Higher interest and non-interest income to boost results
PETALING JAYA: Analysts expect Malayan Banking Bhd’s (Maybank) earnings for the fourth quarter to be announced today to be better than the previous quarter’s, underpinned by higher interest and non-interest income.

MIDF Research banking analyst Kelvin Ong said the series of overnight policy hikes recently would translate into higher net interest margins and higher interest income for the bank judging from the trend of other banks.

Loans, among others like retail loans, are also expected to register stronger growth for the fourth quarter ended June 30.

Loans are expected to register stronger growth for Maybank in the fourth quarter.

Ong said non-interest income derived from fee and insurance would also contribute to higher earnings for the quarter.

MIDF Research has made a conservative estimate on the bank’s net profit of at least RM1bil for the fourth quarter and about RM4bil for the full year.

ECM Libra head of research Bernard Ching estimated Maybank’s full year net profit at slightly below RM3.4bil.

For the fourth quarter, he felt the bank’s earnings should be better than the previous quarter buoyed by higher contributions from its Indonesian unit PT Bank Internasional Indonesia Tbk (BII) and overall loans growth.

Ching does not expect Maybank’s earnings to be boosted by its net interest margins as bank margins have been fairly constant over a couple of months.

HwangDBS Vickers Research said that even after stripping out one-off items, it expected the bank to post strong non-interest income for the fourth quarter. This non-interest income could be its key earnings driver and was likely to come from fee and commission income and insurance.

Every fourth quarter, according to the research house, Maybank transfers RM150mil-RM200mil life insurance surplus funds to shareholders’ funds. The volatile items are forex and marked-to-market gain/loss for trading securities and derivatives, it said.

It raised financial year 2010/12 forecast earnings by 5% to 10% following the stronger non-interest income.

HwangDBS Vickers expected the bank to turn in a net profit of RM1bil to RM1.1bil, with final dividends.

It said that although BII’s earnings was not up to its expectation, it had a small impact on the Maybank group. BII’s second quarter results released on July 30 reported 43% quarter-on-quarter (q-o-q) drop in earnings mainly due to higher provisions.

But loans surged 17% q-o-q (higher than most Indonesian peers), led by the SME and consumer segments, the research outfit said.

Maybank saw its net profit for the third quarter ended March 31 increase 105% to RM1.03bil from RM503.3mil recorded in the same corresponding period last year.

The better performance was due to higher revenues across all business segments, lower loan loss provisions as well as higher non-interest income and strong loan growth.

Revenue for the period stood at RM4.6bil compared with RM4.3bil for the same quarter a year earlier while earnings per share was at 14.56 sen against 9.15 sen previously. The group’s loan loss provisions almost halved to RM215.5mil in the third quarter. Last year, it made a net profit of RM691.9mil or 12 sen per share.