Maybank stands to be the biggest beneficiary among its peers of the positive economic development in Johor.
PETALING JAYA: With its strong exposure in Malaysia and Singapore, Malayan Banking Bhd
(Maybank) stands to be the biggest beneficiary among peers of positive economic development in Johor.
Following a recent virtual investor day held by the bank for its Singapore and Indonesia operations, CGS International (CGSI) Research said it had a positive outlook for the business growth in the southern state with the developments of the Johor-Singapore Special Economic Zone and the Special Financial Zone in Forest City.
“Among the Malaysian banks, we think that Maybank would be the biggest beneficiary, given its strong businesses established in both Malaysia and Singapore.
“This would help the group to capture additional fee income from the increased business flow between Johor and Singapore, aside from the potential increase in credit demand in these two areas.”
In Singapore, Maybank Singapore is ranked fifth with market shares of 4% in loans and 3.1% in total deposits in the first half of 2024 (1H24). Meanwhile, its loan market share of 4% trailed DBS bank Ltd’s 15.1%, UOB’s 12.4%, OCBC’s 9.9% and Standard Chartered’s 4.8% for that period.
CGSI noted that Maybank Singapore posted a turnaround in pre-provision profit (PPOP) growth in the financial year 2023 (FY23).
“In 1H24, Maybank Singapore recorded a PPOP of RM480mil. Based on this, we believe that it would register another strong growth in PPOP in FY24.
“The largest contributor for Maybank Singapore’s 1H24 PPOP was mainly for retail businesses with a share of 54.3%, followed by 41.3% contribution from the corporate segment.”
Among the key drivers Maybank Singapore has identified for its business growth are increasing the group’s wealth management contribution to total group income from 21% to 26% and doubling the productivity of retail wealth sales staff for FY24.
In terms of sustainable finance, it aims to be the top contributor to the group’s sustainable finance goal of RM80bil for FY25 and leading the transitioning finance industry in early retirement of coal-fired power plants in Asean.
In FY24, Maybank Singapore also targets to leverage the increase in the inter-country trade flows (among Malaysia, Singapore and other countries), plus increase its customer base to circa 5,000.
CGSI reiterated its “add” rating on Maybank with a RM12.30 target price. “We see the potential write-backs of its management overlay, robust loan/fee income growth and capital management initiatives, which could lead to high dividend payout ratios and return on equity as potential re-rating catalysts for the stock.”
