Factors that Lead to Good Financial Performance of Banks in Maybank

Introduction

Banking industry is well known because of its strong competency financial system. Banks are the considered greatest financial sources that can support a large corporation. Aside from the credit loans that are included in their offered services, the banks also gives value on the traditional saving service that is available for the people. The banks created different intervention through the use of the technologies and by adopting right techniques and process that can support the operation of the business. In the midst of the financial crisis, the banking industry is expected to remain standing tall.

Background of the Study and Problem Statement

Maybank is a well known organization that consistently provides their shareholders with a superior returns and exerting services for their customers that can deliberately meet their demands. Moreover, the bank is more focused on the sustainable and superior growth of their business through the guidance of their sound financial discipline and applied strategies. The bank maintains its operation in a most efficient and effective manner that is why they are trusted by the biggest corporations and managed to operate in diversified countries (Maybank Annual Report, 2004). However, what are the contributing factors to determine that Maybank is in the right track of having a good financial performance?

Research Objectives

The research provided sound objectives that can serve as an inspiration of the completion of its study in Maybank. First, to provide adequate reasoning or answers on what are the factors to identify that the bank is in good financial status. Second is to spread the factors in the literature banking contexts. With that idea, the banking industry in all over the world can experience the satisfaction in their services in the financial mainstream. Moreover, this might help develop the consistency in most of the banks in the developing countries so that, in the long run, they can manage to support their developing economies.

Research Questions

The study accommodated certain questions that can help to determine the adequate answers included in the main topic.

1. What are the recent strategies of Maybank that can be also recognize its advantage among the other international banks?

2. What are the common trends in economy that provided additional advantage to the banks?

3. What are the risks anticipated by the bank in upcoming years?

Literature Review

Banks perform a broad range of activities. They collect deposits and provide transaction services to their depositors extend loans to enterprises and households and purchase other debt instruments, provide or demand liquidity in the interbank market, and conduct foreign exchange operations and fee-based activities. In performing these activities, they try to resolve information asymmetries and assess borrowers’ ability to pay, mitigate the ex post moral hazard problem , provide inter-temporal smoothing of risk by maintaining a maturity mismatch, participate in corporate governance, and possibly spur economic growth . Banks also play important roles in underwriting securities and in payment systems (Feyzioglu, 2009).

To measure how efficiently banks perform these activities, we first define a production function. Similar to other types of businesses and following the industrial organization literature, we take physical capital and labor as two critical inputs. In addition, in banking, unlike other types of services and manufacturing, financial capital is a critical input because of the regulatory environment that typically constrains bank output. with efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools (Hoy, 2007).

Methodology

The applied methodology of the study is the combination of the comparative case study and interview on the staff of Maybank. First, the use of the comparative case study allows the entire process of the study to examine, compare, and criticize the different actions of the banks in assessing the risks and strategically implement the actions on their operation. It is difficult to analyze a banking institution if the researcher doesn’t have the idea regarding the terminologies applied in their procedures therefore; it is a great advantage to consult some of the past literatures. The next step is to conduct an interview on the staff at Maybank. The participants are 28 in number and have no retail customer. It is difficult to have an access on the past records of the Maybank because they are securing al of their data. Interview is conducted to gather the idea of the employees toward the factors that might lead to a good financial performance.

Conclusion

Maybank is continuing its effort in enriching the experiences of the customers in their services. The bank is also looking forward in a strong relationship that can be beneficial in both of the parties. In addition, to gain the full trust of all their clients, the bank is engaged placing high value on their client’s privacy and financial security. Maybank is an organization that is committed to excellence in every transaction they are in. Besides, the team is in support for the foster develop of the banking industry which is very beneficial to the entire organization. The corporate social responsibility of the bank is also on strict monitoring and creating a significant competitive advantage as well as placing high levels of integrity and ethical values in their transaction settings. Therefore, aside from the traditional business transactions, the bank can recognized it major role and effectiveness in the market through their corporate goals.

References:

Feyzioglu, T., (2009) “Does Good Financial Performance Mean Good Financial Intermediation in China?” Accessed 03 Feb 2010, from http://www.imf.org/external/pubs/ft/wp/2009/wp09170.pdf

Hoy, R., (2007) “Banking Sector”, Round Up for Banks and Expectations. Accessed 03 Feb 2010, from http://www.maybank2e.net/economic_library/equity_focus_11Apr07.pdf

Maybank Annual Report, (2004) Accessed 03 Feb 2010, from http://www.maybank2u.com.my/maybank_docs/aboutus/inv_relations/annualreport/AU03.01_report_2004_eng.pdf