Maybank to continue thriving in GCFS market

PETALING JAYA: While Malayan Banking Bhd (Maybank) has a strong base and market share in the group community financial services (GCFS) space, analysts are mixed about the bank’s optimistic growth projections for this division over the next few years.

Following a recent Maybank’s Investor Day for its GCFS division, CGS-CIMB Research said it does not see exceptional growth of more than 10% per annum for this division’s revenue in the next three to five years.

This is premised on the huge size of its income base, its entrenched position in two of its major markets, Malaysia and Singapore, and competition from other banks, it added.

“We think that a sustainable growth rate for the income and total loans of GCFS is around 5% per annum over the next three to five years,” said the research house.

GCFS, which focuses on servicing individual and small and medium enterprise (SME) customers, is the largest contributor to Maybank, making up 59.3% of revenue, 53% of pre-provisioning operating profit, 65.8% of total loans and 59.9% of total deposits in financial year 2022 (FY22).

The division has a total of 15.6 million customers, spanning over eight countries, predominantly in Malaysia, Singapore and Indonesia.

Apart from being the largest bank in Malaysia, Maybank’s GCFS also commanded double-digit market shares in all major market segments as at end-December 2022, namely 30.4% in auto loans, 14.8% in mortgages, 21.1% for credit card receivables, 19.7% in SME loans and 25% in retail current account savings account.

Its position in the digital banking space in Malaysia is also significant with market shares of 53.1% for mobile banking and 50.2% for Internet banking at end-December 2022 in terms of transaction volume.

Meanwhile, Hong Leong Investment Bank (HLIB) Research said that after learning more on its GCFS business along with the strategy that Maybank has installed for the respective segments, it believes the bank would continue to thrive in this space.

It said the GCFS’ gross impaired loan ratio has been steadily falling over the years to 1.1% in FY22 versus 1. 7% in FY18.

Similarly, net credit costs declined seven basis points (bps) to 18 bps in FY22 during the same period (group level was higher at 40 bps).

The game plan is to accelerate core portfolio growth, push for further operational excellence, regionalise core digital services and uphold asset quality.

“Overall, our forecasts were kept. We still find Maybank’s risk-reward profile to be balanced as there are no new positive catalysts to spur the share price upwards.

“We are retaining a ‘hold’ call on the bank and a target price of RM8.90,” it said.

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