Malayan Banking Berhad (Maybank) is the largest listed company and bank in Malaysia, boasting a market capitalization of RM118.5 billion as of May 2024. As a financial giant, Maybank has consistently demonstrated robust performance, even amid challenging economic conditions. The bank achieved commendable results in 2023, showcasing its resilience and strategic initiatives in navigating a complex and dynamic landscape.
Attending the 2024 Maybank annual general meeting provided valuable insights into the bank’s operations and strategies. Here are 15 things I learned.
1. Operating income increased 3.3% year-on-year to RM27.4 billion in 2023, supported by the 38.3% year-on-year increase in non-interest income to RM8.1 billion. Maybank benefited from gains in investment and trading income, favourable foreign exchange rates, and higher core fees.
On the other hand, net fund-based income decreased 6.6% year-on-year to RM19.3 billion in 2023 as net interest margin compressed 27 basis points year-on-year to 2.12% in 2023. The decrease was due to higher funding cost and stiff competition for deposits (especially with digital banks) across its home markets, in line with the industry. The compression of the net interest margin eased after Q2 2023 but is expected to compress further by up to 5 basis points in 2024. Maybank expects customer deposits to comprise at least three-quarters of its total funding in 2024, similar to 2023.
2. The bank’s net profit increased 17.5% year-on-year to RM9.4 billion in 2023. It registered higher treasury and markets income because of favourable movement in forex gain and higher realised capital gain on financial investments. For every 1.0% depreciation of the ringgit, the group’s net profit will increase by RM40.2 million.
Dividend per share improved 3.4% year-on-year to 60.0 sen in 2023, which represents a dividend payout ratio of 77.4% in 2023. Dividends remain a key method for the bank to reward shareholders.
3. Maybank’s asset quality has improved. To address potential risks due to the current economic environment, Maybank allocated 60% of its RM1.7 billion management overlay to the retail and retail SME portfolio. Gross impaired loans ratio improved because of ‘write-offs, recoveries, and reclassification of accounts to non-impaired loans’. As a result, net impairment losses declined 39.5% year-on-year to RM1.7 billion. Net credit charge off rate is expected to improve to less than 30 bps in 2024.
Maybank aims to improve its returns on equity to 11% in 2024.
| Year | 2022 | 2023 |
| Gross impaired loan ratio | 1.6% | 1.3% |
| Net credit charge off rate (%) | 40 bps | 31 bps |
| Loan loss coverage | 131.2% | 124.9% |
| Returns on equity | 9.6% | 10.8% |
4. Maybank continues to strengthen its solid capital position by boosting its capital ratios above the minimum requirements.
| Year | 2022 | 2023 |
| CET1 Capital Ratio | 14.8% | 15.3% |
| Tier 1 Capital Ratio | 15.5% | 16.0% |
| Total Capital Ratio | 18.2% | 18.6% |
5. Maybank’s liquidity ratios remained healthy with net stable funding ratio and liquidity coverage ratio levels above regulatory requirements.
| Year | 2022 | 2023 |
| Loan-to-deposit ratio | 91.6% | 91.7% |
| Net stable funding ratio | 118.1% | 122.0% |
| Liquidity coverage ratio | 145.4% | 142.1% |
6. Maybank’s total assets exceeded RM1 trillion in 2023. The company achieved strong loans growth at 9.2% to RM640.8 billion in 2023 across all home markets, namely Malaysia, Singapore, Indonesia, and Cambodia. The overall loans growth is expected to reach between 6% and 7% in 2024.
Its domestic loans growth in Malaysia was the fastest among its Malaysian peers in 2023. Green financing has become a growth engine for Maybank. The bank owned about 30% of the electric vehicle financing market share in the country.
7. Overhead expenses increased 11.8% year-on-year in 2023. The increase was due to higher personnel expenses after the conclusion of collective agreements during the year as well as higher IT, depreciation, and credit card-related expenses as a result of higher billings. Cost-to-income ratio increased from 45.2% in 2022 to 48.9% in 2023. The bank aims to keep the ratio less than 49% in 2024, and down to around 45% in 2025 as the company is actively investing.
By 2027, the bank is committed to spend up to RM4.5 billion on operating and capital expenditure under its M25+ strategic plan. To date, the bank has spent RM304.7 million.
