Malayan Banking Bhd
Outperform. Target price: RM11.00
group’s FY24 loans growth target of 6-7% (FY23: +9%) is fuelled by slower albeit sustainable demand in most fronts, with better support coming from recoveries in consumer spending and economic activity. Its global banking units seek to benefit from regional recoveries as well, predominantly in Indonesia’s high-growth status and rising corporate portfolios.
Domestically, the group expects tailwinds to arise from more secondary mortgage transactions which we opine may lead to more market share as certain competitors may lose appetite to be aggressive in this space. Meanwhile, it is investing in more interface enhancements and feature to keep stickier the SME and business accounts.
Coming out of FY23’s severe NIM compression of 27 bps from a tighter deposits landscape, the group believes that similar pressures could have mostly subsided. On the flipside, the group continues to expect NIM compression to occur in FY24,citing up to -5 bps. We believe that this could be tied to higher loans demand across the board in line with better economic prospects, as banks now have to compete more aggressively to retain financing market share.
Post update, we maintain our FY24F/FY25F earnings. Overall, we remain undeterred by near-term headwinds as MAYBANK continues to present itself as a highly sustainable pick, granted also by its leading market share and brand equity. That said, concerns may be more apparent in 2HCY24 with the possible implementation of targeted fuel subsidies likely to spur inflation (with full effects likely cutting into FY25) and whether public infrastructure projects could roll out in a timely manner.
We maintain our OUTPERFORM call and GGM-derived PBV TP of RM11.00.