• 9M24 results was within expectations with key targets for 2024 remain unchanged

• Lower NIM and moderation in non-interest income may lead to a weaker 4Q24

• Our TP unchanged at RM11.40, but upgrade to BUY following pullback in share price

In line with expectations

Maybank reported 3Q24 PATAMI of RM2.5bn (+0.3% QoQ, +8% YoY), bringing 9M24 PATAMI to RM7.6bn (+9% YoY). Overall results are in line with expectations at 76%/75% of our and consensus estimates, respectively. We anticipate a potentially weaker 4Q24 sequentially due to: 1) seasonal deposit competition, which could further compress NIM, and 2) lower noninterest income due to reduced market volatility. 3Q24 recorded a higher ROE of 11.2%, partly lifted by a lower equity base from the sharp appreciation of the Ringgit. Management has reiterated its 2024 targets, including 7.5% loan growth, 10bps NIM compression, credit cost <30bps, and an ROE of 11%.

Mindful of NIM compression

PIOP grew 7% YoY in 3Q24, driven mainly by a 21% YoY increase in non-interest income, while interest income showed modest growth of 1.5% YoY. Loan growth remained healthy at 8% YoY (4.8% annualized), though driven by low-yield mortgages, resulting in a 3bps QoQ NIM compression to 2.04%. Credit cost decreased to 24bps (3Q23: 30bps) on higher bad debt recoveries, while the GIL ratio improved to 1.26% from 1.29% in 2Q24 as a result of recoveries and write-offs. Management overlays remain unchanged at RM1.7bn, though 66% has been allocated to retail and RSME portfolios due to observed asset quality deterioration. The pipeline for data centre financing remains robust at RM3bn in 3Q24. Management remains focused on reducing exposure to the real estate segment and shifting towards higher-yield loans such as the auto sector.

Upgrade to BUY with unchanged GGM-derived TP of RM11.40

We maintain our 12-months TP at RM11.40, but upgrade our rating to BUY (from HOLD) following the recent pullback in share price. Our TP implies a 1.37x 2025E P/BV (close to +2SD from 10-year mean), which we believe is justified by improved ROE, asset quality, and an attractive 6% 2025E dividend yield. Key risks to our BUY call include continued NIM compression, rising cost base, deteriorating asset quality, and intense deposit competition driving up funding costs.

Source: Phillip Capital Research - 27 Nov 2024