Maybank Q4 profit up 27pc, sees pressure on margins

KUALA LUMPUR: Malaysia's largest lender Malayan Banking (Maybank) posted a 27 percent rise in fourth-quarter profit, helped by robust regional loans growth, but warned of pressure on margins ahead due to a weakening global economy and investor sentiment.

"We foresee weaker economic conditions from other parts of the world and remain vigilant about the slowing down of growth," Maybank Chairman Megat Zaharuddinat told a press briefing on Monday.

But the bank would be focused on pursuing its goal of regional growth, he said.

Maybank bought Singapore brokerage Kim Eng Holdings for $1.4 billion earlier this year as it sought to plug the gap in its regional brokerage operations.

More recently, it wanted to purchase smaller rival RHB Capital , currently Malaysia's fifth-largest lender, but backed away due to price considerations.

For its full-year ended June 30, Maybank reported group loans growth of 21.7 percent, its highest in a decade, driven by financing demand in Malaysia, Singapore and Indonesia.

Chief executive Abdul Wahid Omar Wahid said robust loans growth was expected to continue given strong regional economic conditions.

"We have set robust KPIs (key performance indicators) of 16 percent ROE and 12 percent loan and debt securities growth, amongst others, for the financial year ahead," Wahid told the briefing, but warned that margin contractions remained an issue.

"Net interest margins saw a 9 bps contraction during the financial year," he said. "Given challenging market conditions, we can expect a bit more tightening in net interest margins as we go forward."

Maybank's fourth-quarter net profit of 1.15 billion ringgit was in line with the quarterly estimate of 1.1 billion ringgit of 22 analysts tracked by Thomson.

Its full-year net profit of 4.45 billion ringgit was also in line with the average 4.4 billion ringgit provided by the same analysts.

Maybank's rival Public Bank posted a net profit increase of 20 percent in July but similarly warned about margins falling faster than anticipated.

Singaporean rivals DBS , OCBC Corp and UOB had all beaten street forecasts for their recently announced quarterly profits, but were also bearish about prospects going forward.

Seventeen of the 22 analysts had either a "Strong Buy" or "Buy" call on the stock, while three were neutral.

Maybank's shares were unchanged on Monday ahead of the earnings announcement.

Copyright Reuters, 2011