Malaysia's best domestic bank 2020: Maybank
Don’t get used to it. This, essentially, is what chief executive Abdul Farid Alias told investors recently when Maybank, Malaysia’s largest listed company, managed to beat first-quarter forecasts.
Despite Covid-19 dislocations, it turned a RM2.05 billion ($491 million) profit. That’s on top of a record RM8.2 billion profit in 2019.
These numbers are “not representative of the way we will perform for the rest of the year,” said Alias. That is likely to be quite an understatement.
With the economy contracting 17.1% in the second quarter, Malaysia finds itself transported back to 1998, the last time it experienced a comparable decline. But southeast Asia’s fourth-largest bank by assets remains a clear standout.
The 5.3% rise in net earnings in the fourth quarter was the product of solid performance in community financial services, Islamic banking and the insurance and takaful segments.
The bank’s tangible common equity as a percentage of risk-weighted assets was 19.1% as of March 31, 2020, which “exceeded that of its peers in the region and provides ample buffer against risks,” according to Moody’s Investors Service.
Maybank is lending more to small and medium-sized enterprises and raising its digital game. But the main reason Maybank walks away with Asiamoney’s best domestic bank honours once again is because of its unbridled regional ambitions. Alias and his team continue to make Maybank ever more Asian in scale.
The bank’s operations in China, India, Indonesia, the Philippines, Singapore and Vietnam, as well as its offices in the UK and the US, are increasing its global footprint and, for the most part, profitability.
Brokerage partnerships with Japan’s Mizuho Securities, South Korea’s Daishin Securities and Taiwan’s Cathay Securities are diversifying income streams.
It is still a work in progress. Asset quality on overseas loans in recent years – mostly in Indonesia and Singapore – has been bumpy. The deterioration reflects the relatively high concentration of loans in oil and gas, shipping and structured trade credit.
As of March 31, gross impaired loan ratios for the Indonesia and Singapore operations were 4.9% and 4%, respectively, compared with 2% at home in Malaysia.
But even in this tough global climate, Maybank is making progress, managing risk in its international loan book and curtailing exposure to large borrowers. That could change if second waves of Covid-19 upend southeast Asia further, but Maybank appears well-placed to weather the storm.