KUALA LUMPUR: Malayan Banking Bhd (Maybank) is reviewing hedging strategies to manage foreign exchange exposure as the stronger ringgit reduces the translated value of earnings from its regional operations.
Chief Financial Officer Shafiq Abdul Jabbar said the appreciation of ringgit against major currencies has affected reported profits from the bank’s operations in Singapore and Indonesia.
“We do see the ringgit strengthening across major currencies and regional peers. That does have an impact to us because we have operations predominantly in Singapore as well as Indonesia. The earnings translated back are a smaller amount of profit,” he said at Maybank Group’s 4Q and FY2025 financial results media briefing yesterday.
On the other hand, Shafiq noted that the group also holds foreign currency positions on its balance sheet, which could either benefit or be adversely affected depending on whether it is net long or net short.
“We are assessing our exposures and will decide internally how much to hedge or keep open, including the instruments to use and whether to hedge progressively or upfront,” he said.
“So what we are doing at present is assessing our exposures, and we will be deciding internally with the teams how much of this we want to hedge or we want to keep open. And if we want to hedge, what sort of instrument we use and the value that we will take, whether it is progressively over time or whether it is upfront,” he said.
Responding to a question on whether currency volatility has spurred hedging demand and could support non-interest income, Shafiq said institutions with cross-border exposure would naturally seek these solutions.
“Quite naturally, as you see this, we do have institutions that we deal with who are open to externalities. Whether it’s the buy side or sell side, they could be buying from overseas, they could be selling from overseas. So where they do have exposures, they will potentially reach out to their bankers to ask for hedging instruments to help them with their business,” he said.
On the ringgit outlook, he said Maybank’s “house view” stands at around 3.95 against the US dollar, although the currency has recently strengthened beyond that level.
He noted that some forecasts see the ringgit reverting to around 3.85 in the second half of the year, while others have projected levels as strong as 3.70.
“But to be honest, it’s a crystal ball. If I had a crystal ball, I can tell you, but I don’t,” he said, underscoring the uncertainty surrounding currency movements.
Maybank Group CEO of Global Banking Datuk John Chong Eng Chuan added that the bank supports clients across segments with foreign exchange risk management solutions.
“We deal with all kinds, all segments of clients and a lot of them obviously have exposures in different markets. Quite a number of them hedge their positions depending on the business and sectors they’re in. We support them with the solutions that we have, given our positions in the market, especially across Asean,” he said.
For FY2025, Maybank recorded a net loss of RM3.97 billion on foreign exchange translation. It recorded a net profit of RM10.51 billion for the financial year.