CGSI Research projects that the lender may post net profit of RM5.42bil in 2H24.
PETALING JAYA: Analysts are optimistic about the prospects of Malaysia’s leading lender Malayan Banking Bhd
(Maybank), after the release of its second quarter (2Q24) and first half (1H24) results on Wednesday.
MIDF Research said it believed issues with earnings and return on equity (ROE) would not be major concerns for now, adding that it predicted the group’s financial year 2024 (FY24) results should not deviate significantly from its target of 11%.
“On the flip side, we do not see any meaningful catalysts for a higher sustainable ROE either, at least for the next couple of years.
“Hence, we think the major determinants of further re-rating are the attractiveness of dividend yields and the continuation of foreign-investor interest,” the research house said in a note yesterday.
MIDF Research said foreign shareholding in the banking group stood at 19.7% as of July, although that was still well below the peak of 25.6% in May 2013.
The research house added that while it was difficult to compare the vibrancy of the current stock market with conditions in 2013, it nonetheless was taking the number as an indicator that there was still room for further foreign shareholdings in Maybank.
On the banking group’s net interest margin (NIM) guidance downgrade and slower loan growth forecast for 2H24, MIDF Research said that the guidance was to incorporate greater downside risk in its cost of funds, as Maybank was not confident that it could continue growing its current and savings account numbers to fuel loan growth.
Maybank had already begun paring down its pricier money-market deposits, which were used to fund the higher loan growth in 1H24. A large chunk of the growth comprised low-yielding residential mortgages.
In spite of the bank’s already leading market share, Kenanga Research said that Maybank continues to demonstrate better-than-industry loan-growth rates at the expense of its peers.
Running above a revised target of 7% to 8% growth, from 6%to 7%, the research house said Maybank believed that it could afford to be less aggressive with lower-margin accounts in order to target more profitable small and medium enterprises and corporate accounts.
“This in part should optimise NIMs alongside efforts to shave off costlier corporate deposits,” said the research house.
It said its earnings forecast for Maybank was slightly adjusted to incorporate better non-interest income, increasing its earnings predictions for FY25 by 9% as it revised loan-growth inputs to 7% from 4% in anticipation of greater spillover, in addition to lower credit costs.
CGS International Research (CGSI Research) projected for the lender to record net profit of RM5.42bil in 2H24, which translated to year-on-year growth of 14.2%, as it noted that key earnings catalysts in the latter half of the year would be higher non-interest income and a potential recovery in the growth of net interest income.
MIDF Research, Kenanga Research and CGSI Research all have effective “buy” calls on the counter, with target prices of RM12.11, RM11.30 and RM12.30, respectively.
