Malaysia's Maybank Q2 profit drops 52%

Credit: REUTERS/Lim Huey Teng

Malayan Banking Bhd (Maybank), Malaysia's largest lender by asset, reported a 51.5% fall in second-quarter profit as incomes shrunk and impairments rose, it said in a bourse filing on Thursday.

KUALA LUMPUR, Aug 27 (Reuters) - Malayan Banking Bhd MBBM.KL (Maybank), Malaysia's largest lender by asset, reported a 51.5% fall in second-quarter profit as incomes shrunk and impairments rose, it said in a bourse filing on Thursday.

Maybank's net profit for the April-June period was 942 million ringgit ($225.95 million) compared with 1.9 billion ringgit a year ago, lagging behind a 1.64 billion ringgit estimate by analysts in a Refinitiv poll.

Revenue fell 9.7% to 11.8 billion ringgit.

The bank's net interest income and Islamic Banking income both fell 8.2%, while allowances for impairment losses on loans and financing rose 344.1%.

"Given the significant interest rate cuts in 2020 across our key markets, the group's net interest margin will compress," Maybank said, adding that it will seek to offset the impact by growing current and savings deposits which carry a lower cost.

Net interest margin is a key measure of bank profitability.

Malaysia's economy shrunk 17.1% in the second quarter, plunging into its first contraction since the 2009 global financial crisis, as the coronavirus pandemic ravaged business activity, prompting the central bank to sharply cut its GDP forecast for this year.

($1 = 4.1690 ringgit)

(Reporting by Liz Lee; Editing by Shailesh Kuber)

((liz.lee@thomsonreuters.com; Desk: +60323338039; Twitter: @livinglizly;))

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