KUALA LUMPUR (Reuters) - Malayan Banking Bhd (Maybank), Malaysia's largest lender by assets, posted a drop in third-quarter profit on lower fee-based income, while its CEO cautioned that the "prolonged geopolitical situation" was a key concern for business.
Smaller rival CIMB Group Holdings Bhd also sounded a cautious note citing weaker regional economies and the U.S.-China trade war, even as it posted higher quarterly earnings on better consumer and commercial banking business.
Maybank's net profit for the quarter ended September dropped 3.4 percent from a year ago to 1.96 billion ringgit ($468 million), lagging the 1.98 billion ringgit average estimate from two analysts surveyed by Refinitiv.
The lender attributed the drop to lower investment and trading proceeds as well as foreign exchange fluctuations. Insurance claims and allowances for impairment losses also increased, according to its financial statement.
Revenue climbed 4 percent to 12.1 billion ringgit.
"The prolonged geopolitical situation remains a key concern, as it would influence global growth, including Asia where Maybank has most of its operations," Maybank group president and CEO Abdul Farid Alias said in a statement on Thursday.
"We will remain agile to adjust to rapid market changes, while at the same time look for opportunities for growth, such as in infrastructure financing, wealth management, digital banking and Islamic banking," the Maybank CEO added.
CIMB's group CEO Zafrul Aziz said his bank would "continue to control asset quality and cost across its businesses" amid global trade tensions.
The country's No.2 lender by assets posted a 1.18 billion ringgit profit for the third quarter, 4.2 percent higher than a year ago and above a consensus estimate of 824 million ringgit from four analysts surveyed by Refinitiv. Its revenue, however, slipped 6.3 percent.
Maybank and CIMB's net interest income, a key measure of banks' financial performance, in the third quarter narrowed to 2.3 percent and 7.3 percent, respectively.
The mixed results come against a backdrop of a broader weakness in the Malaysian economy that analysts have cautioned will dampen banking performance.
Malaysia's economic growth is expected to slow to 4.8 percent in 2018, from the 5.9 percent pace a year earlier. The economy, Southeast Asia's third largest, grew 4.4 percent over July-September, its slowest pace in two years.
($1 = 4.1850 ringgit)
(Reporting by Liz Lee and A.Ananthalakshmi; Editing by Himani Sarkar)