By Ying Xian Wong
Malayan Banking's second-quarter net profit rose 3.9%, beating market expectations, supported by stronger noninterest income.
Malaysia's largest lender by market capitalization said Tuesday that quarterly net profit climbed to 2.63 billion ringgit, equivalent to $625.1 million. That compared with the 2.51 billion ringgit consensus estimate in a Visible Alpha poll.
Net interest income slipped 0.6% from a year ago to 3.17 billion ringgit, while noninterest income jumped 14% to 2.75 billion ringgit.
For the first six months of the year, Maybank's net profit was 4.0% higher at 5.22 billion ringgit, driven by higher noninterest income amid better investment and trading income, as well as a moderation in net impairment provisions. Net interest margin for the first half fell 2 basis points, mainly due to the lower interest-rate environment, particularly in Singapore.
Maybank said it will leverage growth in its key markets to accelerate digitalization, customer-centric initiatives, as well as the expansion of its wealth-management, midmarket, nonretail and bancassurance segments.
The lender said it aims to maintain strong capital, liquidity and asset quality as it navigates slower regional growth and potential trade disruptions. It reiterated its target for a return on equity of at least 11.3% for 2025.
The bank's results come as investor sentiment is gradually improving amid easing trade uncertainties, with Malaysia securing a 19% tariff on goods exported to the U.S., lower than the 25% proposed previously. Shares in Maybank have climbed more than 4% so far this month, roughly in line with the broader market.
Yet headwinds from abroad and at home remain.
Expectations of weaker exports as front-loading activity fades could cause Malaysia's economy to slow from the second half of the year.
The country's economic momentum is likely to weaken through 2026, weighed by softer trade, slower investment and contractionary fiscal policy, according to BMI, a unit of Fitch Solutions. However, resilient domestic consumption, supported by low inflation, a firm labor market and coming wage increases for civil servants, might help cushion the slowdown, it said in a recent note. BMI expects Malaysia's gross domestic product to expand 4.2% this year, near the lower end of the government's 4.0%-4.8% target range.
Maybank could also face earnings pressure in the near term from Bank Negara Malaysia's quarter-percentage point rate reduction in July--its first cut in five years.
Loan yields would fall immediately, while deposit costs would stay high until they are repriced later, CIMB Securities analyst Ivy Ng wrote in a recent note. That puts Maybank's guidance for a stable net interest margin of around 2.04% for 2025 at risk, she said.
The lender's efforts to reduce its reliance on wholesale funding and grow its current account and savings account balances could help cushion the margin pressure but are unlikely to offset it, she said.
In the long term, a portfolio rebalancing in Indonesia and a strong Southeast Asian presence will likely position Maybank to benefit from cross-border financing, intraregional trade and sustainable finance opportunities, Ng said.
Write to Ying Xian Wong at yingxian.wong@wsj.com
(END) Dow Jones Newswires
08-26-25 0213ET
