Maybank BHD Financial Performance Analyis

Maybank BHD Financial Performance Analyis CHAPTER 1 INTRODUCTION Production or gain from a financial institution is depending on some issues whether the external control or the internal control. External control refer to the environment in our country like economy growth and inflation that effect the purchasing power of customer as the price of goods increases, customer demand will increase too. The Malaysian economy actually moves together with strong financial system. Strong financial system of a country will contribute to economic growth. Economic growth of a country like Malaysia is measured in terms of real GDP. According to Travel Document Systems (1996) ,since independent on 1957 until 2005, Malaysian economy had grew by 6.5% per year automatically it become the best country in Asia at that time. Banks nowadays struggled to maintain a good performance in order to fulfill its objectives of satisfying their customers, employees, depositors and government according to Askari Commercial Bank ( 2006 ). The evolution of financial system in Malaysia has been significant. 7.2 per cent economic growth registered by the country last year was the highest achievement over 10 years and was driven by the two stimulus packages as well as the management of countrys financial and banking system by Bank Negara said the Prime Minister Datuk Seri Najib Tun Razak (2011) . 1.1 BACKGROUND OF STUDY Profit is the major focus of why everybody struggles to make sure their business going well as profit is the important sources of funds. This paper will measure financial performance of Maybank Bhd and determinant of data by identifying the profitability performance of Maybank Bhd. It is important to understand the profitability of commercial bank after considering certain factors that may contribute to the profitability. The research is based on the performance of Maybank from 2001 to 2010. 1.2 PROBLEM STATEMENT A financial institution is a profit-seeking organization owned by shareholders who expect to gain return with the risk associated that they have to face. There are many factors that contribute to bank profitability. According to Bankers Journal Malaysia, for Malaysian Banks, more than 80% of their total income is attributed to interest income. Previous studies have also found that interest income and non-interest income have a positive effect on bank profitability. However besides those banking characteristics of internal variables, there are some external variable that may affect the banks profitability performance that cannot be overemphasized like inflation and GDP. Earlier studies by Al-Hajji, Mohsen (2003) have found positive relationship between the GDP and bank profitability. When GDP increases, profitability of the bank will increase too. Adverse result was found about relationship between inflation and bank profitability. This study will answer the question of how interest income, non-interest income, GDP and inflation rate relate with bank profitability also how is well is the performance of Maybank Bhd during the period of study. RESEARCH QUESTION Dependent and independent variables are studied to find solution about the profitability performance of Maybank Berhad. Factors affecting performance of Maybank Berhad can be comprises into external and internal factors. The criteria that will be evaluated are interest income, non-interest income , interest expenses, Gross Domestic Product (GDP) and inflation rate. The intent of this study is to examine the effect of all this factors towards performance of Maybank Berhad. This research problem leads to questions concerning relationship between selected criteria. In this research, there are few question were asked as listed below : 1.3.1 To what extend inflation rate effect the performance of Maybank Berhad? What are the relationship between dependent variable and independent variables ? 1.3.3 What is the factor that most effect profitability ratio of Maybank Berhad? 1.4 OBJECTIVE OF STUDY The main objective of this study is to study the factors attributes to the profitability performance of Maybank Bhd. comprises of interest income, non-interest income ,Gross Domestic Product (GDP), and inflation rate. The study also will determine the profitability performance of bank for 10 years period. Apart from that, there are few supporting objectives to support the main purpose were listed below : To study the relationship between internal variables and bank profitability. To identify whether bank cost and bank revenues will contribute to profitability performance of Maybank Bhd. To determine which factors contribute the most to profitability of Maybank Bhd. To analyze the trend of Maybank profitability over 10years and identify Maybanks strength and weaknesses using certain profitability ratios. SIGNIFICANT OF THE STUDY Bank profits refer to the return on invested capital and it is important to company as well as the shareholder. Bank profits can be considered as benefit to depositors as it shows stronger, safer and efficient banking system in the increases in revenues and services improvements. Indirectly borrowers also will get the benefits since the bank lending rate depends of ability of banks capital accounts. This paper will focus on some categories as follows: Facilitate researcher to find out the major factors contributing to the profitability performance of commercial banks especially Maybank Bhd. To assist the researcher to be more alert on how to manage and overcome problems that could come together with independent variables and provide guides on how to improve profitability performance. Also provide information on banks profitability strength and weaknesses that could be use by the customers as an evaluation of banks performance. The researcher may also view the performance trend of Maybank Bhd. during this 10 years from 2001 to 2010. 