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THE July-September quarter earnings of the 10 public-listed banking groups were a mixed bag. But there was a common factor: heavy loan loss provisions particularly pre-emptive provisions that are expected to remain at elevated levels over the next few quarters.
“The third quarter of 2020 was a provisions affair,” remarks AllianceDBS Research. “Net credit costs were still high at 89 basis points in 3Q2020, with more than half for dampened macro indicators and overlays, and more to come in 4Q2020.”
Of the 10 banks, four Malayan Banking Bhd (Maybank), Public Bank Bhd, RHB Bank Bhd and Alliance Bank Malaysia Bhd turned in better-than-expected earnings relative to analysts’ consensus estimates. This was mainly on the back of higher-than-expected investment gains, cost controls and, for some, a quicker pace of recovery in net interest margin (NIM).