Maybank - Earnings Dragged by Higher Provisions

Date: 02/05/2019

Source  :  MIDF
Stock  :  MAYBANK       Price Target  :  11.40      |      Price Call  :  BUY
        Last Price  :  8.93      |      Upside/Downside  :  +2.47 (27.66%)


  • Lower PATAMI due to higher provisions but this was due to conservative stance
  • Asset quality continued to improve as gross NPL fell -13bpyoy
  • Operationally remain sound as NII grew robustly by +7.7%yoy
  • Loans growth supported by corporate loans while deposits grew robustly
  • No change in our forecast for Maybank Group
  • Maintain BUY with unchanged TP to RM11.40 based on PB multiple of 1.6x

Hit by higher provisions. Maybank Indonesia 1QFY19 net profit declined -10.4%yoy to IDR415b. The contraction was due to increased provisions, which grew +52.2%yoy to IDR401b. Nevertheless, the higher provisions was due to conservative stance in which Maybank Indonesia set aside provision for business loans which were impacted by the continued challenging economy.

However, asset quality continued to improve. While the provisions were higher, asset quality continued to improve. Gross NPL ratio fell -13bp-yoy to 2.89%.

Better NII. In terms of its operations, NII had a strong growth. The NII expanded +7.7%yoy to IDR2.04t. This was due to +6.9%yoy increase in interest income to IDR3.85t. As a result, PPOP grew +7.6%yoy to IDR972b despite +5.1%yoy increase in OPEX.

Loans growth led by corporate loans. Gross loans had a robust growth of +10.9%yoy to IDR135.8t. We believe that this was the major contributor for the strong NII growth. The loans growth was supported by corporate and sharia loans which grew +34.8%yoy to IDR26.9t and +22.0%yoy to IDR24.7t respectively. This came from loans to State-Owned Enterprises and top tier corporates.

Robust deposits growth. Deposits grew +6.2%yoy to IDR128.4t. However, these were fuelled by non-CASA deposits as CASA contracted -13.5%yoy to IDR40.7t. However, we noted that this did not have a detrimental impact to NIM given the strong NII growth.

No change to forecast. Pending the announcement of the Group's 1QFY19 result, we make no change to our forecast for now.

Source: MIDF Research - 2 May 2019

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