Maybank 1H FY24 PATAMI up 9.0% to RM5.02b

Corporate & Financial

Maybank 1H FY24 PATAMI up 9.0% to RM5.02b

- Declares first interim full cash dividend of 29 sen -

1H FY24 Preview (Y-o-Y)

Net operating income up 9.4% at RM14.92b Net fund based income increased to RM9.77b from RM9.62b Non-interest income recorded a solid 28.4% increase to RM5.15b, boosted by strong growth in core fees by 16.5% Pre-provisioning operating profit rose 7.1% to RM7.67b Net impairment provisions stood at RM924.1m from RM867.4m, while net credit charge off rate decreased to 27 bps from 31 bps PBT increased 7.2% to RM6.89b, while profit after tax and minority interests rose 9.0% to RM5.02b Healthy growth in group loans of 10.4%, across all home markets and key segments (MY 10.6%; SG 12.5%; IDN 12.1%) Healthy liquidity risk indicators with Group LCR at 133.5% and Group LDR at 94.5% Robust capital position: 18.02% total capital ratio & 14.70% CET1 capital ratio

Maybank, Southeast Asia's fourth largest bank by assets, today announced a 9.0% Y-o-Y increase in its profit after tax and minority interests (PATAMI) of RM5.02 billion for the first half of 2024 (1H FY24). Profit before tax (PBT) was up 7.2% to RM6.89 billion. The commendable results were driven by strong growth in non-interest income (NOII), arising from higher core fees, improved insurance performance as well as an increase in treasury and market gains.

Net operating income for the first half grew by 9.4% to RM14.92 billion. This was mainly attributed to a 28.4% Y-o-Y increase in NOII to RM5.15 billion boosted by strong growth in core fees which rose 16.5%, as well as improved treasury and market income. Net fund based income also improved to RM9.77 billion from RM9.62 billion compared to a year earlier supported by strong loans growth of 10.4% from all key segments in Malaysia, Singapore and Indonesia. Net interest margin (NIM) declined 15 bps Y-o-Y as a result of higher funding cost across the home markets. However, NIM improved by 2 bps Q-o-Q.

Overhead cost was higher at RM7.25 billion compared with RM6.47 billion a year earlier, as a result of increase in personnel costs, administration and general costs, IT expenses, and marketing expenses. Notwithstanding that, the Group's pre-provisioning operating profit (PPOP) was up by 7.1% Y-o-Y to RM7.67 billion.

Net impairment provisions stood at RM924.1 million from RM867.4 million a year earlier. This is due to an increase in net allowances for financial investments and others to RM75.05 million, reversing a net writeback of RM54.37 million from the same period previously. Meanwhile, net loan provisions decreased by 7.9% to RM849.05 million, driven by higher recoveries. This resulted in a lower net credit charge off rate for loans of 27bps from 31 bps the year before. Gross impaired loans ratio improved by 18 bps to 1.29% from 1.47% a year earlier while loan loss coverage remained stable at 128.7% from 130.3%. The Group continues to undertake proactive engagement with clients facing financial challenges by assisting them in managing their commitments effectively.

2Q FY24 vs 2QFY23

For the second quarter of 2024, PATAMI rose by 8.2% Y-o-Y to RM2.53 billion compared with the same period last year, while PBT for the quarter was up 2.2%. Net operating income expanded slightly to RM7.34 billion from RM7.31 billion led by higher net fund based income by 2.2% to RM4.93 billion. NOII however recorded a slight decrease to RM2.41 billion compared with RM2.48 billion.

2Q FY24 vs 1Q FY24
The Group's PATAMI for 2Q FY24 was 1.7% higher than the RM2.49 billion registered in 1QFY24, while PBT was flat.

Dividend

The Board of Directors has declared a first interim full cash dividend of 29 sen per share. This translates into a dividend payout ratio of 69.7% equivalent to RM3.50 billion payout.

Comments from Maybank Chairman and President & Group CEO

Maybank Chairman, Tan Sri Dato' Sri Ir. Zamzamzairani Mohd Isa said that the Group's financial performance in the first half of 2024 has been commendable, reflecting Maybank's commitment to excellence and resilience in a volatile market environment. Maybank's M25+ strategic initiatives are well-positioned to capitalise on emerging opportunities and drive sustainable growth. The Group is confident, that its solid foundation and forward-thinking approach will enable it to navigate any challenges and deliver consistent value to its stakeholders.