1.6 SCOPE OF STUDY This research paper will focus on the financial performance of Maybank Berhad based on banks profitability. The factors that will be evaluate are divided into 2 which are external factors (Gross Domestic Product, and inflation) and internal factors ( interest income, non-interest income ). 1.7 LIMITATION OF STUDY The limitations of this study is the data only for 10years starting 2001 to 2010. Furthermore the data come from secondary data and sometimes may be adequate or accurate. Besides most of the data were gathered from journals, BNM – Maybank annual reports , and articles. 1.8 DEFINITION OF TERMS 1.8.1 Profit According to Wikipedia, profit  can be considered as the difference between the purchase  price  and the  costs  of bringing to market whatever it is that is accounted as an enterprise or in a simple word it means money gained in business. 1.8.2 Interest Income Companies sometimes keep their cash in short-term deposit investments such as certificates or deposit with maturities up to twelve months, savings account, and money market funds. The cash placed in these accounts earn interest for the business, which is recorded on the income statement as interest income. Interest income will fluctuate each year with the amount of cash a company keeps on hand and the general level of interest rates as set by the Federal Reserve. (Source: Joshua Kennen – Investing for beginners guide ) 1.8.3 Operating profit The profit earned from a firms normal core business operations. This value does not include any profit earned from the firms investments (such as earnings from firms  in which  the company has partial interest) and the effects of interest and taxes. It is also  known as earnings before interest  and tax (EBIT). (Source:http://www.investopedia.com/terms/o/operating_profit.asp) 1.8.3 Profitability Analysis Analysis that assigns revenues and costs to major customers or groups of customers rather than to organizational units, products, or other objects. The results may direct organizational resources toward more profitable uses. It is an application of segmented reporting in which a customer group is treated as a segment. It is especially helpful when combined with an activity-based costing approach that determines which activities are performed for each group and assigns costs based on appropriate drivers. (Source : http://www.answers.com) 1.8.4 Inflation Inflation is An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand. (Source : Websters New Universal Unabridged Dictionary) 1.8.5 Financial Ratios Ratios that measure a firms ability to meet its short-term financial obligations on time, such as the ratio of current assets to current liabilities. (Source : The Free Dictionary by Farlex ) 1.8.6 Gross Domestic Product Gross domestic product (GDP) refers to the market value of all goods and services produced within a country in a given period. It is often considered an indicator of a countrys standard of living. Gross domestic product is related to national accounts, a subject in macroeconomics. ( Source : http://erbwikipedia.org/wiki/Gross_domestic_product ). Interest Expense Interest expense is a non-operating or other expense for the cost of borrowed money or other credit. The amount of interest expense appearing on the income statement is the cost of the money that was used during the time interval shown in the heading of the income statement, not the amount of interest paid during that period of time. (Source : Accounting Couch) SUMMARY In this chapter, we have discussed about the influence of factors affecting profitability performance of Maybank Berhad and the question that need to be answered in this paper. This research examined the bank profitability which focused on both the returns on bank assets and equity, net interest rate margins and net operating margin. High performance comes from effort given by bank management to produce high profit while facing risk related. Firm need to generate income as much as possible as banking institution is a profit-orientation company. CHAPTER 2 LITERATURE REVIEW INTRODUCTION Bank performance depends on the profitability measurement of banks financial statement. It is recognized that the growth of the banking system is dependent on a strong and stable economic development. PREVIOUS STUDY This paper deals with performance of commercial bank, focuses on Maybank Berhad. Some of previous study that relate with this research are Masood et al. (2009) revealed that in case of calculating profitability in terms of ROE or ROA the most significant internal and external factors affecting Saudi banks are capital adequacy ratio, earning assets to deposits ratio, operational efficiency, growth rate in GDP, and banking sector development. He finds also that variables to do with credit risk, inflation rate and interbank offered rate are insignificant and have a low effect on all indicators of profitability. The results in the speech by Tan Sri Dato Ali Abu Hassan Bin Sulaiman, Governor of BNM, (23 September 1998), he stated that since the onset of the financial crisis, BNM had instituted a number of measures , amongst others included tighter loan classficication policy for non-performing loans and a limit on lending for the purchase of shares. Since then, the