MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its BUY call on Malayan Banking Bhd (Maybank), with an unchanged target price of RM12.11, following the banking group’s strong fourth-quarter results for the financial year 2024 (4QFY24).
The research house highlighted that Maybank’s earnings have surpassed the RM10 billion mark, driven by robust loan and deposit growth, stable net interest margins (NIMs), and a strong non-interest income (NOII) performance. They believe the bank remains a solid defensive investment amid market volatility, particularly with its attractive dividend yield of around 6%.
For the full year, Maybank’s core net profit (NP) reached RM10.09 billion, representing a 7.9% year-on-year increase and coming in within expectations at 104% of MIDF Research’s forecast and 102% of the consensus estimate. The rise in core NP was mainly attributed to an 8.1% year-on-year increase in net income, led by a significant 22.6% surge in NOII.
The boost in NOII was underpinned by improved fees from wealth and investment banking, as well as gains from global markets and insurance. Wealth-related fees rose 56.8% year-on-year to RM1.16 billion, while investment banking fees saw a 31% increase to RM1.1 billion, benefiting from higher sales and trading income due to market volatility.
On a quarter-on-quarter basis, Maybank’s core NP stood at RM2.53 billion, remaining stable from the previous quarter as higher net income was offset by increased operating expenses. Gross loans grew 5.3% year-on-year to RM418.9 billion, mainly supported by the Malaysian market, where loans expanded by 8.2% year-on-year. The Community Financial Services segment played a key role in this, with gross loans increasing by 9.1% year-on-year to RM325.4 billion.
While Singapore and Indonesia recorded marginal growth in ringgit terms at 0.4% year-on-year, they posted strong increases in their respective local currencies, with Singapore’s loan book rising 8.9% year-on-year to SGD51.7 billion and Indonesia’s growing 11.7% year-on-year to IDR131.5 trillion. Excluding foreign exchange effects, Maybank’s overall loan growth stood at 7.6% year-on-year.
Meanwhile, total deposits grew 6.3% year-on-year, with current account savings account (CASA) deposits increasing by 5.0% year-on-year. All key markets recorded CASA growth, and excluding foreign exchange impact, group deposits would have risen by 8.7% year-on-year. Asset quality remained steady, with the gross impaired loan (GIL) ratio improving by three basis points to 1.24%, supported by recoveries and write-offs. The loan loss coverage (LLC) ratio currently stands at 122%.
Maybank declared a higher dividend of 61 sen per share, translating to an 80% payout ratio. Looking ahead, MIDF Research expects the bank’s strong performance to continue in FY25, supported by stable economic growth and an unchanged overnight policy rate (OPR). As a result, MIDF Research has adjusted its earnings estimates upwards by 2.2% for FY25 and 3.3% for FY26, reinforcing its positive outlook on Maybank’s prospects.
