Malaysia's Maybank Q2 profit up 43% on lower loan-loss provisions

People take an escalator with a Maybank advertisement at a mall in Kuala Lumpur.
People take an escalator with a Maybank advertisement at a mall in Kuala Lumpur.PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysia's largest bank by assets, Malayan Banking Bhd (Maybank), on Wednesday (Aug 30) reported a 43 per cent rise in net profit for the three months through June, helped by lower loan-loss provisions.

Profit reached RM1.66 billion (S$526.8 million) in the second quarter from RM1.16 billion in the same period a year prior. The result compared with the RM1.69 billion average of two analyst estimates, Thomson Reuters data showed.

Net interest income rose about 10 per cent to RM3.04 billion.

The results indicate Maybank is recovering from a difficult 2016 when it had to set aside an unusually large amount of funds to cover losses from loans to the oil and gas sector, including those to now-bankrupt Singapore-listed Swiber Holdings.

Allowances for impairment losses on loans and financing shrunk to RM830.3 million from RM982 million ringgit in the second quarter of last year.

Allowances for impairment losses on financial investments fell to RM5.5 million from RM200 million.

The bank also said it expects 2017 earnings to be"satisfactory given the ongoing challenging global environment".

It targets return on equity of 10 percent to 11 per cent, and loan growth is likely to be in line with the industry, Maybank said in a statement.

Maybank had earlier said it was targeting loan growth of 6 per cent to 7 per cent for 2017.

"Against the backdrop of selective growth in the market, Maybank Group will maintain its approach of proactively managing asset quality," it said.