KUALA LUMPUR, Feb 27 — Malayan Banking Bhd (Maybank), South-east Asia’s fourth-largest bank by asset, expects its net interest margin (NIM) to decline further by five basis points (bps) this year.
The banking group’s NIM for the financial year 2019 was only marginally lower by six bps at 2.27 per cent against 2.33 per cent in 2018.
Group president and chief executive officer Datuk Abdul Farid Alias said the lower projection was in anticipation of a challenging market environment, including the global trade war, Covid-19 and geopolitical uncertainties.
“We are looking at a potential NIM compression of up to five bps as our guidance for 2020, (while) looking at cost income ratio of 46-47 per cent, credit charge of 45-50 bsp and return on equity of 10-11 per cent,” he told reporters at the banking group’s 2019 financial results announcement here today.
On the impact of Covid-19, Abdul Farid said the exposure of Maybank’s entire business portfolio to sectors that are vulnerable to the outbreak such as airlines, retail and tourism is quite small and amounting to less than 10 per cent.
He said the banking group has the capacity to manage the situation and has taken measures to reduce the impact, including providing moratorium to clients for loan schedule and insurance protection.
“The impact of Covid-19 is real as we have seen several industries slowed down in demand… We feel it is our duty to help our customers that are affected to weather this cycle (outbreak).
“I can’t tell how much it would impact our (financial year) 2020 performance (but) I hope there could be a V-shape recovery and we can contain it early,” he said.
Meanwhile, Abdul Farid said the overnight policy rate (OPR), which many economists opined would be slashed by another 25 bps, would have an effect on the group’s NIM.
“We have many other tools to mitigate the impact. So, as the year goes, we’ll see how certain variables play out,” he added.
Maybank’s net profit for the financial year ended December 31, 2019 reached a new high of RM8.2 billion compared with RM8.11 billion in the financial year 2018 on the back of higher fourth quarter net earnings.
Revenue rose to RM52.84 billion from RM47.32 billion previously. — Bernama
