The Maybank Group today announced that its pre-tax profit for the half-year ended 31 December 2005 rose 5.2% to RM1.87 billion, from RM1.77 billion in the previous corresponding period ended 31 December 2004. Profit after tax for the Group increased to RM1.31 billion from RM1.25 billion previously.

This performance translated into a net return on equity (ROE) of 15.7% compared to 16.5% in the previous corresponding period. The decline in ROE is the result of a conscious effort by the Group to continue with an even more aggressive loan write-off policy given its strong financial position.

For the interim period under review, 75% of the collateral value of non-performing loans (NPLs) aged between 5-7 years, as well as 100% of the collateral value of NPLs aged 7 years and above were completely written-off. As a comparison, for the corresponding period to December 2004, only the collateral value of NPLs aged 9 years and above was written off.

Apart from cleaning further the balance sheet, this write-off policy is expected to protect the Group from the higher carrying cost of aged NPLs, especially with the prospect of rising interest rates. In addition, it will further enhance the Group? capital efficiency in preparation for the implementation of the Basel II, in view that additional capital charges will be required for impaired assets.

Notwithstanding the decline in ROE, earnings per share rose to 34.89 sen from 34.56 sen previously, while for the first time, total assets of the Group surpassed the RM200 billion mark, touching RM208.9 billion from RM191.9 billion previously. The total assets include that of MNI Holdings Bhd for which the acquisition was completed in December 2005. However, the profit and loss statement for this period excludes the results of MNI Holdings.

Elaborating on the Group's performance, the President and CEO of Maybank, Datuk Amirsham A Aziz said that the results were achieved on the back of a 15.7% improvement in non-fund based income and sustained growth of 4.3% in net interest income.

Total loans for the Group grew by 7.6% on an annualized basis (after adjusting for NPLs written off). Loan growth for the Malaysian operations was 2.02% on an annualized basis, due to a significant decline in loans to the corporate sector. However, this was more than offset by the continued strong growth in the SMI and consumer sectors. Loans for SMIs expanded by 15.5%, automobile financing by 16.4 % and credit card receivables by 16.5% while growth in home mortgages moderated further to 6.4%.

For the Group's Islamic banking operations, total financing grew at an annualized rate of 8.4%, contributed mainly by an increase in hire purchase (+10.2%), trade financing (+6.5%) and overdrafts (+4.9%).

Non-interest income during the half-year under review grew 15.7% while net fund based income rose by 4.3%. The ratio of non-interest income to gross income for the period continued to rise, reaching 33.7% compared to 32.7% previously, reflecting the success of on-going efforts to diversify the Group? income streams.

Net income for the period rose faster than overheads (11.2% against 7.5%), resulting in the cost-to-income ratio of the Group improving further to 37.9% for the half-year just ended, compared to 39.3% previously.

Datuk Amirsham noted that both the default and recovery rates of NPLs have improved in the period under review. The default rate declined to 4.6% from 6.5% previously while the recovery rate improved to 51.1% respectively from 44.8%.

However, loan loss and provision for the Group during the period recorded an increase to RM598 million from RM396.7 previously owing to the adoption of the more aggressive loan write-off policy for the period. If the impact of the additional provision required as a result of the writing down of the collateral value of long outstanding NPLs only is excluded, the loan loss and provision for the half-year just ended would have actually recorded a decline of RM68.3 million or 18.8%.

Arising from this, the Group's asset quality as at December 2005 improved further to 4.37% from 4.83% in June 2005. Loan loss coverage for the Group (excluding collateral value) stood at 70.4% compared to 678.5% previously.

The results of major subsidiaries/business segments for the period under review were as follows:

Subsidiaries	Profit before tax for Half-Year ended 31 Dec 2005 (RM million)	Profit before tax for Half-Year ended 31 Dec 2005 (RM million)
Maybank	1,721.5*	888.9*
Aseambankers Malaysia Berhad	78.85	70.98
Mayban Discount Berhad	33.88	36.76
Mayban Securities	1.72	(9.32)
Mayban General Assurance	53.28	42.56
Mayban Life Assurance	2.96	2.67
Maybank International Labuan	9.72	52.12
Singapore Operations	169.09	87.35
Other overseas operations	89.98	58.09

* excluding dividends from subsidiaries

In view that the Board had, on 17 November 2005, declared an interim dividend of 50 sen per share for the first quarter of the financial year which was paid out on 16 January 2006, the Board is not recommending any additional interim dividend for the half year.