KUALA LUMPUR (Aug 1): Malayan Banking Bhd (Maybank)’s 98.54%-owned PT Bank Maybank Indonesia Tbk’s net profit for the first half ended June 30, 2023 (1HFY2023) jumped 44.5% to Rp960 billion (RM286.54 million), from Rp663 billion (RM197.89 million), on the back of a decrease in provisions following improved asset quality and well-managed overhead costs.

The banking group’s net interest income (NII) also grew 6.7% due to an increase in loans and better earning assets composition, according to a press release on Tuesday (Aug 1).

The group said that the economy in Indonesia had resumed its growth phase in the first half of the year, with a stable business climate leading to higher loan demand and a steady market outlook. The bank was also able to book higher earnings from its loan portfolio and a significant increase in fee-based income as treasury-related transactions improved.

Fee-based income widened by 25.6% to 1.10 trillion rupiahs from 872 billion rupiahs, owing to significant growth in global market (GM) transaction fees of 239.3% to 182 billion rupiahs, compared to 54 billion rupiahs year-on-year (y-o-y).

Maybank Indonesia added that the improved performance was also “supported by stable interest rate environment and positive market outlook, as well as improved forex services performance”.

Additionally, the group saw an 11.6% increase in non-GM fees, recording 913 billion rupiahs from 818 billion rupiahs in 1HFY2022, comprising asset recovery fees that grew more than seven times to 241 billion rupiahs, as well as loan and retail business-related fees.

For the first half of 2023, the bank’s total outstanding loans recorded a slight increase of 2.9% to 109.97 trillion rupiahs, from 106.81 trillion rupiahs, as the Indonesian economy continued its growth phase, leading to improvements in public consumption and consumer purchasing power.

The group saw significant growth in community financial services (CFS) retail loans by 15.4% to 41.49 trillion rupiahs, from 35.95 trillion rupiahs, supported by growth in subsidiaries’ auto loans, credit card business and personal loans, and mortgages.

“The bank maintained its conservative approach to rebalance its non-retail loans portfolio and took a cautious risk posture in loan disbursements to ensure long-term commitment with clients. In the first half of 2023, the bank’s CFS non-retail loans decreased by 2.9% as the business banking segment eased by 6.8%, followed by a 4.0% decline in the small-medium enterprise loans segment,” Maybank Indonesia further commented.

Meanwhile, the group’s total customer deposits stood at 110.38 trillion rupiahs, declining slightly by 1.1% from the 111.66 trillion rupiahs posted a year earlier, owing to a drop in the bank’s current account savings account (Casa) of 2.7%, with the Casa ratio remaining largely stable at 48.6%.

Moreover, the bank’s time deposits also increased minutely by 0.4% y-o-y but grew significantly by 13.8% quarter-on-quarter, as customers sought to divest funds in higher earnings deposits.

The group also saw its overhead costs increase by 6.4% to 2.94 trillion rupiahs, as it continued to intensify the development of its human capital with future-ready skills, incorporate more strategic hiring and training programmes, as well as increase customer engagement and campaign initiatives, resulting in higher marketing and outsourcing costs.

Subsequently, in terms of the group’s shariah banking unit, Maybank Indonesia saw a massive leap in profit before tax (PBT) of 179% to 346 billion rupiahs, from 124 billion rupiahs posted in 1HFY2022. Assets also grew by 5.2% to 43.29 trillion rupiahs from 41.14 trillion rupiahs, while Casa increased to 15.6 trillion rupiahs from 11.91 trillion rupiahs.

Maybank Indonesia said it also saw growth in its digital banking segment, as financial transactions from retail customers using the M2U app increased 17.6% to 10.1 million transactions, alongside a 2.3%growth from corporate transactions to over 2.1 million transactions.

Capital remains strong with capital adequacy ratio (CAR) at 28.6% and a total capital of 29.27 trillion rupiahs.

“We continue to make progress with our transformation efforts under the M25+ strategy, which aims to improve our business fundamentals, advance the bank’s digital capabilities, especially for our SME customers, and expand our participation in the relevant ecosystem. We will also continue to leverage the bank’s strong footprint in the shariah banking market, to lead the industry in enriching [the] shariah wealth solutions offering,” said Taswin Zakaria, president director of Maybank Indonesia.

President commissioner of Maybank Indonesia, Datuk Khairussaleh Ramli added that the bank will remain optimistic about its growth opportunities, as the economy continues to pick up. He said it will also provide support to all stakeholders in efforts to strengthen its regional presence.

“Implementation of our refined M25+ strategy will address the evolving needs of Maybank’s franchise, specifically covering aspects of business and operational improvements, as well as capability enhancements to uplift Maybank Indonesia’s business. This strategy will further reinforce the bank’s market competitiveness, while we continuously drive customer centricity, in line with our mission to humanise financial services,” Khairussaleh further said.

At Tuesday’s afternoon break on Bursa Malaysia, Maybank’s share price fell three sen or 0.33% to RM8.99, giving the group a market capitalisation of RM108.37 billion.