MAYBANK (1155) - Malayan Banking Bhd - A final sprint
Target RM12.00 (Stock Rating: ADD)
At 101% of our forecast and 104% of consensus, Maybank’s FY14 net profit did not disappoint. Its full-year net DPS of 57 sen was also higher than our projected 51 sen. We trim our EPS forecasts and lower our DMM-based target (COE of 10.3%; LT growth of 5%) as we cut our loan growth projections by 1% pt. Maybank remains an Add as we envisage a better showing in 2015. Potential re-rating catalysts include (1) improvement in the contributions from Indonesia, (2) better investment banking deal flow, and (3) the benefits from continuous regionalisation of its operations.
A good end to FY14
The lower 9MFY14 was made up by the strong growth in 4QFY14 when net profit rose by 11.5% yoy to a record RM1.93bn. This was primarily underpinned by a 21.1% yoy jump in non-interest income arising from higher fee income and foreign exchange gains. The strong 4Q14 earnings enabled the group to register a 2.5% increase in its net profit in FY14 although FY14 operating revenue was flattish at RM18.5bn, with a marginal 1.2% increase in net interest income offset by a 1.4% drop in non-interest income.
Slower but still-strong loan growth
Although the group’s loan growth eased from 13.8% yoy in Sep 14, it remained strong at 13.3% yoy in Dec 14. It was mainly driven by 15.3% loan expansion in Singapore. Malaysia’s loan growth was at 8.8% yoy in Dec 14 (vs. 8.4% yoy in Sep 14), on par with the industry’s 8.7%. Its loan momentum in Indonesia, the third largest market, eased from 10.7% yoy in Sep 14 to 9.8% yoy in Dec 14.
Improved asset quality
Following the deterioration in 3Q14, Maybank’s gross impaired loan ratio fell from 1.65% in Sep 14 to 1.52% in Dec 14 while loan loss coverage was largely stable at circa 95.6% in Sep-Dec 14.
Striving for better growth in 2015
2014 has proven to be a tough one for Maybank with net profit growth at only 2.5%. However, we envisage a better showing in 2015, premised on a operating environment in Indonesia and stabilised growth in Malaysia.
Source: CIMB Daybreak - 27 February 2015
Target RM12.00 (Stock Rating: ADD)
At 101% of our forecast and 104% of consensus, Maybank’s FY14 net profit did not disappoint. Its full-year net DPS of 57 sen was also higher than our projected 51 sen. We trim our EPS forecasts and lower our DMM-based target (COE of 10.3%; LT growth of 5%) as we cut our loan growth projections by 1% pt. Maybank remains an Add as we envisage a better showing in 2015. Potential re-rating catalysts include (1) improvement in the contributions from Indonesia, (2) better investment banking deal flow, and (3) the benefits from continuous regionalisation of its operations.
A good end to FY14
The lower 9MFY14 was made up by the strong growth in 4QFY14 when net profit rose by 11.5% yoy to a record RM1.93bn. This was primarily underpinned by a 21.1% yoy jump in non-interest income arising from higher fee income and foreign exchange gains. The strong 4Q14 earnings enabled the group to register a 2.5% increase in its net profit in FY14 although FY14 operating revenue was flattish at RM18.5bn, with a marginal 1.2% increase in net interest income offset by a 1.4% drop in non-interest income.
Slower but still-strong loan growth
Although the group’s loan growth eased from 13.8% yoy in Sep 14, it remained strong at 13.3% yoy in Dec 14. It was mainly driven by 15.3% loan expansion in Singapore. Malaysia’s loan growth was at 8.8% yoy in Dec 14 (vs. 8.4% yoy in Sep 14), on par with the industry’s 8.7%. Its loan momentum in Indonesia, the third largest market, eased from 10.7% yoy in Sep 14 to 9.8% yoy in Dec 14.
Improved asset quality
Following the deterioration in 3Q14, Maybank’s gross impaired loan ratio fell from 1.65% in Sep 14 to 1.52% in Dec 14 while loan loss coverage was largely stable at circa 95.6% in Sep-Dec 14.
Striving for better growth in 2015
2014 has proven to be a tough one for Maybank with net profit growth at only 2.5%. However, we envisage a better showing in 2015, premised on a operating environment in Indonesia and stabilised growth in Malaysia.
Source: CIMB Daybreak - 27 February 2015
