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Categories
| Update Wahid: Maybank to remain profitable in FY09 |
| Business & Market 2009 | |||
| Written by Ellina Badri | |||
| Tuesday, 24 March 2009 11:06 | |||
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“We made a RM242 million impairment loss on MCB Bank in Pakistan in the first quarter and are expecting to make an impairment on PT Bank Internasional Indonesia (BII) as well. Notwithstanding the impairments, we will remain profitable in FY09,” he said. Wahid said, however, net profit in FY09 would be lower than that in FY08 due to the impairment losses and an expected uptick in NPLs. In FY08, the bank registered RM2.93 billion in net profit. Wahid declined to elaborate on the bank’s total impairment losses on its acquisitions expected to be made this year. Over the last 18 months, the bank had forked out some RM11.5 billion buying overseas banks last year, namely MCB Bank, BII and An Binh Bank in Vietnam. Wahid said the bank’s NPLs were expected to be “slightly higher” this year, although he did not say by how much. Its current NPL ratio is 1.8%, which is lower than the industry average of 2.2%. However, the NPL ratio is expected to increase with the slowing economy.  On its investments in BII, Wahid said that the Indonesian bank would need to grow its average earnings by 25% over the next five years for Maybank to break even on its RM8.2 billion acquisition of the Indonesian bank. BII made RM180 million in net profit in FY08, contributing to an earnings yield of 2%, he said. He added BII would need to triple the current earnings yield for the acquisition to be earnings neutral, expected from year five of the acquisition onwards. Maybank had bought BII last year and originally targeted for the buy to be earnings accretive four years after. On another note, he did not discount the possibility of merging PT Bank Maybank Indocorp (MBI) with BII. MBI is Maybank’s joint venture in Indonesia, which has been in operation since 1995. “We are looking at the options and could either continue operating it as it is, merge it with BII or convert it into a syariah (Islamic) bank,” he said. Speaking to reporters after the bank’s EGM on its RM6 billion rights issue, which shareholders approved, Wahid said the proceeds from the capital raising would be used to restore its capital base to pre-acquisition levels. After the completion of the rights issue, Maybank’s core capital ratio and risk-weighted capital ratio will rise to 11% and 16.4%, from 8.1% and 13.5%, respectively. He added the bank would not be over-capitalised with the fresh injection of capital, especially in comparison to other banks regionally, and its new capital base was an appropriate and optimum level to take advantage of growth opportunities over the next three to five years. This article appeared in The Edge Financial Daily, March 24, 2009.
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