Malaysia's top lender Maybank yesterday said its first quarter profits fell 22 percent from the same period last year due to higher loan loss provisions and losses in an associated company.

maybank malaysia bank 121108 Maybank, officially known as Malayan Banking, reported its net profit for the first three months to September 2008 fell to RM572.2 million from RM735.4 million a year ago.

Maybank chairperson Mohamed Basir Ahmad said in a statement that the group was fundamentally sound despite the poorer results.

"Despite the lower profit recorded for the quarter, the group remains strong in terms of its total asset quality which improved steadily, clearly reflecting its strong fundamentals and resilience in all economic cycles," he said.

The net non-performing loan ratio strengthened to 1.84 percent from 1.92 percent in June 2008 while loan loss coverage improved to 100.2 percent in September.

Net interest income was 3.6 percent lower at RM1.27 billion while non-interest income fell to RM478.7 million from RM610.2 million a year earlier.

Losses suffered by associated company

Loan loss provision was RM192.2 million compared to RM108.1 million a year ago mainly due to the lower specific allowance written back.

Maybank said its pre-tax profit for the period was impacted by impairment losses in an associated company which amounted to RM242 million.

The bank said it expected net profit for its financial year ending June 2009 to be lower given the deteriorating global financial and economic situation.

It said the operating environment for the domestic banking sector would be more challenging, against this backdrop, with slower loans growth and increasing risk of greater non-performing loans.

"We are adopting a conservative outlook for the financial year ahead, focusing on strengthening our core areas of business to drive growth and building on our regional footprint to set the foundation for future growth," said Maybank president and CEO Abdul Wahid Omar in the statement.

- AFP