MAYBANK ISSUES PROFITS & DIVIDENDS WARNING

MAYBANK ISSUES PROFITS & DIVIDENDS WARNING

CLASSIFICATION: ACCOUNTING/AUDIT NOTIFICATION/ANALYSIS & BUSINESS PROJECTIONS
TYPE: Special dividends/Dividends/Dividend Policy
06 April 2009

MAYBANK ISSUES PROFITS & DIVIDENDS WARNING MALAYAN BANKING expects expects lower profits in the current fiscal year and may cut its dividend due to the global economic slowdown, the firm's top official was quoted by BUSINESS TIMES on Mar 23, 2009.

LOWER PROFITS & DIVIDENDS
CEO - ABDUL WAHID OMAR said that the bulk of the earnings would come from commercial, consumer and Islamic banking segments but did not say how much lower the profits would be. For FYE Jun 2008, the Bank registered RM2.9 bil in Net Profits. " .... For the current year (FY09), we will have to review this indication, but for the long term, we are committed to the 40-60 per cent range (dividend as proportion of net profit) .... We're actually entering this recession, or crisis, with a strong balance sheet and strong assets quality ...." said ABDUL WAHID.

NPL RATIO AT 1.8% & LOANS GROWTH TO SLOW
He said the Bank's current NPL ratio stands at 1.8% while the industry's Net NPL ratio was around 2.2%. Loans growth for the lender was expected to range between 6% - 7% in the current fiscal year which was very promising despite the current economic environment, WAHID said.

PROPOSED RIGHTS ISSUE MAY DILUTE EARNINGS & DIVIDENDS
Shares of MAYBANK have fallen 14.5% since early 2009 on fears that its rights issue plan worth RM6 billion will dilute the firm?s future earnings and lower dividends.

ABDUL WAHID said that the Rights Issue proposal will help in the bank's ambition to become one of the top five banks in Southeast Asia and shore up its balance sheet.

" .... When we look at our requirements for the next three to five years, we felt that RM6 bil would be an appropriate amount ...." ABDUL WAHID Wahid said. " .... Once we have enough capital, then there'll be no issue to be able to grow the market, so that means we will be able to capture some loans growth, with much better margins ....".

Analysts have repeated that the Bank is expected to significantly mark down the value of its investment in BANK INTERNASIONAL INDONESIA following a sharp fall in market value. MALAYAN BANKING has already booked an impairment loss of RM242m investment in Pakistan's MCB BANK.