Maybank rose 13 sen to RM5.85 and added 2.1 points to the KLCI on Feb 4, 2016. STAR
KUALA LUMPUR: AmInvestment Bank Research has maintained its “hold” call on Malayan Banking Bhd
(Maybank) with a higher revised fair value of RM9.20 after tweaking its estimates.
“We have fine-tuned our forecast, raising our FY18/19 net profit slightly by 2.6%/3.3% after imputing higher net order imbalance indicator (NOII) estimates. We now expect an ROE of 10.7% (previously 10.5%) for FY18 and continue peg the stock to a price-to-book value (P/BV) of 1.3 times,” AmInvestment said.
Maybank reported a core net profit of RM1.7bil in 1QFY17. Compared to 1QFY16, the improvement in earnings in 1QFY17 was contributed by higher net interest income (NII) from better NIM and loan growth as well as lower net impairment losses of 38.2% year-on-year. In addition, its NOII was lower in 1QFY17 largely due to unrealised losses from the revaluation of derivatives.
AmInvestment said Maybank’s annualised ROE for 1QFY17 of 9.8% was in line with its estimate.
“Core net profit came within expectation, making up 24.8% of our and 24.1% of consensus FY17 net profit estimate,” it added,
Meanwhile, negative JAW of 4.0% was recorded as growth in operating expenditure of 7.0% year-on-year, driven by higher personnel and admin and general expenses, outpaced its operating income growth of 3.0% year-on-year. It added that the 1QFY17 saw the group’s CI ratio rising to 50.5%. Its NIM improved 11 basis points quarter-on-quarter or nine basis points year-on-year to 2.43% in 1QFY17 attributed to a lower funding cost and higher asset yield.
AmInvestment noted that there was tighter liquidity with the group’s loan-deposit (LD) ratio rising to 94.7%. LD ratio for Singapore increased while that of Malaysia and Indonesia dropped in 1QFY17.
Its gross impaired loans (GIL) rose by 5.4% quarter-on-quarter to RM11.6bil in 1QFY17, contributed largely by an increase in impairment of loans in Singapore and Malaysia. For Singapore, the increase in impaired loans was 32.1% quarter-on-quarter.
“We understand this was due to the impairment of oil and gas sector loans but in smaller accounts compared to the ones impaired the previous year. In Malaysia, the increase was due to higher impairments of business banking loans.
“This has resulted in an increase in the group’s GIL ratio to 2.40% in 1QFY17 versus 2.28% in 4QFY16,” AmInvestment said.
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