INVESTMENT HIGHLIGHTS

• The management is comfortable with current loans growth run rate.

• It is competing via services and turnaround time and not through pricing. This will ensure that NIM compression is kept at a minimum.

• Looking beyond T18 initiatives.

• Reviewing and strategizing its overseas franchise with condition that it has to be value accretive.

• Need to make investment to enhance digital offering. Partly funded by divestments.

• No change to forecast for now.

• Optimism remains. Maintain BUY with unchanged TP of RM7.80, based on 1.4x PBV on FY18 BVPS. Key take aways. We met with the Group's CFO recently for an update of the latest development. Below are a summary of the key take aways from our meeting:

• Competiting for loans acquisition through services and faster turnaround time (e.g. newly launched “instant mortgage”) and not through pricing.

• Reviewing and strategizing its overseas franchise with the condition that it must be value accretive to the Group.

• Investment will be made to enhance its digital proposition. Divestment is partly to raise fund for investment in digital strategy.

• Looking at next phase of growth, beyond T18 initiatives.

Seems to be on-track in terms of loans growth target. At current juncture, the Group are comfortable with the loans growth run rate. This is especially the case in Malaysia, where management believe it will be able to achieve the 6-7% loans growth target. We echo this view given the demand for affordable housing. Furthermore, we understand that the loans growth are skewing towards mortgages. The challenge will be in Indonesia and Thailand with a decline in its auto loans book and SME loans respectively. Nevertheless, we understand that retail loans in these two markets appear to be stable.

Source: MIDF Research - 4 May 2018