Investment Highlights

• We maintain HOLD on Malayan Banking (Maybank) with unchanged fair value (FV) of RM9.90/share, pegging the sto to P/BV of 1.2x supported by FY24F ROE of 10.5% with 3 premium based on our 4-star ESG rating.

• No changes to our net profit estimates as 1Q24 net profit RM2.49bil were within expectations, accounting for 24.8% our and 25.3% of consensus estimate.

• The group’s net profit grew 9.8% YoY in 1Q24. This w supported by stronger non-interest income (NOII) from increase in core fees, income for treasury, markets a insurance, partially offset by higher operating expens (OPEX) as well as provisions for impairment of loans a investments. The strong treasury and markets income RM1.5bil in 1Q24, supported by realised gains in bonds, sales and unrealised gains on FVTPL securities may not repeated in the quarters ahead. Net fund-based income w flattish YoY, impacted by NIM compression of 19bps due higher funding cost.

• On a QoQ basis, Maybank’s net profit grew 4.2%. Net operati income grew 8.6%, contributed by stronger treasury a markets income which led to stronger NOII. Nevertheless, th was partially offset by weaker net fund-based income from NIM compression of 6bps (Malaysia: 1bps, Singapore: 3b and Indonesia: 2bps) to 2% coupled with an increase in OP and provisions. Downside risk is seen on NIM guidance o compression of up to 5bps from 2.12% in FY23 as YTD intere margin has fallen by 12bps. A deceleration in loan growth the quarters ahead is likely to mitigate further pressure funding cost due to the moderation in deposit growth.

• Neutral JAWs with 1Q24 OPEX rising by 19.8% YoY, driven higher personnel, establishment (IT maintenance expens and project contract staffs), administration and gene expenses. CI ratio was stable at 48.3% within managemen guidance of <49% for FY24. Expenses related to M25+ strate totalled RM87.3mil and excluding these costs, CI ratio w lower at 47.4% in 1Q24.

• The group’s loans accelerated to 11.7% YoY in 1Q24 vs. 9.2 YoY in 4Q23. Malaysian loans grew 8.2% YoY, outpacing t industry’s 6%, supported by mortgages, auto finance, cre cards, SME loans under the Community Financial Servic (CFS) segment. Meanwhile, corporate loans under Glob Banking (GB) segment grew 7.4% YoY (mainly term loans a tradelines). In Singapore, loan expansion was support largely by growth in GB segment while that for CFS gr modestly. Loans in Indonesia expanded 13.6% YoY, led commendable growth in SME, business banking, auto a corporate loans.

• Group deposit growth was stable at 9% YoY. CASA ra increased marginally to 37.3% in 1Q24 vs. 36.9% in 4Q23.

• Net credit cost of 28bps in 1Q24 was within managemen guidance of up to 30bps for FY24. GIL ratio improved sligh to 1.32% in 1Q24 vs. 1.34% in the preceding quarter, attributed to a decline in the ratios for Singapore and Indonesia.

Source: AmInvest Research - 27 May 2024