NIM reduction expected for Maybank Investment Bank

KUALA LUMPUR – Maybank Investment Bank (Maybank 1B) announced that they are expecting net interest margins (NIMs) to reduce this year.

The bank explained that the decline could be attributed to the slow growth of the current account saving account (CASA) as well as rise in deposit competition.

NIM is one of the methods to gauge how much a bank’s profits and growth are. It shows a bank’s interest earned from loans and interests paid out to depositors.

Furthermore, Maybank 1B is also expecting a shrink in the operating profit growth for banking sectors. This is after “having conservatively factored in lower non-interest income from further mark-to-market investment losses as bond yields rise and the slightly faster expense growth.”

In a research note released recently, the bank said they are expecting higher tax under Cukai Makmur (prosperity tax) that would offset lower credit costs. It would also project a 1.0% reduction in cumulative core net profit.

Maybank 1B is asking investors to look towards 2023. The bank projects an 18% net profit rebound with lower provisions. There would also no longer be Cukai Makmur in the equation then.

“Excluding Cukai Makmur, we are expecting cumulative core net profit to increase 7.0% in 2022 and 8.0% in 2023.

“There’s room for earning surprises with rising interest rates and/or credit costs decline faster. We impute only one rate hike in Q4 of 2022 and we kept credit costs elevated,” the bank added.

Maybank 1B further expects a return on average equity (ROAE) to increase to 10.2% in 2023 from 9.1% and 9.6% in 2022 and 2021 respectively.

According to investopedia, the ROAE is a financial ratio measuring the income over the company’s shareholder equity.

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