PETALING JAYA: Several research houses have trimmed their earnings forecasts for Malayan Banking Bhd
(Maybank) to reflect slower loan growth ahead.
Kenanga Research, for example, cut its forecasts for the lender for this year (FY25) and FY26 by 4% and 3%, respectively, as it foresees loan growth slowing down from 4.5% to about 3%, in line with revisions to guidance.
Its current net interest margin (NIM) assumption of 2.02% is largely unchanged, being more conservative in anticipation of persistent pains from funding costs.
CGS International Research (CGSI Research) reduced its net profit target for this year by 1.3% as it factored in the cut in the overnight policy rate on July 9, due to the negative impact of the timing difference for repricing loans and fixed deposits.
TA Research’s net profit forecasts for FY25 to FY27 are adjusted to RM10.21bil, RM10.68bil, and RM11.32bil from RM10.44bil, RM11.04bil, and RM11.82bil, respectively.
AmInvestment Bank Research’s (AmInvestment Research) earnings forecasts for Maybank for the same time frame have been tweaked downwards by between 0.5% and 2.6%.
CIMB Research said it believes that Maybank’s earnings in the second half of this year may moderate on the back of further NIM compression, higher provisions, and higher overheads.
It reiterated its “hold” call with an unchanged target price of RM9.85 a share.
For dividend exposure, the research house said peers such as RHB Bank Bhd and CIMB Group Holdings Bhd offer better yields for FY25 to FY27 of 6% to 7.1% relative to Maybank’s 5.9% to 6.6%.
Meanwhile, Hong Leong Investment Bank Research finds Maybank’s risk-reward profile to be skewed to the upside as the share price is down 4% year-to-date, making it a laggard large cap, index-heavy weight stock.
In addition, it is a good dividend paymaster, providing attractive yields of 6%. It upgraded the stock to a “buy” with a target price of RM10.70 a share, based on 1.29 times next year’s price-to-book ratio.
CGSI Research said following the increase in Maybanks’s management overlay from RM1.7bil to RM1.8bil in the first quarter of this year (1Q25), Maybank, surprisingly, raised it further in 2Q25 to RM2bil.
The research house estimates that every 10% write-back in the management overlay would enhance its projected FY25 and FY26 net profit for Maybank by about 1.3%.
It retains its “add” call premised on potential write-backs in its management overlay and its projection of return on equity (ROE) expansion from FY25 to FY27.
Kenanga Research has maintained its “outperform” rating with a lower target price of RM11.30 from RM12 a share.
It lowered its ROE inputs to 11.5%, from 12% to better reflect the group’s near-term target.
TA Research maintained its “buy” call with a target price of RM11.40 a share while AmInvestment Research retained its “hold” call with a target price of RM9.30 a share.
CGSI Research said the potential downside risks to its call include an increase in gross impaired loan ratios for FY25 and FY26 and material slowdown in Maybank’s loan growth, partly due to the negative impact from US tariffs.
Another potential risk would be protracted deposit competition in the banking industry that could increase Maybank’s cost of funds and exert pressure on its net interest margin.
