Analysts optimistic of Maybank Islamic’s future
We are optimistic of its future given the expected continuing growth for demand of syariah based financial products.
KUALA LUMPUR: Analysts are optimistic of Maybank Islamic Bhd’s (Maybank Islamic) future given the expected continuing growth for demand of syariahbased financial products.
In a briefing note following an investor day organised by Malayan Banking Bhd (Maybank), the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) observed that Maybank Islamic has grown strongly over the years and has become an essential part of the group.
“We are optimistic of its future given the expected continuing growth for demand of syariah based financial products.
“We believe that Maybank Islamic will be in a good position to take advantage of this demand,” MIDF Research opined.
MIDF Research highlighed that Maybank Islamic targets to grow contribution to the group’s assets, funding and profit before tax (PBT) to 50 per cent, 50 per cent and 40 per cent respectively by the year 2020.
“We view this target to be very ambitious,” the research arm said.
According to MIDF Research, as at end financial year 2017 (FY17), the contributions were 28.8 per cent, 31 per cent and 26.6 per cent from 26.9 per cent, 27.9 per cent and 21.2 per cent the previous year respectively.
Assuming current run rate, the research arm estimated that Maybank Islamic’s contribution to the group’s asset and funding by 2020 may fall short of its target by five to 10 percentage point (ppt) respectively.
“However, we believe that its PBT contribution target will be achievable.”
While Maybank Islamic’s targets seem ambitious, MIDF Research recognised that it has grown strongly over the years.
“For example, it had grown faster than conventional segment for the period FY10 to FY17.”
MIDF Research further highlighted that the compound annual growth rate (CAGR) for Maybank Islamic’s financing, deposits (including investment accounts) and PBT and zakat (PBTZ) for the period was 21.4 per cent, 20.5 per cent and 20.4 per cent to RM163.7 billion, RM154.6 billion and RM2.36 billion respectively.
“Comparatively, excluding Maybank Islamic (i.e. conventional), these segments’ CAGR was eight per cent, 7.9 per cent and 6.1 per cent to RM330.1 billion, RM371.9 billion and RM7.74 billion respectively.
“Meanwhile, the contributions to total group for these segments increased from 16.3 per cent, 14.6 per cent and 10 per cent to 33.1 per cent, 29.4 per cent and 23.4 per cent respectively.”
From this, the research arm determined that Maybank Islamic has been a very important feature to the group.
MIDF Research noted that the global Islamic banking market assets are expected to grow at CAGR of 7.3 per cent to US$2.44 trillion over the same period.
“As for the domestic market, Bank Negara Malaysia expects Islamic financing will account for 40 per cent of total financing by 2020 from 31 per cent as at 2017.
MIDF Research believed that all of this represents a great opportunity for Maybank Islamic to continue its growth trajectory, especially as it is the top five largest Islamic bank globally by asset size and the only of non Gulf Co-operation Country bank.
“With Maybank Islamic growing to be a sizeable entity, we would not be wrong to assume that it could be carved out to a separate entity.
“However, management indicated that there is no such plan as it leverages the group for branding, branches and funding.
“This allows it to operate at a more lean structure as it does not need to have separate branches for example.
“We believe that this could be the right strategic move as Maybank Islamic is embedded and a part of the total growth of the group.”
MIDF Research