RHB Research has maintained a “Buy” recommendation for Malayan Banking Bhd with a new target price of RM10.40 from RM10.60.
It said that Malayan Banking’s FY21 results were slightly ahead of expectations on lower-than-expected provisions.
It said that the management remains conservative on asset quality while financial targets for FY22 point to stable operations against a backdrop of strengthening economic recovery. “Although FY22F earnings growth will be capped by Cukai Makmur, we believe the share price will grind higher given its attractive dividend yield and undemanding valuation, “ RHB said.
RHB said that with economic recovery in key markets projected to strengthen in 2022, management will focus on leveraging fee-based income opportunities and accelerating digital product rollouts to drive income growth.
It said that the loan growth is expected to track system growth in respective countries while NIM is expected to be stable to 5bps higher, with policy rates forecast to rise 25bps in 4Q22 in Malaysia and 75bps in Indonesia.
It said that CIR would likely range at 45-46% given cost pressures and impending renewal of collective union agreement. Still conservative on asset quality, management guided for credit cost of 40-50bps (FY21: 51bps). ROE target is set at 9.5-10%.
