The bank’s improved quarterly performance was the result of the sale of some liquid assets and fixed income instruments, which raised net fee-based income.
Malaysia’s largest lender recorded a profit of RM2.05 billion ($470 million) for the first quarter of the year, an increase of RM240.4 million or 13.3 percent year-on-year, according to financial results released on Thursday.
However, the bank’s group president and chief executive Abdul Farid Alias said the results do not reflect expectations for the rest of the year, as the full impact of the Covid-19 pandemic was not yet known.
The full effects of rate cuts across key markets will show in 2Q income, with net interest margin expected to compress 15bps in the current rate environment, Maybank said in its outlook for 2020.
Given the strong trading income and heightened risk going forward, the bank is making additional provisions of about RM600 million for loan losses, RM400 million for forward-looking assessment based on weakening macro-economic factors, and RM200 million for retail portfolio slippage.
Maybank said its priority was to help support the domestic economies of its home markets and to work with affected borrowers to ensure viable solutions that support employment and prevent business failures in the near term.
In Singapore, its profit before taxation was S$77.3 million, an improvement of more than 100 percent from the same period a year before, which recorded a loss before taxation of S$79.7 million, which was due to higher loan loss allowances.
Net fund based income was 11.8 percent lower on-year at S$170.4 million, attributed to margin compression, while fee-based income grew 26.1 percent on-year, led by wealth management and investment gains. At the same time, overhead expenses increased by 7.5 percent due to higher personnel and information technology costs.