8. Maybank expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 3.00% in 2024, despite potential interest rate cuts by the U.S. Federal Reserve. This is because Malaysia’s OPR wasn’t raised as aggressively as the U.S. Fed Rate, resulting in the current record-wide gap of over 250 basis points. Nevertheless, Malaysia’s inflation is forecast to remain moderate, ranging between 2% and 3.5%.
9. Maybank’s branches and ATMs are part of the bank’s omnichannel touch points. Its branches can be used to introduce new products and services as well as serve the evolving needs of customers. Its ATMs are still heavily used with hundred millions of transactions per year despite the 30% year-on-year increase in mobile transactions.
10. Group deposits grew 9.0% year-on-year but the CASA ratio dropped from 40.9% in 2022 to 36.9% in 2023, led by the decrease in Singapore. Nevertheless, the CASA ratio is still higher than the pre-pandemic level of around 35%. Consumers are spending more post-pandemic and are also shifting their funds to deposits with higher yields. To save costs and protect its profit margin, the bank has continued to release some high-cost funding.
11. Etiqa Singapore’s loss before tax reduced from RM618.3 million in 2022 to RM51.9 million in 2023 because it has set aside sufficient reserves for further surrenders of its mini universal life policies. The entity saw 30% year-on-year reduction in the policies to 18,700 in 2023. China bonds related to the property sector was impaired in 2022. Etiqa Singapore no longer held such bonds as of July 2023. Maybank does not plan to spin off its Etiqa business at this time.
12. In 2023, Maybank launched its regional offshore global Islamic wealth management hub in Singapore, further cementing its position as the global Islamic finance leader. Its assets under management grew 19.0% year-on-year to US$2.0 billion in 2023 and are expected to grow at double digits in the coming years to reach US$4.4 billion in 2025.
Besides wealth management, the management will focus on expanding its sustainable trade financing in the country. Almost 20% of its profit came from Singapore according to the CEO. Maybank also has two branches in Vietnam and owns 16% stake in An Binh bank. The regulator there does not allow foreign players to own more than 20% stake in a Vietnamese bank.
13. Indonesia’s revenue grew 4.9% year-on-year in 2023, contributing about 10% to the group’s total revenue. This strong performance suggests potential for further growth, as loan and deposit growth in Indonesia increased 11.3% and 5.4% year-on-year in February 2024, respectively. This indicates a continued demand for financing. However, finding cost-effective funding solutions remains a challenge.
14. All five digital banks are expected to launch in Malaysia by 2024. Digital banks are not expected to compete with incumbents in the near term, as they focus on underserved segments that make up 8% of the population and are not actively targeted by traditional banks. Maybank avoids interest rate wars for savings accounts. This keeps their funding costs under control and protects their profits in the long run. With interest rates rising in 2023, Maybank will likely rely more on cheaper deposits and short-duration placements from other banks to fund their operations, as well as on higher average interbank volumes. With a dominant 56% share of Malaysia’s mobile banking market, Maybank is well-positioned to compete against new entrants.
15. The banking industry spent about RM10 million in 2023 alone to raise awareness among the public regarding scam protection. Data protection in Malaysia is governed by the Personal Data Protection Act and the Financial Services Act, both of which Maybank complies with. The banking industry, including Maybank, works closely with regulators to ensure compliance.
Maybank launched a kill-switch button that allows customers who suspect their accounts have been compromised to press the button to deactivate their accounts to protect their accounts. The accounts can be activated subsequently. Maybank has fully migrated to Secure2u authentication function to replace the six-digit SMS one-time pin (OTP). The bank also educates its customers about the importance of not sharing their credentials with others or fraudsters, as online fraud incidents have become more prevalent recently.
The fifth perspective
Maybank expects to leverage continued GDP growth in its key home markets (Malaysia, Singapore, and Indonesia) to achieve organic business expansion. They plan to further strengthen their regional ASEAN position by offering more seamless services across these countries.
Interest rates are expected to remain stable in Malaysia and Indonesia, while Singapore may see a decrease. The uncertain global economic environment, geopolitical risks, inflation, and cyber threats were identified as short-term challenges.
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