Highlights

• Hosted Digital Day… Maybank hosted its Digital Day yesterday which was well attended by analysts, fund managers and journalists. During the event, Maybank showcased its latest initiative on the digital technology, reinforcing its position as the leading bank in digital space.
• The rise of digital opportunity… Maybank recognized that the volume of digital banking transactions is growing at a fast rate through the growth of smartphones in circulation, wide spread of social media usage, and increasing e- commerce popularity which provide an abundance of opportunity. Through these digital transactions, Maybank expects the value of banking transaction via Maybank2u to rise 50% YoY to RM22bn in 2017.
• To stay ahead of the pack… To lead in the digital space, Maybank introduced various digital initiatives such as MaybankPay, SamsungPay, Maybank Heart (digital social fundraising platform for NGOs) and partnered Western Union for mobile remittance via Maybank2u.
• All new Maybank2u… To attract more users, Maybank introduced new face of Maybank2u and new innovation of Secure2u, which allows customers the option to acknowledge and digitally verify transactions via the new app.
• Cost saving and new business… The growth of digital banking forces banks to re-tailor their business model, including recurring investment in digital banking to remain competitive and relevant. While investment value earmarked for digital initiative is unknown, we believe Maybank is leveraging on it in-house digital R&D team, hence eliminating the exorbitant consultant fees.
• Positive on the development… All in, we are positive on the latest move, as we expect decent return from its digital effort, especially in garnering new potential business (i.e. new loan application & CASA) with shorter turnaround time.

Risks

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

Forecasts

• Unchanged.

Rating

BUY (↔)

• We continue to like Maybank for its well-balanced exposure in both retail and corporate segments. Maybank is the front runner beneficiary and the best proxy to ride on a continued expansion in the Malaysian economy.

Valuation

• Maintain BUY at TP of RM10.70. Our TP is derived from GGM model based on i) ROE 10% ii) WACC of 8.5%.

Source: Hong Leong Investment Bank Research - 14 Nov 2017