The top 2 Malaysian banks? Yeah, profits are fine. Always look at them for clues.

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I mentioned many times that to understand the property market dynamics, we need to look at the overall economy. Briefly, only if we have a stable job, we will decide to buy some stuffs. May not be property but basically consumption of goods. That’s how GDP growth come about. We have savings and we believe we will not be losing our job anytime soon, then we will perhaps buy a property. As for whether the businesses are doing well, the banks’ results will be offer another clue.

Article in themalaysianreserve.com Maybank is Malaysia’s largest bank based on assets. It has reported a slight drop in earnings. It has posted a net profit of RM1.94 billion for second quarter ended 30 June 2019. (Guys, it’s RM1.94 BILLION in one quarter yeah..) This was 0.9% lower compared to a year ago due to higher interest expense. Revenue for the quarter rose by 13.4% to RM13.05 billion from RM11.51 billion a year ago.

Group president and CEO Datuk Abdul Farid Alias shared that overhead expenses increased by 5.3% year on year. He said, “The increase was mainly contributed by the rise in personnel expenses, higher establishment costs and marketing expenses of RM28.6 million.” He expects the 2019 financial performance to be satisfactory but has lowered the target for return on equity (ROE) to between 10% and 10.5% for this year. For its full results please refer to the article in themalaysianreserve.com here.

Another article in themalaysianreserve.com CIMB is Malaysia’s second largest bank based on assets. The banking group’s net profit slipped 23.7% to RM1.51 billion in the second quarter ended June 30, 2019 (2Q19), from RM1.98 billion recorded a year ago due to the absence of a RM920 million one-off gain from the disposal of the group’s stakes in asset management joint ventures with Principal Financial Group. (Guys, it’s RM1.51 BILLION per quarter yeah…)

Group Chief Executive Officer/ Executive Director Tengku Zafrul said, “Our main focus for 2H19 will be on loan growth, revenue generation and asset quality management. Key financial targets are on track as our main markets continue to grow despite the challenging operating environment driven by continued trade tensions.” For the full report on its results, please refer to the article in themalaysianreserve.com for reference.

We should not be over confident in any investments we do. Else, we may be overlooking a lot of potential dangers. However, if we are over worried about fall in banks’ profits for example without understanding that its profits remain very high in absolute numbers, we may also been missing out on potential investment opportunities too.

As I have shared before, it’s extremely important to look at banks’ results because this is a very good overview on the whole market. When every business is suffering, it’s quite impossible for banks to keep reporting profits of over RM1.5 billion per quarter… By the way, it does not have to be property yeah.It can be equity. Buy banking shares in Bursa Malaysia for example. That’salso an investment. Happy understanding yeah.

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<Featured Image is courtesy of Stock Photos from Olivier Le Moal>

Next suggested article: Cost efficiencies, competition and us. Are we really ready?

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