INVESTMENT HIGHLIGHTS

• PATAMI grew +10.4%yoy from solid NII growth

• NII growth from lower interest expense

• Loans growth was steady from SME segment

• Asset quality stable

• No change in our forecast for Maybank Group

• Maintain BUY with unchanged TP to RM9.80 based on PB multiple of 1.4x

Double digit PATAMI growth. Maybank Indonesia posted PATAMI growth of +10.4%yoy to Rp490.1b due to the solid NII growth and lower provisions. However, CI ratio increased from higher general & admin (+4.9%yoy) and personnel cost (+3.7%yoy).

Solid NII growth from better funding management. NII grew a solid +8.1%yoy to Rp1.67t. This was from better funding cost management as interest expense fell -9.4%yoy to Rp1.65t as opposed to -1.4%yoy decline in interest income to Rp3.32t. This is despite faster rise in fixed deposits (+2.9%yoy to Rp73.97t) vs. CASA growth (+2.0%yoy to Rp43.71t).

Steady loans growth. Gross loans growth as at 1QFY17 came in at a decent +3.2%yoy to Rp108.2t. This was mainly contributed by growth in the SME segment, where it grew +5.4%yoy to Rp18.81t. This moderated by decrease in auto (-22.1%yoy to Rp13.68t), mortgage (- 11.7%yoy to Rp10.22t) and credit cards (-8.3%yoy to Rp2.11t). However, we understand that this could be from some portfolio rebalancing, especially on the drop in the auto loans segment, possibly to preserve asset quality.

Asset quality stable. Gross NPL ratio was slightly higher by +2bps yoy to 3.74%. We noted that NPL went up by +5.2%yoy to Rp4.1t, which was mainly contributed by the mining segment. This segment's NPL increased by +19.1%yoy to Rp576.6b

FORECAST

Pending the announcement of the Group's 1QFY17 result, we make no change to our forecast for now.

VALUATION AND RECOMMENDATION

We believe that the result from Maybank Indonesia will provide a boost to the Group’s overall 1QFY17 result. We were pleasantly surprised by the continued solid growth in NII. All-in-all, we are sanguine on the Group’s prospect for the rest of FY17 given that we expect provisions to come down and the potential to maintain the momentum of loans growth and quality deposits growth. While the expected total return is currently below our threshold of +15%, we are making an exception in this case pending for the Group's 1QFY17 result where there could be a possible revision in our TP. For now, we maintain our BUY call with unchanged TP of RM9.80 as we peg FY17 BVPS to 1.4x.

Source: MIDF Research - 2 May 2017