KUALA LUMPUR, Aug 13 —Malayan Banking Bhd’s (Maybank) group loan-to-deposit ratio (LDR) is at a comfortable level of 94.7 per cent as at end-March 2017 and not 101 per cent as stated in a Bloomberg report released Friday, Aug 11, 2017.
Its Group Chief Financial Officer, Datuk Amirul Feisal Wan Zahir, said the news article and the Malaysian banking analyst research report it quoted, did not give a true picture of Maybank’s careful management of its assets and liabilities.
“Maybank runs its business at the highest level of prudence and transparency and we have clearly disclosed in our quarterly earnings presentations, the levels of both our LDR and liquidity coverage ratio (LCR),” he said in a statement here today.
He said that for Maybank’s Malaysian operations, its LDR as at March 2017 was 90.6 per cent, and this has remained fairly stable over the last year from the 90.2 per cent in March 2016.
“It was in fact lower quarter-on-quarter from the 91.3 per cent level recorded in December 2016, arising from deposit growth which outpaced loan growth. Deposits growth was also supported by low-cost current account & savings account (CASA) growth,” he said.
The group, he said, has been actively focusing its attention on increasing its CASA component, and where necessary, moved away from the higher funding cost segments, such as fixed deposits.
Maybank’s Singapore operations, meanwhile, had an LDR of 89.5 per cent as at March 2017, while Maybank Indonesia’s LDR at the bank level stood at 88.4 per cent, he said.
“To state that our LDR ratio is approaching 101 per cent is wrong and can lead to misunderstanding among our stakeholders, including our customers, shareholders and regulators,” said Feisal.
He said the research report, which stated Maybank’s LDR as being 99.2 per cent, had excluded the Islamic investment accounts (IAs) from its computation of the group’s LDR, hence resulting in it reporting a higher LDR for Maybank.
“This is a misrepresentation of LDR computations as IA should be included in the LDR computation for Maybank Group and Maybank Malaysia as provided for under Malaysian banking guidelines. If IA is excluded from the LDR computation, then the associated loan amount should also be excluded in the computation as investment accounts are meant to fund loans,” he said.
IA is a banking product offered by Maybank Islamic Bhd, which in essence, is similar to traditional deposits with CASA and time deposit features, and used to fund Islamic assets.
The IAs were reclassified from Mudarabah deposits under the old guidelines on Islamic banking to Mudarabah Investment Accounts (IAs) starting from July 2015. This is in line with Maybank Group’s commitment in complying with, and embracing the Islamic Financial Services Act.
Feisal also clarified that the group’s liquidity coverage ratio, which measured how sufficiently banking institutions held high-quality liquid assets to withstand an acute liquidity stress scenario over a 30-day horizon, stood at 134 per cent as at end March 2017, which was well above the Bank Negara Malaysia requirement of 80 per cent for the year 2017.
On the issue of some Malaysian banks’ (including Maybank’s) net interest spread being less than two per cent as also stated in the Bloomberg article, he said, Maybank’s net interest margin (NIM) stood at a healthy level at 2.43 per cent as at first quarter of 2017.
“We have actually seen our NIM expand by nine basis points from 2.34 per cent a year ago arising from our disciplined loan pricing and ability to reduce our cost of funding by focusing on CASA growth.”
With regard to the statement on Malaysian banks’ growing reliance on foreign currency debt issuances, Feisal also clarified that Maybank Group’s total borrowings, including subordinated debt and capital instruments was 7.6 per cent of total assets.
As part of Maybank Group’s prudent risk management approach to avoid foreign currency exposure mismatch for its assets and liabilities, Maybank only raised foreign currency borrowings to fund client requirements in that particular currency, he said.
On the concern raised in the news report about lending to riskier clients, he said, Maybank Group has always applied a disciplined and prudent credit management framework in accordance with its risk appetite.
“Regular oversight via committees that encompass senior executives and board members is applied at all times to ensure that asset quality is managed appropriately,” he said. — Bernama