Malaysia's Maybank books record annual profit, flags virus impact

·2-min read

* Lender's Q4 gains on higher net operating income

* Net interest margin shrunk 6 bps to 2.27% in FY2019

KUALA LUMPUR, Feb 27 (Reuters) - Malayan Banking Bhd (Maybank) posted on Thursday a higher fourth-quarter net profit and a record annual profit, underpinned by strong performances in its insurance and Islamic banking businesses.

In a bourse filing, Malaysia's largest lender by assets said solid quarterly performances in these segments lifted its full-year net profit to a record high of 8.2 billion ringgit ($1.94 billion).

Maybank recorded a 2.45 billion ringgit profit in the October-December period, compared with 2.33 billion ringgit a year earlier, beating the 2.44 billion ringgit analysts' forecast by Refinitiv.

The company's fourth-quarter revenue rose 6.1% to 12.98 billion ringgit, while its net interest income dipped 0.8% to 3.08 billion ringgit.

Net interest margin - a key measure of bank profitability - compressed 6 basis points in 2019 to 2.27%, as group gross loans expanded by 1.2% while deposits widened 1.6% for the year.

The group expects its full-year financial performance to be satisfactory amid the virus outbreak, U.S. elections and tensions in the Middle East.

The lender has set a target for return on equity of 10% to 11%.

The bank will "seek out selective growth opportunities despite the overall cautious stance" on prevailing concerns over the coronavirus outbreak and other geo-political issues, Group President and Chief Executive Officer Abdul Farid Alias said.

The Malaysian lender had earlier flagged potential impact on its clients due to the uncertainty surrounding the country's domestic economic policy.

This week, Malaysia was tossed into a political turmoil after Prime Minister Mahathir Mohamad stepped down but was immediately appointed the interim prime minister with full authority until a new government is formed.

The nation awaits its king's decision on a new leader, expected later in the day, after consulations with all members of parliament.

Malaysia's economic growth slowed to the weakest in a decade in the fourth quarter at 3.6% due to lower commodity output and a drop in exports amid the U.S.-China trade war.

The Malaysian central bank also warned that the economy could face further slowdown this year as the coronavirus outbreak threatened to pile on pressure.

Bank Negara unexpectedly cut its overnight policy rate last month by 25 basis points to 2.75%, the lowest since March 2011.

($1 = 4.2350 ringgit) (Reporting by Liz Lee; Editing by Sherry Jacob-Phillips)