Tan Sri Zamzamzairani added, "This is a testament to the hard work of our dedicated Maybankers and the trust that our customers have placed in us. Looking ahead to the second half of 2024, we remain optimistic about our prospects. We will continue to focus on enhancing customer centricity, with an emphasis on providing a more values based ecosystem of financial solutions, leveraging digital innovation whilst maintaining prudent risk management practices."

Meanwhile, President & Group CEO, Dato' Khairussaleh Ramli said that the Group will actively capitalise on its footprint particularly in Southeast Asia. Maybank's strategic priorities for 2024 are centered on embedding the five M25+ strategic thrusts through the respective initiatives, and realising greater value from key growth areas.

"We will continue to focus on customer experience and journeys across segments. Our efforts to institutionalise the Agile ways of working is making good progress towards future proofing the organisation beyond M25+, enhancing our competitive edge and driving sustainable growth. We are staying the course and sustaining this momentum and our intent to provide differentiated values-based solutions, aligned with our purpose to Humanising Financial Services."

Loans & Deposits

Group loans grew by a strong 10.4% Y-o-Y as at 30 June 2024, lifted by increases in all home markets of Malaysia, Singapore and Indonesia by 10.6%, 12.5% and 12.1% respectively. The Group's deposits meanwhile expanded 7.9% led by growth in the Malaysia market of 9.2% followed by Singapore 6.9% and Indonesia 4.6%.

Capital & Liquidity Strength

For the first half of 2024, Maybank maintained robust capital and liquidity positions with its CET1 capital ratio at 14.70%, while total capital ratio stood at 18.02%. The Group's liquidity coverage ratio remained stable at 133.5%, well above the regulatory requirement of 100%.

Sustainability updates

Maybank has exceeded its cumulative sustainable finance target by FY25 of RM80 billion, with a cumulative achievement of RM83.22 billion as at June 2024. The Group will continue to mobilise sustainable finance as guided by its internal frameworks and in support of the various national roadmaps. Under commitment 2, Maybank has improved the lives of 1.59 million households across ASEAN through a combination of its community programmes and financial inclusion efforts particularly for the lower income communities, against the target of 2 million households by 2025. Similarly, for commitments 3 and 4, the Group had recorded a 50.9% reduction in carbon emissions as well as close to 600,000 hours for the first half of 2024.

This is compared to the annual target of 52.5% to achieve a Carbon Neutral Position of emissions by 2030 and 1 million hours on sustainability initiatives respectively.

Maybank also recently launched a White Paper with 2030 interim emission intensity targets for the Palm Oil and Power sectors as well as the inaugural Social Impact Report during ASEAN Day, the first of its kind in Malaysia and the region. The report highlights social impact across Maybank Group for communities in the region, covering banking and beyond banking initiatives.

M25+ progress

Maybank continued its momentum to progress steadfastly under its M25+ strategic initiatives, recording positive growth across all customer segments and home markets whilst seeing commendable results in its efforts in scaling Agile ways of working across the organisation.

Through focused efforts anchoring on its M25+ objectives namely customer-centricity and enhancing its ecosystem, the Group has deepened customer penetration by doubling loan originations in its homeownership programme and CASA account openings. Efforts in its hyper-personalisation initiatives are gaining traction with substantial growth recorded in its auto insurance renewals via 'one click renewal'.

The Group's regional wealth management initiatives have seen income growing by 70% and customer base and assets under management increasing by 14%. Group Islamic Wealth Management (GIWM) offerings are gaining traction in Malaysia, with significant growth in fee income by 62% Y-o-Y from RM71.9 million to RM116.7 million and customer acquisition by 74% Y-o-Y from 83,000 to 145,000.

Significant progress is also seen in Global Banking's mid-market segment with increases in deals pipeline and growth in mid-cap loan. Mid cap loans grew 20% Y-o-Y while total mid cap IB deal size increased from RM0.6 billion to RM1.6 billion. Internally, the Group's vigorous drive towards continuous improvement initiatives through Agile ways of working has touched 15,000 employees and is expected to grow. These are expected to deliver improvement in process turnaround time, cost optimisation, efficiency & productivity improvements and revenue growth.