financial crisis advers ely affected the real economy, resulting in real GDP contracting by 4.8% during the first half of 1998. Year 1998 was a difficult year for the banking system while 1year after that was the recovery year in the performance of banking system. (BNM 1999 Annual Report Press Conference). Haslem (1968) defined profitability as the capacity to gain or profit, or to return a profit or income. Profit is the measured for productive capacity of a company. According to Orl and Yolalan(1990), profitability performance evaluation of a banks should be linked to decision model so as to associate the result obtained with the decision. Meanwhile, according to Bashir and Hassan , (2003) on their study on the factors influencing the profitability of Islamic banks in eight Middle Eastern countries for the period 1993–1998, they find that the higher leverage and large loans-to-asset ratios lead to higher profitability. This study also indicates a positive relationship between macroeconomic variables, stock market development and profitability of banks. Ben Ben Naceur and Goaied (2006) they find that macroeconomic indicators like inflation, GDP, and market concentration ratio have no impact on banks interest margin and profitability. However, financial structure variables (stock market capitalization divided by total assets or GDP) do have a positive effect on the return on assets. Staikouras and Wood (2003) said that macroeconomic indicators (variability of interest rate, growth of GDP) had a negative impact on profitability. Chance and Lane [1980], and Sweeney and Warga [1986] find little evidence that supports the interest rate sensitivity of bank or financial institutions stock returns. On the other hand, studies such as Lynge and Zumwalt [1980], Booth and Officer [19851, Scott and Peterson [1986], and more recently Chaudry and Reichert [1999] suggest that the stock returns of financial institutions are highly sensitive to changes in interest rates.  Different result from Kosmidou and Pasiouras (2007) which they examine how a banks specific characteristics and the overall banking environment affect the profitability of commercial domestic and foreign banks operating in the 15 EU countries and they found that the main determinants of profitability measured by ROAA, macroeconomic conditions (inflation, growth of GDP) and financial market structure (stock market capitalization to total assets or to GDP, total assets to GDP) are statistically significant and related to both domestic and foreign banks profitability. Apart from that, Bourke (1989), Heggested (1977) using the consumer price index (CPI) as a proxy for inflation both of them made a research on relationship between profit and inflation and the result, both studies found that inflation had a significant relationship with profit. Earlier study from Revell (1980). believed that inflation could be a factor in the causation of variations in banks profitability. For studied on total expenses, items that fall within the control of bank management can be broadly divided into 3 categories: staff expenses, provision for loan losses, and other general expenses. Expenses, such as payment for income tax, are considered statutory expenses and hence beyond the control of management. Devinaga Rasiah (2010) . THEORETICAL FRAMEWORK In this study, 4 factors were chosen to be evaluated. They are return of unit trust fund, risk level of unit trust, diversification level and last but not least is risk-adjusted level. Below is the relationship between dependent variable and independent variables. Title : Investigation of The Financial Performance of Maybank Berhad Bank interest income Bank Non-Interest Income GDP Inflation rate Bank Profitability Interest Expense DEPENDENT VARIABLE INDEPENDENT VARIABLES CHAPTER 3 METHODOLOGY AND DATA 3.0 INTRODUCTION This study will analyze the relationship between dependent variable (profitability of Maybank Bhd) and independent variables (interest income, non-interest income, inflation rate and Gross Domestic Product (GDP) ).This study will covered 10 years data from 2001 until 2010 and will be done using Statistical Package For Social Science (SPSS). Furthermore, hypothesis will be tested whether it can be accepted or rejected. This will provide more understanding view among variables. The advantage of using profitability ratios is that they are inflation invariant that is they are not affected by changes in price levels. This is useful in a time series analysis such as this, where the real value of profits may be distorted by the time varying inflation rates as stated by Devinaga Rasiah (2010). 3.1 DATA COLLECTION Data was collected using annual reports of Maybank Bhd. The data collection was compiled from the financial statement also the balance sheets from Maybanks annual reports for 10 years.. All the data will be evaluate accordingly to see the relationship between the dependent and independent variables also to test the hypothesis. Besides some of the data comes from Internet website like video on news and some articles which contain information about Maybank Bhd. 3.2 SAMPLING FRAME 10 years data was chosen as to see the latest profitability performance of Maybank Bhd. 10 years data is enough to show the flow of performance of bank to see whether it has consistent performance or not and factors which relate the most to banks performance can be determine. 3.3 SOURCES OF DATA The data on Maybank Berhad financial statements and balance sheets were collected using secondary data which come from: (BNM) Bank Negara Malaysia Annual Reports (2001 until 2010). Bursa Malaysia Internet Website. Library books, articles and magazines. 