Malayan Banking Berhad (Maybank) posted a marginal 1% decline in net profit to RM5.17 billion for the first half of FY2026 (1H26), with earnings deemed broadly in line with expectations, according to Kenanga Research.
The research house said Maybank’s 1H26 net profit accounted for 49% of both its and consensus full-year earnings estimates.
Kenanga noted that weaker net operating income from investment income (NOII) in the global markets business weighed on the bank’s pre-provision operating profit (PPOP), which declined 6% year-on-year (YoY) in 1H26.
This was partly offset by stronger core fee income, with wealth management and investment banking fees each rising more than 40% YoY, as well as lower impairment charges that helped largely neutralise the impact on the bottom line.
Maybank declared an interim dividend of 31 sen per share, representing a payout ratio of 72.5%. Of this, five sen per share is eligible for dividend reinvestment. Its common equity tier-one (CET1) ratio remained broadly stable quarter-on-quarter at 14.92%.
Loan growth supported by CASA deposits
Kenanga said Maybank’s net interest income (NII) increased 2.5% YoY in 1H26, supported by 2.7% YoY loan growth.
Excluding foreign exchange effects, loan growth would have been close to 5%, led by Malaysia, where loans expanded 5.5%, alongside growth in Singapore and Indonesia.
Net interest margin (NIM) improved to 212 basis points in 1H26, up 10 basis points from the corresponding period last year. However, NIM eased four basis points quarter-on-quarter to 210 basis points in 2Q26, suggesting some pressure could persist as Maybank expands its loan book across key markets.
The bank also benefited from stronger current account and savings account (CASA) deposits, which rose 7.6% YoY, while fixed deposits declined 11%. Maybank’s group CASA ratio consequently improved to 41.5% as at 2Q26.
Kenanga attributed the stronger deposit mix partly to a higher loan-to-deposit ratio (LDR), which increased to 94.7% at end-June, while the liquidity coverage ratio (LCR) eased slightly to 130%.
Global markets weighs on cost-to-income ratio
Maybank’s cost discipline continued to provide some support, with personnel costs falling 6.6% YoY during 1H26.
However, the weaker income performance resulted in a higher cost-to-income ratio (CIR) of 49.5%. Management now expects the FY26 CIR to come in at around 49%, compared with its previous guidance of below 49%.
Kenanga said increased spending on technology transformation could place some pressure on costs going forward.
The global markets division remained the main drag on income, with its contribution falling 42% YoY in 1H26 amid weaker trading income.
Asset quality remains manageable
On asset quality, Kenanga said actual non-performing loan formation remained benign, although Maybank continued to exercise caution in provisioning.
Management overlay adjustments (MOA) increased by RM200 million to RM2.6 billion to account for macroeconomic risks.
Normalized net credit cost stood at 20 basis points for 1H26, while the gross impaired loan (GIL) ratio increased marginally by one basis point quarter-on-quarter.
Kenanga observed some deterioration in pockets of the mortgage and auto financing portfolios, but said Maybank’s loan loss coverage remained robust at 103.1%, providing an important buffer.
FY26 guidance maintained
Maybank has maintained its FY26 guidance, including its return on equity (ROE) target of above 11.8% and loan growth target of 4%-5%.
The bank recorded an ROE of 11.6% in 1H26, slightly below its target, although Kenanga noted that the acquisition of the entire stake in Maybank Ageas is expected to provide some ROE accretion.
Kenanga retained its earnings forecasts for Maybank and maintained its Outperform recommendation with a target price of RM12.30.
The target price is based on an unchanged Gordon Growth Model-derived price-to-book value (PBV) multiple of 1.45 times.
Kenanga said Maybank’s cash-only dividend yield is estimated at around 5.1%, after accounting for the portion of dividends eligible for reinvestment.
Key risks to the positive view include a sharper-than-expected squeeze on margins, weaker loan growth, deterioration in asset quality, slower capital market activity, adverse currency movements and changes in the overnight policy rate.
