May 30, 2019 / 6:08 AM / 3 months ago

Malaysia's Maybank posts Q1 profit fall on lower income, higher expenses

* Q1 net profit 1.81 bln rgt, 3.3% lower on year

* Revenue up 12.7% on loan growth, fund based income

* Expects stable growth in Malaysia

* Sees potential impact from trade tension, unclear govt policy

KUALA LUMPUR, May 30 (Reuters) - Malayan Banking Bhd (Maybank), Malaysia’s largest lender by assets, recorded a 3.3% fall in net profit for the first quarter on Thursday due to lower net interest income, higher expenses and allowances for impairment losses on loans.

Chairman Mohaiyani Shamsudin said the results were within expectations given a softer outlook consequent of ongoing global geo-political issues.

Maybank said it expects Malaysia, one of the bank’s three main markets in the region, to chart stable growth this year on rebounds in the mining and agriculture sectors, the central bank’s interest rate cut and revival of major infrastructure and government development spending projects.

However, it flagged potential impact from the outcome of the U.S.-China trade talks and the government’s long term economic growth policy.

Group President and CEO Abdul Farid Alias had in February also pointed to concern among investors about policy clarity.

Malaysia’s economy accelerated at a quicker pace than expected in the first quarter at 4.5% as recovery in the agriculture sector boosted. However, weakening global demand and the U.S.-China trade war were seen as increasing risks for the country.

The third-largest economy in Southeast Asia became the first in the region to cut its interest rate earlier this month, to support its economy amid concern about global growth.

Maybank posted a net profit of 1.81 billion ringgit ($431.47 million) for the three months ended March compared to 1.87 billion ringgit a year earlier. The result was below the 1.94 billion ringgit average of two analyst estimates compiled by Refinitiv.

Revenue rose 12.7% to 13 billion ringgit, however, on a 4.8% expansion in loans and 1.6% rise in fund based income.

Maybank’s net interest margin - the difference between interest paid and earned and a key gauge of bank profitability - shrank slightly to 2.3% versus 2.39% a year before due to competition.

Smaller rival CIMB Group Holdings Bhd also reported a quarterly profit drop on Wednesday, citing a one-off gain it recognised during the same quarter last year. ($1 = 4.1950 ringgit) (Reporting by Liz Lee; Editing by Christopher Cushing)

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