Investment Highlights

• We maintain our BUY call on Malayan Banking (Maybank) with a revised fair value (FV) of RM9.90/share from RM10.40/share, pegging it to a P/BV of 1.2x supported by lower FY22 ROE of 9.8%. Our FV reflects a 3% premium to its share price based on a 4-star ESG rating. We finetune our FY21/22/23 net profit by -4.7%/-5.9%/-4.6% to account for lower non-interest income (NOII) estimates.

• Maybank posted lower core earnings of RM2.0bil (-18.0% QoQ) in 2Q21 attributed to lower NOII from a reduction in core fees, marked-to-market (MTM) losses on financial liabilities and higher operating expenses (opex).

• 6M21 core earnings came in at RM4.4bil (+31.7% YoY) supported by higher net interest income (NII) from NIM and loan expansion coupled with lower provisions.

• The group’s cumulative core net profit was within expectation accounting for 53.0% our projection and 55.2% of consensus estimate.

• Opex remained well controlled with a growth of 1.7% YoY for 6M21. This led to a positive JAW of 3.4% YoY.

• Loans expanded at a faster pace of 4.1% YoY led by the expansion of consumer loans in Malaysia and Singapore while loans in Indonesia continued to contract.

• Group deposits growth decelerated to 5.5 %YoY in 2Q21. This was contributed by the moderation in Malaysia and Singapore’s deposit growth.

• Group GIL ratio decreased slightly to 2.18% in 2Q21. By country, the GIL ratio for Malaysia and Singapore improved QoQ. 2Q21 saw a further uptick in the GIL ratio for Indonesia contributed by the weaker asset quality for its business segments.

• In 2Q21, provisions declined by 38.3% QoQ. Annualised net credit cost for the group of 0.51% in 6M21 was within management’s guidance of 0.70–0.80% for FY21.

• An interim dividend of 28 sen/share (payout: 72.5%) has been declared with an electable portion of 14 sen under its DRP. This was higher in quantum than the interim dividend of 13.5 sen/share in FY20.

Source: AmInvest Research - 27 Aug 2021