INVESTMENT HIGHLIGHTS

• Strong earnings in FY19 for Maybank Indonesia

• NII moderated income decline

• Asset quality stable

• Loans book expanded but deposits declined

• No change to our forecast for Maybank Group

• Maintain BUY with unchanged TP to RM11.40 based on PB multiple of 1.6x

Key takeaway. We participated in a briefing by the management of Maybank Indonesia yesterday. Below are the key takeaway:

• FY18 saw strong earnings growth and highest PATAMI in its history.

• Loans growth and asset quality improvement led to the good performance.

• Sufficient funding and liquidity.

Strong earnings in FY18. Maybank Indonesia posted an earnings growth of +21.6%yoy to IDR2.26t, mainly supported by lower provisions. Provisions fell by -38.6%yoy as asset quality improved with gross NPL ratio declining -0.22ppt(yoy) to 2.59%.

NII moderated income decline. Total income in FY18 came in flattish at -0.7%yoy for Maybank Indonesia. This was due to the - 17.3%yoy decline in NOII. However, NII had moderated this impact as it grew +5.2%yoy despite operating in a policy rate hike environment. Note, in Indonesia, deposit rate are repriced faster than interest rate after a policy rate hike. Interest expense fell -5.8%yoy to IDR6.69t while interest income fell only by -0.1%yoy to IDR14.79t in FY18.

Loans book expanded but deposits declined. As at end 4QFY18, Maybank Indonesia’s loans book expanded +6.3%yoy to IDR133.3t. The growth was driven by non-retail segment where it grew +10.9%yoy to IDR58.3t. Of this, business banking and SME loans grew +9.8%yoy and +12.4%yoy to IDR34.0t and IDR24.3t respectively. Meanwhile, deposits from customers contracted -3.7%yoy to IDR116.8t as CASA fell -8.3%yoy to IDR44.5t. Despite liquidity remained tight, its LCR and NSFR (both bank only) stood at above regulatory requirement of 100% at 116.6% and 107.2% respectively. The management indicated that measures already in place to manage liquidity in addition to selective loans growth.

Source: MIDF Research - 19 Feb 2019