PublicInvest Research

Malayan Banking Berhad - Focused Growth

PublicInvest
Publish date: Thu, 29 Feb 2024, 11:08 AM
PublicInvest
0 10,792
An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

PUBLIC INVESTMENT BANK BERHAD (20027-W)
9th Floor, Bangunan Public Bank
6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur
T 603 2031 3011 | F 603 2272 3704 | Dealing Line 603 2260 6718

Focused Growth

Maybank ended its financial year on a steadier note with a 4QFY23 net profit of RM2.39bn (+8.3% YoY, +1.3% QoQ), though headline improvements (YoY) are largely aided by a normalization in tax rates (ie. Cukai Makmur in 2022). Cumulative FY23 net profit of RM9.35bn (+17.5% YoY) is in line with our and consensus expectations at 101% of full-year estimates. Weakness in net interest income and insurance-related contributions were mitigated by a notable uptick in non-interest income contributions, as lower loan loss provisions also helped. Our estimates are tweaked lower by 1% on average due to housekeeping changes. While we continue to like the Group’s longer term prospects underpinned by its M25+ initiatives which are gaining further traction, we lower our call to Trading Buy given the limited share price upside to our unchanged TP of RM9.70.

  • Net fund-based income fell 6.6% for the year to RM19.30bn as net interest margin (NIM) compressed 27bps (to 2.12%) due to higher funding costs. Management affirmed its resolve in defending CASA balances (CASA ratio: 36.9%), guiding for a marginal NIM compression of only ~5bps in 2024. By business segment, Community Financial Services contributions rose +7.4% YoY to RM12.96bn, though Corporate Banking/Global Markets fell 11.2% YoY to RM5.04bn. Management will continue to double-down on its mortgage, SME and retail SME portfolio across its universal markets to drive income growth, though with a keen eye asset quality preservation.
  • Non-interest income growth of +38.3% YoY to RM8.06bn for FY23 was lifted by a significant +59.2% increase in Treasury and Markets-related income (foreign exchange gains, realized capital gain on financial investments) and narrowing of insurance-related losses.
  • Loans growth was a notable +9.2% YoY, with strong expansions seen across all its key markets. Business in Malaysia (+6.2% YoY) is underpinned by the mortgage (+10.4%), auto (+9.0%) and SME/business banking (+9.0%) segments. Singapore (+8.7% YoY) is supported by the corporate banking business (+16.0%) meanwhile. Indonesia’s (+6.2% YoY) growth is evident in auto loans (+18.8%). Management has guided for a more subdued growth target of between 6% and 7% (at Group level) for 2024 however.
  • Asset quality continues to show mixed signals. Gross impaired loans ratio improved to 1.34% (3QFY23: 1.43%), though largely due to write-offs and recoveries. Loan loss provisions increased 37.8% QoQ to RM471.5m for 4QFY23 due to a net allowance in financial investments, and higher net loan provisioning. Loan loss coverage remains healthy at 124.9% (3QFY23: 127.1%) however, as formation of newly-impaired loans remained moderate (Figure 4). FY23 net credit cost (NCC) of 31bps is within management’s guidance of between 30bps and 35bps. FY24 NCC guidance is ~30bps.

Source: PublicInvest Research - 29 Feb 2024

Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment