KUALA LUMPUR, Nov 12 (Reuters) – Malaysia’s largest lender Malayan Banking (Maybank) (MBBM.KL: Quote, Profile, Research, Stock Buzz) posted a better-than-expected 16 percent rise in first-quarter net profit as domestic rate increases and growth in the bank’s Indonesia operations boosted net interest income.

Malaysian banks have generally reported strong quarterly earnings as the economic recovery has spurred increased borrowing and greater capital market activities.

Maybank, which has a diversified loan portfolio in both consumer and commercial segments, said prospects for the bank were bright owing to strong GDP growth and to the country’s planned development projects.

“Barring unforseen circumstances, the group expects its performance for the financial year ending June 30, 2011 to be better than the last financial year and is on track to meet its target ROE of 14 percent,” the bank said in a statement.

Net profit for July-Sept was 1.02 billion ringgit ($327.8 million) compared with a profit of 881.8 million ringgit a year ago.

That translates to an earnings-per-share of 14.53 sen, exceeding Thomson I/B/E/S consensus earnings estimate of 14 sen per share.

Shares of Malaysian banks have surged since the start of the year, with almost all having outperformed the benchmark FBM KLCI index .