Maybank reported a 1.54 billion ringgit ($381.38 million)profit in the October-December period, compared with 2.45 billion ringgit a year earlier, and undershooting the 1.76 billion ringgit forecast from analysts polled by Refinitiv.

The company's fourth-quarter revenue fell 5.8% to 12.24 billion ringgit, it said in a bourse filing.

Maybank said during the quarter, allowances for impairment losses on loans, advances, financing and other debts increased by 227.5% while its net interest income and Islamic Banking income decreased by 4.6%.

Malaysia's largest lender by assets said its 2020 full-year net profit fell to 6.48 billion ringgit, after recording a record high of 8.2 billion ringgit a year ago.

Group President and Chief Executive Abdul Farid Alias said in a statement the group expected the operating environment in 2021 to remain challenging for the medium term amid the coronavirus pandemic.

"We are hopeful that economic momentum will be lifted once the vaccination campaigns are rolled out more comprehensively," he said.

"To mitigate against further net interest margin compression, Maybank said it will focus on growing lower cost current and savings deposit balances," the bank said.

The group also said it will target fee-based income opportunities through its wealth management, global markets, investment banking, asset management and insurance segments.

The bank also forecast interest rates in Malaysia to remain at their record low level throughout 2021.

Malaysia's economy contracted by a worse than expected 3.4% year-on-year in the fourth quarter, as stricter coronavirus curbs crimped consumption and slowed the pace of recovery.

For the full year, the economy contracted by 5.6% in 2020, the worst annual performance since 1998 during the Asian Financial Crisis.

(Reporting by Liz Lee; Editing by Simon Cameron-Moore)