November 30, 2017 / 6:40 AM / in 16 days

UPDATE 1-Maybank posts 4th straight quarterly profit gain on Islamic banking growth

* Net interest income up 8.6 pct, Islamic banking up 24.3 pct

* Higher impairments mitigated by lower bad debt

* Growing cost of funds a worry, says group CEO (Updates with details of earnings, executive’s comments)

By Liz Lee

KUALA LUMPUR, Nov 30 (Reuters) - Malayan Banking Bhd (Maybank), Malaysia’s biggest lender by assets, raked in higher profits for a fourth straight quarter, driven by rising net interest income and growth at its Islamic banking operations.

Southeast Asia’s third-largest economy has recovered this year after a rocky 2016, when growth slumped to its slowest pace since the global financial crisis in 2009. The turnaround has buoyed business for banks.

Maybank posted on Thursday a net profit of 2.03 billion ringgit ($496.70 million) for the third quarter ended September, up 13 percent against the 1.795 billion ringgit it made a year ago. That was ahead of an average estimate of 1.795 billion ringgit from two analysts surveyed by Thomson Reuters.

Its net interest income rose 8.6 percent to 3.05 billion ringgit while Islamic banking income increased by 24.3 percent to 1.25 billion ringgit.

Revenue climbed 2.7 percent to 11.59 billion ringgit.

The group’s allowances for impairment losses on loans, advances, financing and other debts increased by 4.4 percent from a year ago mainly due to higher net collective allowance.

The increase was, however, mitigated by lower net individual allowance, as well as lower bad debts and financing recovered, Maybank said in a statement.

Earlier this week, CIMB Group Holdings, the No.2 lender of the country, reported a surprise rise in quarterly profit, helped by an improving domestic economy.

Maybank’s share price has risen 12.3 percent year-to-date while CIMB has gained 32.8 percent, both beating the benchmark index, which has climbed 4.8 percent.

Maybank group CEO Abdul Farid Alias, in a statement, referred to the pick-up in domestic business and loan growth as well as market sentiments, and expected the lender to further leverage on those in the months ahead.

“However, in the midst of this more positive outlook, we are conscious of the heightening pressure on interest margins owing to the increasing cost of funds,” he said.

The country’s central bank has said the economy was on track to register growth of 5.2 percent to 5.7 percent this year, and may even exceed that estimate.

In the September quarter, Malaysia’s gross domestic product grew at its fastest pace in more than three years. ($1 = 4.0870 ringgit)

Reporting by Liz Lee; Editing by Himani Sarkar and Muralikumar Anantharaman

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