Investment Highlights

• We maintain HOLD on Malayan Banking (Maybank) with revised fair value (FV) of RM9.90/share from RM9.50/sha This is due to a higher BV/share estimate after factoring in t actual FY23 numbers into our model. Our FV is pegged to P/ of 1.2x supported by FY24F ROE of 10.5% with 3% premi based on our 4-star ESG rating.

• Our FY24F/25F earnings have been raised by 5.1%/9.2% af adjusting our NIM and credit cost assumptions.

• 12M23 core earnings of RM9.4bil were within expectatio coming in 2.8% above our forecast and 1% of consensus’.

• The group’s net profit grew 17.5% YoY to RM9.4bil in 12M This was supported by a stronger non-interest income (NO from higher core fees, gains in investment, trading and income coupled with lower provisions.

• On a QoQ basis, Maybank’s recorded a subdued net profit RM2.39bil (+1.3%) in 4Q23. Net operating income grew 3. QoQ, contributed by improvement in insurance income a higher core fees, which led to a stronger NOII. Neverthele the stronger topline were partially offset by higher opex a provisions.

• 12M23 opex grew by 11.8% YoY, driven by higher personn establishment, administration and general expenses. This to a higher CI ratio of 48.9% in 12M23 vs. 45.2% in 12M22, wh exceeded management’s guidance of 47.5% for FY23.

• The group’s loans grew 9.2% YoY in 12M23. Malaysian loa were driven by mortgages under CFS while corporate lo growth recovered in 2H23. Corporate loans under Glo Banking (GB) segment were extended to services, utilit segments and financial holdings companies. In Singapo loan expansion was supported by growth in GB and SM Meanwhile, loans in Indonesia grew 6.2%.

• Group deposit grew at a faster pace of 9% YoY. CASA ra slipped to 36.9% in 4Q23 vs. 38.6% in 3Q23 but remained abo the pre-pandemic level of 35.5% in Dec 19.

• In 4Q23, NIM slid by 4bps to 2.06%. 12M23 NIM contracted 27bps YoY to 2.12% due to higher cost of funds across ho markets.

• Net credit cost of 29bps in 12M23 was within managemen guidance of 30-35bps for FY23.

• 2nd interim dividend of 31 sen/share (all cash payout) has been declared. This brings the total FY23 dividends to 60 sen/share
  (payout: 77.4%) in line with our expectation.

Source: AmInvest Research - 29 Feb 2024