Sectoral Review

Group Community Financial Services (GCFS) continued to strengthen its franchise in the first half of 2024, registering a 10.2% Y-o-Y increase in net operating income to RM8.89 billion which contributed to a rise in PPOP to RM3.61 billion from RM3.38 billion a year earlier. This was mainly buoyed by a commendable growth in its NOII by 19.0% while net fund based income was also up 7.7% compared to 1H FY23. Wealth Management, a key focus segment for GCFS maintained its upward trajectory with Total Financial Assets rising 9.6% Y-o-Y to RM492.9 billion contributed by loans growth of 16.1% and investments & Banca growth of 14.7%. For CFS Malaysia, loans expanded by 9.5% led by a rise in its Business Banking and SME segment by 11.2% followed by its Consumer segment by 9.1%.

Group Global Banking (GGB) recorded a 14.1% Y-o-Y increase in PBT for the first half of FY24, reaching RM3.18 billion. The growth was primarily driven by higher income and a significant reduction in net impairment provisions. Net operating income rose by 12.1% Y-o-Y to RM5.11 billion, supported by a 40.6% increase in NOII to RM2.62 billion. Net fund-based income, however, declined by 7.5% Y-o-Y to RM2.49 billion, largely due to higher funding costs. Net impairment provisions on loans improved by 49.8% Y-o-Y, reflecting proactive asset quality management and effective bad debt recovery efforts. Corporate loans continued to grow steadily across GGB's three home markets, with Y-o-Y growth of 14.1% in Malaysia, 18.4% in Singapore and 13.4% in Indonesia, contributing to an overall increase of 12.4%.

The Group's Islamic Banking business saw a rise in PBT by 4.8% Y-o-Y to RM1.85 billion on the back of strong increase in total income by 18.7% to RM4.27 billion. Within the business, Maybank Islamic's total gross financing for Malaysia grew 13.0% to RM278.6 billion, contributed by steady growth in its GB business by 16.6% and CFS business by 12.0%. As at 30 June 2024, Islamic financing constituted 69.3% of Maybank Malaysia's total loans and financing while Maybank Islamic continued to lead in the market share of Islamic assets in Malaysia at 30.3%. Assets under management for Islamic Wealth Management increased 25.4% Y-o-Y to RM80.25 billion.

Etiqa Insurance & Takafulregistered a robust 69.8% Y-o-Y increase in PBT to RM829.7 million for 1H FY24. This was on the back of a robust 59.6% rise in net operating income to RM947 million, led by a more than 100% increase in NOII to RM83 million. Total net adjusted premiums/contribution rose 22.5% boosted by a 29.4% increase in Total Life & Family net adjusted premiums and 14.3% in Total General net written premiums. Etiqa maintained its top position in the General Insurance & Takaful (Malaysia) segment with a 16.3% market share and in the top 3 for the Life & Family (New Business) segment with a 13.3% market share.

Key Home Markets

Maybank Singapore recorded a PBT of S$386.37 million for the 1H FY24, up 2.5% compared with a year earlier on the back of a healthy net income which rose 9.4% to S$613.51 million. This was mainly attributed to a strong NOII mitigating the decline in fund based income and slightly lower write back in loan loss allowances compared to the previous corresponding period. NOII grew 76.7% Y-o-Y driven by a significant growth in treasury income from trading interest rate swaps. Wealth management income meanwhile strengthened on higher contributions from structured notes, securities, unit trusts and bancassurance commission. Fund based income however reduced 18.4% Y-o-Y, as rising interest expense outpaced the increase in interest income from higher rates and loans expansion, compressing net interest margin.

Maybank Indonesia recorded a PBT of Rp548 billion in the second quarter of 2024, an increase of 6.2% Y-o-Y, backed by improved business performance as lending grew and lower provisions booked compared to the previous quarter. The performance demonstrated a positive turnaround in the Bank's profitability following a substantial pre-emptive provisioning made in the first quarter of 2024. PBT for the first half of 2024 meanwhile was at Rp283 billion.

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