February 28, 2018 / 10:28 AM / 22 days ago

UPDATE 1-Malaysia's Maybank, CIMB see regional boost to loans growth in 2018

* Maybank’s quarterly profit falls 10 pct, CIMB’s up 24 pct

* Maybank’s 2018 loan growth target 4 pct, CIMB 6 pct

* Banks see improving external environment driving loans appetite (Adds quotes and comments from executives of the banks)

By Liz Lee

KUALA LUMPUR, Feb 28 (Reuters) - Maybank and CIMB , Malaysia’s top two banks, expect stronger demand for corporate and consumer loans in the Southeast Asian region, driven by improving economies, to support their overall loans growth in 2018.

CIMB Group Holdings Bhd, Malaysia’s second-largest bank, said it was targeting improved loan growth this year as it expects performance in its Thailand, Indonesia and Singapore units to recover. Its loan growth weakened to 0.2 percent last year against a target of 7 percent.

“We are expecting Indonesia to come in with mid single digit loan growth, and high single digit for Thailand and Singapore (this year),” CIMB Group Chief Financial Officer Shahnaz Jammal said at an earnings briefing on Wednesday.

Domestic loans grew 6.5 percent for CIMB in 2017 and 5 percent for Malayan Banking Bhd (Maybank), lifting overall loans growth for both banks.

“(With the strong external environment) think the investment and capex cycle will start and that will translate to a bit of loan growth on the corporate side,” Maybank Group President & CEO, Abdul Farid Alias, said at a separate results briefing.

Maybank, Malaysia’s largest bank by assets, reported a 4 percent group loan growth in 2017, a rate it targets this year as well.

Both banks recorded comparable net interest margins (NIMs) -the difference in interest paid and earned and a measure of bank profitability - with CIMB at 2.63 percent and Maybank at 2.36 percent. While Maybank expected an expansion in NIM of 5 basis points in 2018, CIMB projected a 5-10 basis points compression.

CIMB saw higher provisions in the Singapore and Thailand markets for commodity-related loans last year, while Maybank said provisions for oil and gas loans had reduced.

Maybank reported a drop in its quarterly profit on Wednesday, while CIMB posted a rise. Maybank recorded a 10 percent decline in fourth-quarter net profit, despite a slight rise in net interest income. Excluding one-off proceeds from the sale of securities in 2016, the profit rose by 22.4 percent, the bank said in a statement.

For the full year, the bank said a disciplined approach to pricing of loans and deposits helped it achieve a record performance, with profit before tax breaching the 10 billion ringgit ($2.6 billion) mark for the first time, compared with 8.84 billion ringgit a year earlier.

CIMB reported a 24 percent jump in fourth-quarter net profit, helped by a rise in non-interest income and cost-cutting.

Net non-interest income rose 8 percent to 1.3 billion ringgit, while net interest income fell 4.5 percent to 2.53 billion ringgit. ($1 = 3.9215 ringgit)

Reporting by Liz Lee Writing by Praveen Menon Editing by Muralikumar Anantharaman

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