Malayan Banking Bhd’s resilience one of key investment points
KUCHING: Malayan Banking Bhd’s ( Maybank) earnings resilience is one of its key investment points, analysts opine, while others also project that the group’s net interest margin (NIM) will stabilise going forward.
According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), Maybank still managed to post a robust set of result recently, despite the issue with asset quality in Singapore.
In a filing on Bursa Malaysia, Maybank revealed that the group’s profit after tax and zakat attributable to equity holders amounted to RM3.83 billion for the six- month financial period ended June 30, 2018, 13.9 per cent compared to the previous corresponding six- month financial period ended June 30, 2017.
“We believe that this earnings resilience is one of the key investment points of the group,” MIDF Research said.
“We believe that the share price should have already priced in the group’s exposure in Singapore.
“However, should there be any immediate negative reaction to this, we believe that it will be an opportunity for investors to accumulate on the stock.”
MIDF Research also noted that the management had indicated that for the second half of financial year 2018 (2HFY18), Maybank will be focusing on improving the group’s NIM.
“This will be done by releasing some of the more expensive deposits and maintain loan pricing discipline.
“As such, the management had guided flat to marginal compress NIM in 2HFY18.”
However, the research arm believed that the pressure from deposit competition may force NIM to compress further.
“Nevertheless, we do not believe that the compression will be severe.”
Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) expected NIM to stabilise ahead as management will reduce Maybank’s strategy of shoring up the group’s liquidity in 1H18.
“We also do not expect a significant uptick in credit cost ahead, as significant provisions were made in 1H18 with uptick in impaired loans in other sectors (excluding power) are relatively benign,” Kenanga Research said.
The research arm was also positive on stronger income from Maybank’s insurance business duly supported by the expected robust consumer spending that will support the group’s noninterest income ( NOII).