‘Buy’ call on Maybank retained

PETALING JAYA: Maybank Bhd’s share price, which has gained 15% year to date, will likely be range-bound in the near term as first half 2017 earnings were weaker than expected.

According to RHB Investment Research, the stock will continue to outperform the KLCI over the longer term as it is a key beneficiary of the country’s strengthening economy.

The research house maintains its “buy” rating on the stock with a target price of RM10.40.

Shares of the country’s biggest lender closed four sen lower to RM9.42 yesterday.

Maybank’s second quarter ended June 20, 2017 (2QFY17) results were a miss, with a 3% lower net profit of RM1.65mil quarter-on-quarter (q-o-q). First half 2017 (1HFY17) earnings of RM3.36bil were up 30% year-onyear (y-o-y), which accounted for 46% and 47% of RHB Investment Research’s and consensus forecasts respectively.

Annualised 1HFY17 return on equity was 9.6% which was short of management’s target of 10% to 11%.

Pretax profit was flat q-o-q as a 16% rise in fee-based income and tightly controlled expenses were offset by a 53% q-o-q increase in loan provisions.

“Non-interest income (non-II) rose 16% q-o-q on higher commission and service fees, investment and trading income. Net fundbased income grew a modest 1% as gross loans dipped 1% and reported NIM -4bps,” said RHB Investment Research.

Gross loans grew 6% y-o-y but fell 2% year to date mainly due to repayments of corporate loans.

“Its Malaysian book grew 1% year-to-date (YTD) but fell 2% YTD in Singapore and - 3% YTD in Indonesia.

“Deposits were flat y-o-y but -1% YTD, resulting in higher loan-to-deposit ratio (LDR) of 92.2%.

“Still, group liquidity coverage ratio (LCR) improved to 146%. CASA deposits (without investment accounts) grew 0.5% YTD.”

Absolute gross impaired loans (GILs) rose 4% q-o-q, slowing from increases of 5% q-o-q in Q1FY17 and 8% q-o-q in 4QFY16.