KUALA LUMPUR: CIMB Equities Research described Maybank’s 1H15 net profit as below its expectations (45% of full-year forecast) but in line with the street’s estimates (48% of consensus).
The research house said on Friday the variance with its forecast was due to lower-than-expected non-interest income. However, the 24 sen net DPS was largely within expectations.
“We cut our projected FY15-17 non-interest income by 4%-10% and apply a 10% discount to our DDM-based valuation to reflect the weaker market sentiment amid heighted external risks. This led to a drop in our FY15-17 EPS and target price.
“Despite the disappointment in 1H15, Maybank remains an Add, premised on: (1) strong loan growth, (2) recovery in Indonesia operations, (3) benefits from the ongoing regionalisation of its operations, and (4) attractive dividend yield,” it said.
CIMB Research said Maybank posted robust 10.8% on-year growth for 1H15 revenue. It was specifically encouraged by the group successful expansion its net interest income by 10.1% on-year in 1H15, as it sped up loan growth and minimised the contraction in net interest margin to a mere 4bp on-year.
However, this was diluted by the steeper increase in costs by 15.3% on-year for overheads and 50.6% on-year for loan loss provisioning, leading to low 3.4% on-year net profit growth in 1H15.
Maybank’s loan growth continued to pick up from 14.2% on-year in March 2015 to 15.6% on-year in June 2015, driven by the strong 20% on-year loan expansion in Singapore.
Loan momentum in Malaysia was largely stable at 10.3% on-year in June 2015, above the industry’s pace of 9.1% while its loan growth in Indonesia advanced from 5.5% on-year in March 2015 to 7.7% on-year in June 2015.
Maybank’s gross impaired loan ratio rose marginally from 1.5% in March 2015 to 1.56% in June 2015, while its loan loss coverage fell from 93.5% to 83.4% during the same period.
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