May 21, 2020 / 5:51 AM / 8 days ago

Malaysia's Maybank posts higher Q1 profit but cautions pandemic impact in rest of year

KUALA LUMPUR, May 21 (Reuters) - Malayan Banking Bhd (Maybank) reported on Thursday higher profits for the first quarter but flagged that the performance did not reflect expectations for the rest of the year as the full impact of the coronavirus pandemic was not yet known.

The largest lender in Malaysia by assets posted a 2.05 billion ringgit ($472.24 million) profit in the January-March period, compared with 1.81 billion ringgit a year earlier and beating 1.68 billion ringgit forecast by analysts’ in a Refinitiv poll.

However, Group President and Chief Executive Abdul Farid Alias said in a statement the performance was “not representative of the way we will perform for the rest of the year”.

He said the gains from selling some liquid assets and fixed income instruments, which raised net fee based income, contributed largely to the better quarterly performance.

The bank said added provisions were made for possible impairments to credit portfolios potentially vulnerable in the foreseeable future, to mitigate risks from expected supply and demand disruptions. Net impairment losses for the quarter came in 60.7% higher as a result.

Revenue rose 1.85% to 13.22 billion ringgit. Group loans grew marginally by 0.3% while deposits fell 2.5%.

The bank said it managed to contain pressures on net interest margin - a key measure of bank profitability - which narrowed by 7 basis points to 2.23%, but expects that to remained compressed in the low interest rate environment.

Earlier this month, Malaysia’s central bank slashed its overnight policy rate to a historic low of 2.00% and loosened liquidity rules to support the banking system. ($1 = 4.3410 ringgit) (Reporting by Liz Lee; Editing by Kim Coghill)

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