Higher fee income to boost Maybank’s earnings in coming quarters
KUCHING: Despite registering a weaker financial performance in the first quarter of 2014 (1Q14), Malayan Banking Bhd’s (Maybank) financial results is poised to improve in upcoming quarters underpinned by higher fee income.
CIMB Investment Bank Bhd’s research arm (CIMB Research) in a report yesterday said better fee income traction will account for stronger earnings peformance for Maybank in the following quarters.
Following a meeting with the financial institution’s key personnels during Invest Malaysia 2014 recently, analyst Winson Ng said Maybank will focuson further strengthening its regional portfolio and its targeted operational performance.
“Given its established regional business portfolio, we think that Maybank will focus on the following areas in the next five years.
“(These include) increasing the contribution from smaller markets with good potential like the Philippines and China to complement the growth from its top three markets of Malaysia, Singapore and Indonesia.
“Regionalising certain operations to enable the sharing of resources and information which would lead to improved efficiencies and cross-selling.
“(Nonetheless), we cannot rule out the possibility of Maybank entering new markets like Australia and India in the longer term to complement its existing regional portfolio.
“(Hence), its regional exposure would enable the group to benefit from the positive developments in various countries such as the implementation of the Economic Transformation Programme (ETP) in Malaysia as well as the strong loan growth and high margins in Indonesia,” Ng said.
He added that Maybank aims to achieve the following key performance indicators ( KPI) for financial year 2014 ( FY14).
Those KPI include return on equity ( ROE) of 15 per cent, group loan growth of 13 per cent contributed by loan growth of 12 per cent in Malaysia, loan growth of 13 per cent in Singapore, loan growth of 17 to 20 per cent in Indonesia and group deposit growth of 13 per cent.
As for the second quarter of financial year 2014 (2Q14), Ng noted the banking group’s prospects include higher loan growth in the consumer, small and medium enterprises (SMEs) and corporate segments.
Maybank is expected to generate strong depos it gathering, improving fee income growth on the back of better corporate deal pipeline but muted brokerage and loanrelated fee while the financial inst itut ion cont inues to implement cost optimisation in discretionary areas of spending to manage overhead expenses, he said.
Other strategies for 2014 which Maybank is going to implement , Ng observed, are regionalisation which include ongoing transformation of Bank Internasional Indonesia ( BII) as a priority and expansion of the Philippines and Greater China operations.
Besides that, Maybank will also streamline its business and ramp up its key businesses across the region for instance insurance, investment banking, transaction banking and global markets.
The banking institut ion is going to optimise capital in every sector, focusing on acquiring higher quality assets, optimising asset yields and emphasising total income growth.
As for Maybank’s strategy for 2015, Ng said the financial institution is in the process of formulating its transformation roadmap for 2015 to 2020.
“Whi le detai l s of the roadmap remains vague, the new programme might entail more aggressive expansion of Maybank’s Islamic banking business in the region and the possible regional expansion of its insurance operations.”