3.4 VARIABLES AND MEASUREMENT The variables used in this study can be categorized into two main types which are, the dependent and the independent variables. 3.4.1 Dependent Variables The dependent variable for this study is the profitability performance of Maybank Bhd. 3.4.2 Independent Variables There are 4 independent variables in this study which are interest income, non-interest income, inflation rate and Gross Domestic Product(GDP). RESEARCH DESIGN Research design involves a series of rational decision making choices. Various issues regarding the topic will be describe here including purpose of study, types of investigation to be make, time horizon and so on. 3.5.1 Purpose of the Study The purpose of this study is to determine the profitability performance of Maybank Bhd from 2001 to 2010. Besides, this study attempt to analyze the factors relates with the performance of Maybank Bhd. and what are the factor that has the highest impact on Maybank Bhd performance. 3.5.2 Types of Investigation This study involved the multiple regression study on the data from range of 2001 until 2010. This model was chosen because this study has more than 1 independent variable.. 3.5.3 Unit of Analysis Unit analysis for this study are interest income, non-interest income, inflation rate and GDP. 3.5.4 Time Horizon This study will use range data from 2001 until 2010 of Maybank Bhd. 3.7 DATA ANALYSIS AND TREATMENT This study use SPSS, multiple regression study as the statistical tool as to measure how all these variables will influence profitability performance of Maybank Bhd. The multiple regression study will be used to analyze the relationship between dependent variable, which is the profitability of Maybank Bhd and independent variables which includes interest income, inflation rate, GDP and non-interest income. Multiple Linear Regression Model: General Functions: P = f( Inflation rate, interest income, Non-interest income , GDP, e ) Specific Form of Equation: P = a + b1X1 + b2X2 + b3 X3 + b4GDP + b5INF + Where; P = profitability a = Constant b1, b2, b3, b4 = Coefficient Beta value X1 = interest income X2 = non- interest income GDP = Gross Domestic Product INF = Inflation = Error 3.8 HYPOTHESIS STATEMENT There are 5 hypotheses in this study which are: Hypothesis 1 H0: There is no significant relationship between inflation rate and bank profitability. Hypothesis 2 H0: There is no significant relationship between GDP and bank profitability. Hypothesis 3 H0: There is no significant relationship between Interest Income and bank profitability. Hypothesis 4 H0: There is significant relationship between Non-Interest Income and bank profitability. SUMMARY In this chapter, we have discussed about where the data comes from and how the data will be measures to evaluate the significances between dependent variable and the independent variables. The study is designed to examine 5main areas which are interest expense, interest income, non-interest income, inflation rate, and Gross Domestic Product (GDP). 10 years data from varieties of secondary sources like Bank Negara Malaysia and internet sources will be evaluated to explain the relationship between profitability performance and factors influence it. .

“How Valid Are Rizal’s Political, Educational and Socio-Economic Reforms Today?” Essay

  I think that Rizal’s reforms are still valid today. A great man he is, surely his philosophies involved something that of future because great figures always think ahead of time. Moreover, one can hail Rizal as a teacher and so the influence of his teachings is unimaginable. As Henry Adams said, â€Å"A teacher affects eternity; no one can tell where his influence stops.† Indeed, no one can tell, since we are still influenced by his teachings- the idea that the youth is the hope of our nation is still instilled in our minds. In politics, he believed the extension of human rights, the training for self-government and the arousing of spirit of discontent over oppression, brutality, inhumanity, sensitiveness and self-love. These reforms signify the rights of the people. Surely, these rights should be implemented not only in his time but for all seasons, be it now or in the future. In his reforms regarding education, Rizal focuses on the improvement in schools and methods of teaching. This is surely applicable today since we have been aiming to be globally competent and many Filipinos have become aware of the importance of education. It seems like it has even become a prerequisite of life. Lastly, his idea about socio-economic prospect involves that of nation building and not individual social problems. The main point of his philosophy covers the problems of the whole race, with every problem having a distinct solution to bolster the people’s social knowledge. Though people now have becoming less patriotic and have been neglecting the freedom that has been given to them, Rizal’s teachings are still great reminder that we’ve been really lucky to have our own nation and so we must work together in order to build a better nation for the future generation. They have done theirs by giving us freedom, thus, we must also do so. Fortunately, these reforms of Rizal about politics, education, and socio-economic are little by little taking into effect for this generation. Citizens have been aware of their rights and their practicing it now. They also learned the value of education and the advantage they’ll acquire if they practice a healthy economic and social life with other people.

