Deviations

• In line with expectations. Posted a stronger net profit of RM2.3bn in 4Q16 (+42.6% YoY, +31.5% QoQ). After stripping out a gain of stake sale of Visa and Wom Finance of RM625m, Maybank 4Q16 net profit was RM1.7bn (+5%YoY, -3% QoQ). This brings FY16 net profit RM6.1bn, in line with HLIB and consensus estimates, accounting for 98% and 104% FY forecast respectively.

Deviations

• None

Dividend

• Declared final dividend of 32 sen, lifting FY16 dividend to 52 sen, translating to 76% payout or 6% yield.

Highlights

• Against KPIs… Maybank met all targets in FY16 compared to its revised guidance.

• 4Q16. Net profit turned stronger lifted by stake sale amounting RM625m. Stripping this out , net profit amounted to RM1.7bn (+5%YoY, -3% QoQ). On BAU basis, RM1.7bn was underpinned by higher NII of RM4.1bn (+6.1% YoY, +7.5% QoQ) due to higher NIM at 2.32% vs. 2.22% in 3Q16. However, LLP in 4Q16 was still high at RM615.7m (+31.9 YoY, +66.3% QoQ) due to IA allowance.

• 12M16. Net profit of RM6.1bn (excl. stake sale) was driven by higher NII by 4.7% YoY to RM15.7bn as a result of higher NIM booked of 2.27%.

• At PBT level, Malaysia is still the biggest contributor, accounting for 77.2% (dipped by 20ppts) followed by Singapore at 9.9% (lowered by 590bps) and Indonesia at 8.9% (improved by 520bps).

• NIM for FY16 was impressive at 2.27% due to repricing effect of loans yield and higher CASA composition booked in 4Q16 alone.

• Loans soared by 5.7% YoY with strength across all countries, i.e. Malaysia (+6.3% YoY) Indonesia (+8.7% YoY), Singapore (+4.5% YoY). Malaysia loan growth was underpinned by business banking (+9.1% YoY) followed by global banking (+6.8% YoY) and consumer side (+5.8% YoY).

• Deposits grew 2.4% YoY, much ado from CASA that rose 11% YoY, especially from Singapore. CASA now attributed 36.5% of total deposits vs. 33.7% a year ago.

• Asset quality issue is now receding despite GIL rising to 2.28% vs. 2.22% in 9M16. This was due to NPL that rose to 1.64%, but management attributed this as sporadic from several accounts. Notably, R&R now declined to only 0.39% as management witnessed impacted accounts performing again after its close monitoring for 6 months.

Risks

• Unexpected jump in impaired loans, lower than expected loan growth and significant slowdown in capital market.

Forecasts

• Unchanged as results were in line.

Rating

BUY ( ↔ )

• We continue to like Maybank given its well balance exposure in both retail and corporate segments. Maybank is the front runner beneficiary and the best proxy to ride on a gradual recovery in economic growth.

Valuation

• Given the well delivery of KPIs, we raise our TP to RM9.00 as we impute higher ROE of 11% and WACC of 8.55%. Our BUY rating is maintained.

Source: Hong Leong Investment Bank Research - 24 Feb 2017