KUALA LUMPUR: Malayan Banking Bhd (Maybank) is expecting a challenging FY20 ending Dec 31, due to external and internal political disruptions, the US-China trade war and uncertainty over the length of the Covid-19 outbreak.
Speaking to the media at the group’s financial briefing today, group president and CEO Datuk Abdul Farid Alias said Maybank is expecting a potential compression on its net interest margin (NIM) of up to five basis points this year.
“We also see a cost-to-income ratio between 46-47%, a net credit charge of 45-50 basis points including the initial impact from the Covid-19 outbreak and an return on equity between 10-11% on slower economic growth and a lower interest rate environment,“ he said.
For FY19, Maybank saw a marginal reduction in its NIM by six basis points to 2.27% from 2.33% in FY18.
Elaborating further on the impact seen from the Covid-19 pandemic, Abdul Farid said the overall exposure of the group’s loan portfolio to sectors vulnerable to the effects of Covid-19 is less than 10%.
“That said, the impact is real. There will be some impact to our earnings but that is hard to quantify. I’m hoping for a V-shaped recovery and for the situation to be contained soon,“ he said, noting that it is too early to say how much in terms of loan reliefs has been disbursed to affected customers.
Meanwhile, on the expected rate cut in the Overnight Policy Rate (OPR), Abdul Farid said it would have an effect on the group’s NIM.
“We have many other tools to mitigate the impact so as the year goes we’ll see how certain variables play out,“ he said.
source https://www.thesundaily.my/business/maybank-sees-tough-year-ahead-with-nim-compression-CA2057217
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