Analysts bullish on Maybank’s performance in Asean region
KUCHING: Malayan Bank Bhd’s ( Maybank) growth potential in the Asean region has been viewed positively by analysts, despite the on- going challenges seen in the overall banking industry.
CIMB Investment Bank Bhd’s research arm ( CIMB Research) said it retained an ‘add’ recommendation on Maybank premised on potential rerating catalysts such as the growth potential in Indonesia, benefits from the regionalisation of its operations in various countries, and regional expansion of its insurance and Islamic banking businesses.
However, it cautioned that downside risks to its call are further deterioration in asset quality and larger-than- expected margin compression.
Meanwhile, it believed that Maybank would adopt a more conservative stance in 2017.
It explained, “We bel ieve Maybank would continue to adopt a defensive stance in 2017 amidst the challenging operating environment.
“It would still be restrictive in its loan growth, in our view; rather, it would focus on managing asset quality, partly via proactive restructuring of some of the loans that have raised red flags, and defending its margins, via greater price disciplines and active asset/ liability management.”
“Overall, it projected Maybank’s net profit growth of 12.7 per cent in the financial year 2017 ( FY17) compared to a 5.5 per cent decline in FY16.
“This would be underpinned by a 3.4 per cent drop in loan loss provisioning ( LLP) following the 320.5 per cent surge in FY15 and 51.4 per cent surge in FY16,” it said.
The research team also forecast topline growth of 7.6 per cent in
We believe Maybank would continue to adopt a defensive stance in 2017 amidst the challenging operating environment. CIMB Research
FY17 compared with 2.9 per cent in FY16, with the expansion of 5.2 per cent in net interest income and 11 per cent in non-interest income.
As for Maybank’s loan performance, CIMB Research expect loan growth to remain weak in 2017.
It said, “Based on our forecast, Maybank’s loan growth would remain weak at three per cent in FY17, on par with the level in FY16.
“This would be due to weak credit demand, given the poor business sentiment, and its more stringent lending practices.
“We project loan growth of 4.3 per cent for Malaysia and 7.8 per cent for Indonesia in 2017, but flat growth for Singapore.”
It also expected a 20 basis points ( bp) rise in gross impaired loan ratio.
“On a conservative note, we expect the group’s gross impaired loan ratio to increase by 20bp from 2.1 per cent in December 16 to 2.3 per cent in December 17.
“The group still had a total of RM2.4 billion of rescheduled and restructured loans as at endSeptember 16.
“Some of these loans would be reclassified back to non-impaired if the borrowers continue to service the loan promptly for six consecutive months.
“This would help to offset the impact of the new impaired loans and limit the rise in the group’s gross impaired loan ratio,” it added.