Posted on May 16, 2012, Wednesday
KUCHING: Malayan Banking Bhd’s (Maybank) prospects backed by moderate domestic growth and slight non performing loans (NPL) compression.
According to OSK Research Sdn Bhd (OSK Research), it expected Maybank to report commendable first quarter 2012 (1Q12) results with pre-provision operating profit growth expected to come in at a relatively robust 19.3 per cent, underpinned by a total revenue growth of 22.5 per cent.
The group’s ability to sustain its overall group loans growth at 16 per cent and Maybank Kim Eng’s (Maybank Group’s regional investment banking arm) non-interest income contribution were expected to be the key drivers of year on year (y-o-y) revenue growth.
The research firm forecasted a full-year net interest margin (NIM) compression of six basis points (bps) to 2.47 per cent for financial year 2012 (FY12) in view of the continued pressure on NIMs faced by Bank Internasional Indonesia (BII) in Indonesia, for which OSK Research anticipated a further 20bps compression.
However, with Indonesia’s loans book contributing to a relatively small eight per cent of the group’s total gross loan base, the impact on overall group NIMs would be well cushioned by stable NIMs in Singapore and only a slight deterioration in Malaysia, due to strong current account savings growth.
The research firm also noted that given the expected headwinds from the more stringent consumer lending practices, domestic loan growth was expected to ease marginally to eight per cent to nine per cent versus FY11’s 10 per cent growth, while the group’s overall loan growth of 14 per cent to 15 per cent would continue to be driven by Singapore and Indonesia.
Despite the more stringent domestic consumer loans credit underwriting standards, domestic consumer loans would continue to lead overall domestic loan growth.
Mortgages would continue to be the key driver, as reflected in the strong mortgage loans approval growth of 51 per cent over the past 12 months. Domestic auto financing loans growth was expected to hover at 10 per cent to 11 per cent.
The research firm added that there had been concerns that Bank Negara’s stricter credit origination standards might adversely affect large hire purchase (HP) players like Maybank.
However, despite its relatively sizeable absolute HP portfolio by virtue of the group’s overall size, the HP component as a proportion of Maybank’s overall loans portfolio was relatively small at 17 per cent. Moreover, only a third of its HP portfolio was in the more vulnerable national car segment by value.
Asset quality was expected to remain benign and the firm were pleasantly surprised by
the improvement in its
Indonesian operation’s absolute NPL in 4Q11, which dropped by an impressive 48 per cent quarter on quarter.
OSK Research had built in a higher credit cost assumption of 30bps for FY12 versus the six month FY11 financial period’s 25bps. This was the key to the slower anticipated earnings growth of 9.1 per cent for 1QFY12 vs the more robust pre-provision operating growth estimate of 19.3 per cent for 1QFY12.
The group’s ability to maintain credit cost closer to FY11 levels of 23bps to 25bps might result in 1Q12 earnings growth coming in at a stronger 12.6 per cent vs our estimate of 9.1 per cent.
Officers and directors
Abdul Wahid bin Omar President, Chief Executive Officer, Non-Independent Executive Director Khairussaleh bin Ramli Group Chief Financial Officer, Deputy President Zafrul Abd Aziz Head - Investment Banking, Chief Executive Officer - Maybank Investment Bank Bhd Bapak Rahardja Alimhamzah Acting President Director - PT Bank Internasional Indonesia Tbk Hans De Cuyper Head - Insurance & Takaful, Chief Executive Officer - Mayban Ageas Holdings Berhad Muzaffar Hisham Head - Islamic Banking, Chief Executive Officer - Maybank Islamic Berhad Sio Hoong Sim Chief Executive Officer - Maybank Singapore Abdul Farid Alias Deputy President, Head - Global Wholesale Banking Hong Tat Lim Deputy President, Head - Community Financial Services Hin Hock Lee Group Chief Risk Officer
Malayan Banking Berhad (Maybank) is engaged in the commercial banking and related financial services. The Company’s subsidiaries are principally engaged in the businesses of banking and finance, Islamic banking, investment banking, including stock broking, underwriting of general and life insurance, general and family takaful, trustee and nominee services, asset management and venture capital. Maybank operates in four segments: Community Financial Services (CFS), Global Wholesale Banking (GWB), Insurance, Takaful and Asset Management and International Banking. It has operations in Malaysia, Singapore, Indonesia, Philippines, Papua New Guinea, Brunei Darussalam, People’s Republic of China, Hong Kong SAR, Vietnam, United Kingdom, United States of America and Cambodia and Bahrain. On September 19, 2011, the Company disposed of Integral Key Berhad. In May 2011, the Company acquired Kim Eng Holdings Ltd, is an investment banking group.
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