The operating profit of the Maybank Group (i.e. profit before tax and provisioning) has hit the RM4 billion mark for the first time, reaching RM4.32 billion for the year ended June 2005, up 12.2% from RM3.85 billion the previous year.

Group pre-tax profit rose to RM3.49 billion for the year, 4% higher than the RM3.36 billion recorded last year. Profit after tax rose 3.2% to RM2.5 billion from RM2.42 billion previously.

The Group's performance translated into a gross return on equity of 22.5% for the year compared to 23.9% previously. Earnings per share rose to 68.4 sen compared to 67.3 sen in June 2004 while net tangible assets grew by 8.6% to RM4.41 from RM4.06 last year.

The Board has decided once again to reward its shareholders with a final dividend of 25 sen per share and a special dividend of 35 sen per share less 28% income tax respectively. This brings the total dividend for the financial year to 102.5 sen per share, after including the interim dividend totalling 42.5 sen per share. This is in line with the Group's capital management strategy to maintain its capital at an efficient level. Notwithstanding the proposed final dividend payout, the resultant Bank's Capital Adequacy Ratio is well above the statutory requirement, at 12.6%.

The Group has therefore taken the decision to adopt a more aggressive loan write-off policy, by writing off the full collateral value of Non-Performing Loans (NPL) aged 7 years and above, as well as 50% of the collateral value of NPLs aged between 5-7 years. This amounted to RM708.1 million for the year. In view of this, the Group has decided to reduce the level of General Provisions (GP) from 2.5% of total Risk Weighted Assets previously, to 2% in the year under review. The net NPL ratio of the Group now stands at 4.93% in June 2005 from 5.96% in June 2004.

However, for the year, there was an increase in loan loss and provisions to RM823.8 million from RM494.5 million previously. This can be attributed to the following factors:

•		a shortfall of RM50.7 million from the more aggressive policy of writing off of NPLs, even after offsetting the reduction in GP
•		additional GP of RM181.4 million required to support the expanded risk weighted asset base of the Group
•		additional provisioning of RM162.4 million for share margin financing of selected counters which experienced a sharp drop in value during the last quarter of the financial year. Enhanced risk management initiatives have since been introduced in this situation to reduce the risk of re-occurrence.

Factors influencing the results

In elaborating on the results in Kuala Lumpur today, Maybank President and CEO, Datuk Amirsham A Aziz said that it was achieved despite significant pressure on interest margins, increasing competition and challenging market conditions.

He added that overall, both fund-based income and fee-based income expanded. Net fund-based income comprising net interest income and gross income from Islamic Banking operations increased by 6.1% over that of the previous corresponding period while non-interest income expanded by 19.6%.

Income from Islamic Banking operations grew 36.2% to RM711 million, driven mainly by higher demand for hire purchase (+30.6%), trade bills (+31.9%) and term financing (+22.8%). The Group remains a leader in Islamic banking, holding a 57.3% market share for trade bills, 43.4% share for home financing and 17% share for hire purchase. Overall market share for total Islamic financing was 28.3% while that for deposits was 18.3%.

Loans growth for the Group expanded by 9.8% for the year compared to 7.1% last year. This was a result of growth in consumer, SME and corporate segments arising from a concerted and focused marketing strategy.

For the Malaysian operations, corporate loans recorded a turnaround in the year with a growth of 3.9% compared to a decline of 4.9% in the previous year. Growth in trade financing surged to 29.6% this year from 18% previously, while loans to the SME sector expanded by 13.9% in the year. In the consumer segment, home mortgages rose 11.5% while automobile financing grew by 15.8% and credit card receivables by 9.1%.

Performance of overseas operations & subsidiaries

The performance of the Group's overseas operations and major business segments continued to record improvements with the exception of the stock broking company.

The overseas operations saw a 20.4% rise in revenue to RM1.5 billion from RM1.24 billion last year. The main contributor was the Singapore operations which recorded a 20.9% jump in revenue to RM914.7 million from RM756.5 million previously. This was achieved on the back of stronger loan growth and fee based income.

Revenue for the investment banking segment grew 9.9% to RM547.7 million in the year under review. This was attributable to increases in fund-based and fee income as well as from sale of dealing securities at Aseambankers and Mayban Discount, although Mayban Securities recorded lower brokerage income on the back of lower industry volume.

Revenue of the insurance business segment grew by 4.5% to RM324.7 million from RM310.7 million previously, arising from improved net premium earned.

The results of major subsidiaries/ business segments were as follows:

Subsidiaries	Profit before tax for Year ended 30 June 2005 (RM million)	Profit before tax for Year ended 30 June 2004 (RM million)
Aseambankers Malaysia Berhad	109.3	107.7
Mayban Discount Berhad	77.1	45.5
Mayban Securities	(63.5)	54.5
Mayban General Assurance	88.2	74.4
Mayban Life Assurance	28.3	9.9
Singapore Operations	187.4	144.2
Other overseas operations	90.6	73.2