The Secret to /Descriptive Essay Topics

The Secret to /Descriptive Essay Topics / Descriptive Essay Topics Can Be Fun for Everyone As tempting as it might appear to skip past the extra info and go right to the list of persuasive essay topics, don't do it. The more information you are able to gather about the subject, the better prepared you'll be for writing your essay. Therefore, either you would like to learn more about how to compose an essay, or you desire some essay writing services or even in the event that you would like to go through some sample essays, then just refer to WritingBest and all of your requirements will be fulfilled once possible. You're guaranteed the communication essay is going to be that which you've asked for. At exactly the same time, it's a wonderful persuasive essay idea. There are a lot of intriguing topics that could be become a persuasive essay if you take the opportunity to think about doing it. Discussing something which you're familiar isn't only more fun but also a whole lot simpler. The objective of brainstorming is to aid you in getting ideas. The Start of / Descriptive Essay Topics You must ascertain what you need to write in your essay. All persuasive essays are like argumentative essays. Students should continue to keep their mobile in silence in order to not disturb the class. They should be allowed to pray in school. So, the best method to compose a fantastic persuasive essay is to discover a theme you're acquainted with and wish to share your experience with the reader. Our seasoned persuasive paper writers will supply you with effective solutions to ordinary problems, even supposing it is an argumentative essay. Don't neglect to bring a strong hook at the begi nning (introduction paragraph) and wind up with an impressive conclusion to earn the reader want to go over the interesting persuasive essay topics of your pick. You may trust us to supply expert aid for many of your academic writing needs. Writing argumentative essay is an intricate undertaking, as it requires the presence of many skills at the exact same time. The intention of the essay is to select an argument and attempt to persuade the reader to adopt it. Before you commence working on the paper, you must go through several topics to compose a persuasive essay on. An argumentative paper is part of the persuasion. / Descriptive Essay Topics Fundamentals Explained The greatest argumentative essay writing service on the net is an organization that supplies good quality and very affordable help on argumentative essay and argumentative essay topics. The value of research in persuasive writing may not be overstated. Take notes concerning all prospective topics you'll be able to consider. In reality, you'll find dozens of resources on the internet that is going to teach you just how to write persuasively. You have to know all parts of financial topics after you choose them. To choose which subject you're likely to discuss, it's essential to see the complete collection of good persuasive speech topics from the specific area of study. Since you can see, several of the topics listed are new and handle the present issues happening in the World today. Naturally, topics which are still relevant in 2018 are the very best. The Unexpected Truth About / Descriptive Essay Topics Clearly, you ought not purposely choose a topic that will bore your audience. Qualities of an excellent persuasive essay topic The topic needs to be specific. Selecting a great topic for your essay is among the most essential and frequently tricky parts for many students. Selecting the most suitable topic for a persuasive speech is occasionally not such an easy matter to do as it might seem. What Is So Fascinating About / Descriptive Essay Topics? You first have to establish the reason behind your essay, before it's possible to write persuasive content about it. When picking out persuasive essay topics to write about, it would be better to stick to your very own personal opinions so you are going to have a definite idea on what things to put in it. When you're selecting an essay topic, it is necessary to pick one which has a lot of information and statistics to back up your viewpoint, and don't exaggerate any info you have chosen to write about. The very first thing you need to realize searching for an ideal topic is that your opinion is the thing that matters the most. Although having the ability to write persuasively can look like a difficult thing for children to learn, remind them that everyone has valid opinions. Set your objective first, then think of a means to write it in an intriguing manner for your readers to relish. In most instances, you will need to think of a topic that will enable other people to understand your standpoint, and telling them to feel that what you write is true.

How Should Veteran Suicide Be Prevented - 1300 Words

6 How should veteran suicidal be prevented? A Problem and Solution Essay: How Should Veteran Suicide be prevented? Durham Technical Community College This is like a bomb waiting to go off: Family of veterans have to live with fear, hoping that their love one would recuperate, be happy, or simply a civilian again. The Veterans Affairs Department (VA) should put a better effort to better assist veterans, and their family with a better plan to reduce this preventable death. Many veterans find it difficult to admit, control, Post-Traumatic Stress Disorder (PTSD), let alone reaching for help; when they do so, they are considered just another number at the VA. At any moment, a veteran?s sacrifice for this country should end†¦show more content†¦(Zilvin 2007). A study was conducted to identified higher risks of suicidal in veterans, and the conclusion stated that veterans that are depressed have higher risk for suicide. This results can assist to focus on a certain group continuously and monitor closely to detect suicidal behavior and prevent it. Another cause of suicide is PTSD leads to depression and if not treated could lead to suicide but more study is to be done. ?For example, use and frequency of psychotherapy visits and adherence to psychiatric medications could influence the relationship between depression, PTSD, and completed suicide? (Zilvin 2007). One of the disadvantage of previous military wars with todays, is technology. Now soldiers can stay in touch with their families so easy through social media. It is stressful for a soldier to see their friends and family day to day struggle or success, while they are trying to survive combat. So that?s when depression begins followed by alcohol abuse and ending with suicide. Fact: relationship problems are one of the most frequent risk factors associated with suicides among military members. ?Fact: relationship problems are one of the most frequent risk factors associated with suicides among military members? (Litts 2013). Litts also argues that suicidal can be caused due to brain