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PUBLISHED: Aug 25, 2016 6:06pm

Maybank closing branches with low demand

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Source: Bernama Source:
Bernama

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KUALA LUMPUR, 25 Aug 2016: 

Malayan Banking Bhd (Maybank) will close or relocate branches with low demand as part of its branch optimisation effort, said group president and chief executive officer Datuk Abdul Farid Alias.

He said the branches will be shut down if the demand was lower-than-expected.

“We sometimes relocate a branch in a location where multiple branches exist and bring no economic sense,” Abdul Farid said when asked about a leaked list of Maybank closing down about 27 branches.

“However, this does not mean the bank would not open new branches as such a move is part of the bank’s branch optimisation effort.

“The branch is our physical channel. To us, all channels, whether they are digital (banking) or physical space, such as a branch, are still important and relevant (to us, but) depending on areas.”

Maybank, which is Malaysia’s largest bank by market capitalisation, has close to 400 branches nationwide and 2,500 automated teller machines.

Maybank’s pretax profit slipped 26.5% to RM1.58 billion for the second quarter ended 30 June 2016, from RM2.15 billion in the same quarter last year, due to a higher allowance for impairment losses and an increase in overhead expenses.

Revenue increased to RM10.94 billion from RM8.94 billion previously.

For the cumulative six months, Maybank’s pretax profit declined to RM3.51 billion from RM4.39 billion for the same period last year, while revenue jumped to RM22.12 billion from RM18.12 billion.

Maybank is Southeast Asia’s fourth largest bank by assets.

In a filing to Bursa Malaysia, it said the group’s overhead expenses for the second quarter increased by RM205.1 million or 8.5% compared with the previous corresponding quarter ended 30 June 2015.

“The increase was mainly contributed by an increase in establishment costs of RM105.9 million, administration and general expenses of RM102.4 million and personnel expenses of RM45.0 million.”

The group’s allowance for impairment losses on loans, advances, financing and other debts, also increased by RM680.7 million to RM981.7 million for the quarter ended 30 June 2016, compared with the same quarter last year.

The increase was mainly due to higher net individual allowance of RM268.4 million and collective allowance made of RM387.2 million.

Maybank says it does not rule out the possibility of Bank Negara Malaysia to further cut the overnight policy rate by 25 basis points to 2.75% this year, said Abdul Farid.

The central bank, which slashed the rate by 25 basis points to 3%, is scheduled to hold two more meetings on monetary policy this year.

In a nutshell, a cut in key interest rate would ease the strain on borrowers that could result in lower non-performing loans, and drive a slightly higher growth in demand for credit, he said.

“It will also encourage people to raise consumption and the positive impact would be on overall growth, obviously.”

Following the rate cut in July, banks in Malaysia have adjusted their respective base rates. As for Maybank, it brought down its base rate by 20 basis points to 3% per annum from 3.2% previously and its base lending rate to 6.65% per annum from 6.85% before.

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