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Maybank Posts 12% Profit Rise as CEO Tapped for Malaysia Cabinet

Malayan Banking Bhd. (MAY), Malaysia’s biggest lender, said profit increased 12 percent to a record in the first quarter as domestic spending and investment spurred demand for credit in the Southeast Asian nation. Net income climbed to 1.51 billion ringgit ($495 million), or 17.87 sen per share, in the three months ended March 31 from 1.35 billion ringgit, or 17.63 sen, a year earlier, according to a stock exchange filing today.

Prime Minister Najib Razak recruited the bank’s Chief Executive Officer Abdul Wahid Omar to join his Cabinet last week to oversee the country’s Economic Planning Unit. Potential successors include Khairussaleh Ramli, head of Maybank’s Indonesian operations, and Tengku Zafrul Tengku Abdul Aziz, CEO of the group’s investment banking arm, the Star newspaper reported May 17, without saying where it got the information.

“We started the first quarter on an encouraging note,” Wahid told reporters at a media briefing in Kuala Lumpur today before stepping down. “We expect activity to pick up in subsequent quarters. We are on track to meet our targets.”

The stock rose 0.6 percent to 10.14 ringgit at the midday break before its earnings were announced. Maybank, which has operations in countries including Indonesia and Singapore, has risen 10 percent this year, outperforming a 5.4 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, gained 9 percent to 2.41 billion ringgit in the first quarter, Maybank said. Income from Islamic banking increased 16 percent to 619.3 million ringgit. Allowances for losses on loans and financing declined 54 percent to 84.5 million ringgit.

The lender has a return-on-equity target of 15 percent and is aiming for loans growth of 12 percent for 2013, said Wahid.

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net; Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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