• Keep BUY and MYR9.65 TP, 15% upside and c.7% yield. Malayan Banking – one of our sector preferred picks – held an investor day on 24 Mar, showcasing its Group Community Financial Services (GCFS) division. GCFS focuses on enhancing customer experience (CX) and journey with ecosystems as well as digital could well be the key differentiator proposition for the group. In a volatile market, its attractive dividend yield should be the key driver of shareholder returns, in our view.

• GCFS division is the group’s largest segment, with 2022 mix for revenue, loans and deposits at 59%, 66% and 60%. Mortgages (45% share) and auto (20%) are the largest loan segments while Malaysia (74%), Singapore (12%), and Indonesia (12%) are the largest contributors to revenue. GCFS CASA is strong (52% CASA mix). In 2022, GCFS loans and deposits rose 7% YoY and 3% YoY, while revenue was up 17% YoY. Maybank highlighted the increasing importance of digital as a differentiator. Its Maybank Home2u is the country’s first-ever digital home financing solution where approval can be obtained within 10 seconds of completing an application. MYR1.1bn in mortgages have been approved thus far.

• Retail – portfolio growth and CX. For mortgages, Maybank targets primary and secondary markets (quicker disbursements in secondary market), while for auto and mortgages, it intends to strengthen its salesforce and further leverage on digital capabilities to drive growth. Emphasis will also be on establishing integrated ecosystems to connect borrowers with solution providers along their journey of owning a property or vehicle.

• SME – differentiated propositions based on growth stage. Maybank intends to leverage and expand its digital offerings – eg across markets in Malaysia, Singapore and Indonesia, and to redefine the floor and ceiling for ticket sizes so as to expand its customer reach. To enhance CX, this entails putting together an ecosystem that connects SMEs with solutions and tools (eg trade, payroll) to manage the business and facilitate growth.

• WM – strengthening relationships with solutions and digital. Wealth management (WM) total financial assets rose 6% in 2022 to MYR420bn, generating MYR5.7bn in income. The focus ahead is on holistic propositions while leveraging on regional footprint for cross-border referrals and onboarding, and digital to expand coverage and raise productivity. It is optimistic that its recently launched Islamic WM can be a game changer.

• Others. The emphasis on ecosystems is to improve customer stickiness and cross selling opportunities. As for the higher cost for Islamic deposits (vs conventional), this is due to the lack of distinction. The use of more sophisticated deposit products or slower loan growth may help ease the pressure. On digi banks, key for these banks is using data for targeted offerings. Maybank has a huge customer database and intends to monetise this (eg personalised offerings). Lastly, the banks are awaiting guidelines from Bank Negara Malaysia (BNM) to operationalise the use of savings in EPF Account 2 as support for loans.

Source: RHB Research - 27 Mar 2023