Maybank - Overall, a Strong Earnings Growth for the Year

Date: 27/02/2019

Source  :  MIDF
Stock  :  MAYBANK       Price Target  :  11.40      |      Price Call  :  BUY
        Last Price  :  7.71      |      Upside/Downside  :  +3.69 (47.86%)


  • Within expectations. Earnings growth due to robust NII, lower OPEX and provisions
  • Robust NII growth despite NIM compression
  • Solid loans and deposits growth
  • Final dividend of 32sen; total dividend 57sen
  • No revision to FY17 and FY18 forecast.
  • Maintain BUY with unchanged TP of RM11.40, based on PB multiple of 1.6x.

Within expectations. The Group posted FY18 net profit of RM8.11b which was within our expectation at 100.6% of our full year estimate. It was also at the upper bound of consensus' estimate at 104.7%. The Group's FY18 earnings grew +7.9%yoy due to a combination of lower provisions, OPEX decline and robust NII.

Robust NII despite tough operating environment. NII grew +3.1%yoy despite FY18 being a challenging year. This was because of the pressure to NIM as a result of deposit competition in Malaysia and aggressive policy rate hikes in Indonesia. NIM in FY18 compressed - 3bps yoy. However, this was mitigated by solid gross loans growth.

Solid loans growth. Group reported gross loans grew +4.8%yoy to RM517.3b, while normalised for forex effect, it rose +5.0%yoy. Gross loans in Malaysia expanded +4.8%yoy to RM299.2b contributed by +6.0%yoy to RM216.0b gross loans growth from community financial services (CFS) segment. Of this, +8.2%yoy to RM87.5b came from mortgages, while +14.9%yoy to RM17.1b came from SME loans. Meanwhile, +4.5%yoy to SGD42.4b gross loans expansion in Singapore was led by +6.7%yoy to SGD19.7b growth in global banking. In Indonesia, gross loans growth of +7.2%yoy to IDR103.3t and +6.8%yoy to IDR34.7t were from CFS and global banking respectively.

Deposits growth led by Malaysia. Group gross deposits grew +5.6%yoy to RM556.3b, contributed by Malaysia where it expanded +8.2%yoy to RM343.8b. CASA rose +4.1%yoy to RM133.1b while fixed deposits contracted -8.8%yoy to RM125.8b. Liquidity management were also funded by other deposits (such as money market instruments) where it rose +63.6%yoy to RM84.8b.

Lower provisions and downward trend in GIL ratio. Provisions fell -20.5%yoy. Asset quality continue on its improvement path. GIL ratio as at 4QFY18 improved -23bps qoq to 2.41% and this was contributed by its home markets.

Source: MIDF Research - 27 Feb 2019

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