Malayan Banking Bhd (Maybank) shares were traded higher yesterday after the country's largest banking group outdid its peers by posting an improved set of full year results.
The banking group's shares rose 30 sen or 2.9% to close at the day's high of RM10.70 on heavy volume of about 3.8 million shares.
Dealers attributed Maybank's rise mainly to buying from institutional funds, which were impressed by the bank's strong earnings compared with other banking groups.
For the year to June 30, Maybank reported a pre-tax profit of RM3.36bil on interest income of RM7.34bil, higher than the pre-tax profit of RM2.62bil and interest income of RM7.2bil posted a year ago.
Net profit stood at RM2.42bil while net interest income came to RM2.32bil.
The dealers added that the generous final dividend of 25 sen less tax also helped to spur buying interest. With the final dividend, Maybank's full year gross dividend payout would be 60 sen, higher than 52 sen in the previous year. This would represent a gross dividend yield of 5.8%.
Research houses said although Maybank's latest full year results were largely in line with market expectations, the figures were relatively better than those reported by its peers.
JP Morgan, which maintained an overweight rating on Maybank, has raised its 12-month price target for the bank to RM13.50 from RM12.68. It has also raised the bank's projected earnings for FY2005 and FY2006 by 7% and 9% respectively.
In a report, the US-based research house said Maybank's reported full year net profit of RM2.42bil was 4% ahead of both its in-house estimates, and market consensus.
It said the higher earnings were a result of a culmination of the various earnings drivers performing better than expected in the fourth quarter to end-June. The main drivers were higher interest income, improvements in non-interest income and a reduction in loan-loss provisions.
AmResearch noted that for the first time in three years, Maybank had posted a turnaround in interest income with a 2% rise to RM7.34bil.
However, net interest margin was narrower as the rate of increase in net interest income was slower than the group's loans growth of 5%, the research house said in its report.
It also pointed out that Maybank's gross loans growth of 5.2% year-on-year (YoY) came mainly from its Singapore operation, which recorded a loans growth rate of 18.7% YoY. The Singapore operation accounted for 41% or RM2.36bil of the total loan increase of RM5.81bil in FY2004, and now makes up 13% of the group's total gross loans.
Going forward, AmResearch has forecast Maybank's loans growth to be in the region of 5% in FY2005.
A banking analyst with a local stockbroking firm said Maybank could be a dividend play as it had raised dividend payments consistently over the past two years.
K&N Kenanga estimated that Maybank would declare a gross dividend of 65 sen in FY2005, and 70 sen in FY2006, based on a dividend payout ratio of 86% and 83% respectively.
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