading internet banking portal with 4.04
million registered users and 1.26 million active users, recording over 50 million monthly
transactions with a monthly value of over RM3.6 billion.

Business & Corporate Banking

Profit before tax for Business & Corporate Banking stood at RM50.3 million for the quarter
compared to RM223.1 million in the previous corresponding period. The decline was mainly due
to the difficult operating environment which particularly affected the SME sector.


Treasury operations recorded a pre-tax profit of RM393 million from RM210 million previously.
Total income from Treasury operations grew 179% compared to the previous corresponding
period owing to a 346% rise in net interest income and 98% rise in non-interest income.

Investment Banking

Pre-tax profit of the Investment Banking Group rose to RM58.9 million compared to RM19.5
million previously, mainly on account of higher fee based income from arrangers' fees and
brokerage fees which led to total income rising 238% to RM67.7 million.

For the January-September 09 period, Maybank Investment Bank was ranked top in the industry
in underwriting with market share of 29.8%, and joint top in issuance in Debt Capital Market. It
was ranked second in M&A and Fund Raising with market share of 24.2% and 26.6%


Pre-tax profit at the Singapore operations grew 8.9% to SGD81.2 million from SGD74.6 million
previously, supported mainly by a 25% rise in fund based income. The operations saw continued
improvement in asset quality with its net NPL ratio falling to 0.10% from 0.16% in June 2009
although provisioning rose marginally by 3.5% to SGD16.8 million. Loans to the corporate
sector grew 7.2% year-on-year while consumer loans rose 4.8% led by automobile loans which
grew 8% and housing loans 4.8%.

Bank Internasional Indonesia (BII)

BII registered a profit after tax of Rp 131 billion for the quarter compared to Rp 11 billion in the
previous corresponding period. Operating income after provisioning grew to Rp 195 billion
compared to a loss of Rp 13 billion in the last year.

Group loans grew by 12.6% from June 2009 on an annualised basis. Net interest margin
improved further to 6.21% in September 2009 from 6.11% in June 2009 while cost-to-income
ratio fell to 63.7% from 65.4% in the previous corresponding period. BII's performance was also
buoyed by continued improvement in performance of its subsidiary WOM Finance during the
quarter, demonstrating a clear trend of turnaround at the outfit.

Islamic Banking

The Group's Islamic banking operations registered a 23.9% increase in gross attributable income
to RM465.7 million during the quarter under review on the back of a 26% growth in financing.

However, profit before tax for the Islamic banking operations was 35.2% lower at RM63.1
million due to higher loan loss and provision of RM171 million. Nevertheless, asset quality
continued to improve with net non-performing financing improving to 1.66% from 2.49% in the
previous corresponding period, while the financing-to-deposit ratio stood at 102%.

Insurance & Asset Management

This sector recorded a 60.6% growth in pre-tax profit to RM80 million for the quarter from
RM31.5 million in the previous corresponding quarter. The better performance was mainly due
to higher gross premium and investment yield, coupled with lower management fees and a stable
loss ratio.
Combined Gross Premium grew by 17% which was contributed by a 15% growth in general and
19% growth in life/family insurance and takaful. Motor premium rose 32% while single and
regular premium increased 5% and 9% respectively.

Investment yield improved to 5.5% from 4.3% in the previous corresponding period owing to the
good stock market performance. Total assets under management meanwhile rose to RM19
billion from RM18.6 billion due to new business acquisitions during the period.


Prospects for a global economic recovery towards the end of 2009 have begun to look more
encouraging especially for emerging and developing economies. The effects of aggressive
interest rate cuts by central banks and government fiscal stimulus have helped to avoid a global
depression although the pace and sustainability of the recovery is still uncertain.

Malaysia has witnessed a similar recovery with the external sector and industrial production
recording lower rates of decline. At the same time, domestic demand from consumer spending
has been supported by low and stable interest rates and public spending is gaining momentum
from the implementation of the RM67 billion economic stimulus packages. Although a better-
than-expected second quarter GDP has prompted expectations of a less severe recession for
2009, growth in 2010 is expected to remain modest with the upturn dependent on a sustained
global economic recovery.

The domestic banking industry is expected to remain resilient as it has been able to weather the
recession and avoided the worst effects of the global financial turmoil. Loans growth is expected
to remain positive, albeit at a slower pace, while asset quality and capitalisation continues to be
healthy amid excess liquidity.

However, the industry will remain very competitive especially with the gradual introduction of
liberalisation measures through risk of margin compression and asset quality deterioration is
expected to be contained. The recent announcement of Budget 2010 will likely affect the overall
financial services industry particularly in the residential and personal financing sectors, with the
introduction of RM50 per annum service tax for credit and charge cards and also the
reintroduction of Real Property Gains Tax ("RPGT").
Against the backdrop of an improving economy, Maybank's core commercial banking operations
is expected to perform better with positive but modest loan growth although the SME segment,
which has been adversely impacted by the downturn in the external sector, remains challenging.
Improving capital market activity should, however, provide better performance for the
investment banking and insurance divisions.

Whilst seeking to expand and regain market share in selected business segments, the Group will
continue to be vigilant in ensuring asset quality is preserved. Prudent risk management practices
and stringent asset quality management should restrain risk of deterioration in asset quality.

The Group's international operation is expected to record better performance due to the global
economic recovery as well as through business expansion. In particular, BII is already showing
improving performance and is expected to show much better growth in line with the vibrant
banking sector in Indonesia.

Against the backdrop of an improving economic environment towards the end of FY09 and into
FY10 and in the absence of the impairment charge which was incurred in the last financial year,
the Group expects its financial performance for the current financial year ending 30 June 2010 to
improve significantly.

Comments from Maybank Chairman Tan Sri Megat Zaharuddin Megat Mohd Nor:

"I am greatly encouraged by the Group's very good response this quarter to the continued
challenging operating environment. We are harnessing the best synergies and optimizing our
resources to grasp the opportunities in areas of our strength and we will build upon these.

I have great confidence in our CEO's abilities to drive the Group to be among the top regional
I am especially pleased that the new management team in place in our subsidiary Bank
Internasional Indonesia (BII) has quickly come to grips to turn around the performance there in
an economy that has sustained positive GDP growth".

Comments from Maybank President and CEO, Dato' Sri Abdul Wahid Omar:

"Our results for this quarter have been boosted particularly by strong performance from our
treasury operations, international business, investment banking and insurance & takaful. We
have registered good loan growth as well as improved asset quality as a result of the strong
foundation laid over the past year through various performance improvement measures and
building our human capital strengths.

We are especially pleased to see our accelerated efforts to turnaround BII and extract best value
bear much fruit, earlier than we had anticipated. The promising contribution coming in now from
BII is also a recognition of the strong management team we now have in place and our ability to
leverage on opportunities arising from the strong upturn in the Indonesian economy.

We are confident of sustaining the current momentum for growth and we look to sustained
business growth in our key markets across the region."


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