By Samantha Joseph
Maybank’s 9% increase in second quarter results came as no surprise to analysts. One of the main drivers was impressive topline growth, a 16.7% increase in Islamic banking income, followed by an 8.1% in non-interest income.
The group’s net earning for the first half of RM3.1 billion accounted for 49% of consensus estimates.
Year-on-year growth for non-interest income was mainly due to higher gains from the sale of available-for-sale (AFS) securities at RM318 million compared to last year’s second quarter result of RM99 million and higher forex gain at RM408 million versus RM220 million quarter-on-quarter, a report by RHB Research noted.
“Gains from the sale of AFS securities tend to be opportunistic in nature and, hence, will likely be volatile ahead,” RHB analyst David Chong said. “Management has said the bulk of the bank’s forex gains were mainly the result of the appreciation of the USD where Maybank benefited from its net asset position in the greenback.”
Maybank’s international operations have been instrumental in increasing deposits.
“The group’s deposit grew by an annualised rate of 14.6% in 1HFY13, driven by strong deposits growth in all its major operations where on an annualised basis, Malaysia, Singapore and Indonesia deposits grew by 12.7%, 27.1% and 12.0%, respectively,” Alliance analyst Cheah King Yoong said.
“In view of the stronger deposits growth relative to its loan, Maybank’s loan-to-deposit ratio (LDR) has inched down from to 89.6% in FY12 to 87.5% in June 13, which is within management’s comfort LDR level of about 90%.”
Abdul Farid Alias
Continued cost discipline has also made an impact on higher profits, and newly appointed Maybank CEO, Abdul Farid Alias, has assured that it will continue being a priority in Wednesday’s briefing.
“With cost control being one of the strategic priorities for 2013, it was not too surprising then that overheads were well managed, with an 8% increase y-o-y, and 1% q-o-q,” Chong observed. “As such, 2Q13 cost-to-income ratio (CIR) improved y-o-y and q-o-q to 48.4%, up from 49.2% y-o-y and 51.4% q-o-q while pre-impairment profit was up a healthy 12% y-o-y and 14% q-o-q.”
The results were marred by lumpy provisions that resulted in a slightly higher credit charge for the second half.
“The main blemish is the continued rise in impaired loans amount (for second consecutive quarters) but unlike in the first quarter, ratio managed to improve slightly,” Hong Leong Investment Bank analyst Low Yee Huap said. “Maybank also took a conservative stance to make full provision for two lumpy accounts, resulting in a first half credit charge slightly higher than guidance.”
RHB and Alliance have a ‘neutral’ call on Maybank, with target prices of RM11.40 and RM10.54 respectively. HLIB has a ‘buy’ call and maintains its target price of RM11.36 on improving domestic operations and expanding regional footprint, new divisions to better address competition and the new investment banking outfit gaining traction.
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