Malayan Banking Berhad

Another sharing on $MAYBANK / 1155 (MALAYAN BANKING BERHAD)

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*Maybank (HOLD/Target: RM10.56): Change of Group CFO*

*WHATS NEW*

Maybank announced the change of its group chief financial officer (CFO) Khalijah Ismail with immediate effect, following an internal inquiry according to Bursa announcement. Meanwhile pending the search for a new Group CFO, Malique Firdauz Ahmad Sidique will assume the position of acting group CFO, with effect from Feb 17, 2025. Malique has served as Maybank Islamic’s CFO since late 2023.


*COMMENT*

*An isolated case* Management stated that CFO Khalijah Ismail was terminated for non-compliance with internal requirements and processes. She underwent the standard investigation process applicable to all employees, with no involvement from Dato’ Khairulsaleh. Management emphasized that this is an isolated case with no financial impact.

*No financial implication* Key points highlighted by management were: (i) No falsification of financial accounts—statements remain true and fair, ii) N financial losses incurred, iii) The internal inquiry was not triggered by any law enforcement agency – this is an isolated incident, iv) Bank Negara Malaysia was informed, v) Controls are in place to safeguard shareholders’ interest.

*Solid CET1 and provision provides solid buffers* Additionally, the Group’s strong provisioning and buffers provide further reassurance, as reflected in a loan loss coverage ratio of 126%—well above the pre-pandemic average of 75%—and a solid CET1 ratio of 14.7%.

*Maintain HOLD and target price of RM10.56* (1.18x FY25F P/B, 10.2% ROE). The stock is currently trading at its historical mean P/B which we deem to be fair as ROE output is broadly in line with its historical mean levels. Current dividend yield of 6% is also comparable with its historical implied average yield of 6.5-6.8%.

Sharing from remisier.

$MAYBANK / 1155 (MALAYAN BANKING BERHAD) drama

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*Maybank* (RM10.56) - *Updates on briefing*

Maybank terminated the employment of CFO, Pn Khalijah Ismail due to findings of non-compliance of their own internal requirement and process.

She underwent a normal investigation process, which applies to all employees and Dato’ Khairussaleh was not involved.

Few key things to take note:
(i) there were no falsification of accounts and financials stay true and fair,

(ii) no financial losses from this event, and

(iii) the internal inquiry was not triggered by any enforcement of law agency.

Management said this was an isolated case and controls are in place to safeguard shareholders’ interests.

Jit notes that management has provided some clarity on the matter, but he reckons share price could still likely see a knee jerk reaction.

Also, he does not discount the possibility of a short-term overhang on its share price.

That said, he re-iterates its capital and financial strengths, along with its ESG leadership in the banking space, remains valid.

Jit suggests for those who are looking to bottom-fish (in the event of a selldown), RM9.50-9.60 seems to be a good entry range, given its 38% Fibonnaci retracement level.

At this point, the dividend yield is close to 7% and could provide good support to share price.

Jit does not expect significant foreign selling pressure on Maybank, seeing its status as the least preferred large cap bank within his coverage, with foreign shareholding level <20% (lowest).

Aside from buying Maybank on weakness (if any), Jit suggests to re-visit his top picks:
*Public* (TP: RM5.20) and
*RHBBank* (TP: RM7.55).

Jit likes Public for its:
(i) strong defensive qualities,
(ii) headroom for provision write-backs, and
(iii) foreign shareholding is near multi-year low.

He likes RHB for its:
(i) appealing dividend yield of >6%,
(ii) being a relatively undemanding KLCI banking component, and
(iii) elevated CET1 ratio (>16%).

To sum up, Jit has a BUY rating on Maybank with a TP of RM11.35, based on 1.33x FY26 P/B. This is broadly in line with its 5-year pre-pandemic average of 1.27x (similar ROE output vs 2015-19 level) but above sector’s 0.94x (the premium is warranted given its regional exposure, leadership position, and higher dividend yield).

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by APEX

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research Report by TA

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research Report by RHB

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research Report by PBIV

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research Report by HLIB

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research Report by CGSI

With its strong exposure in Malaysia and Singapore, Malayan Banking Bhd (Maybank) stands to be the biggest beneficiary among peers of positive economic development in Johor.

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by CGSi

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by RHB

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by Kenanga

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by HLIB

KUALA LUMPUR: Stocks to watch on Friday include MyEG Services Bhd, Lay Hong Bhd, Malayan Banking Bhd (Maybank), Harrisons Holdings (M) Bhd, Atlan Holdings Bhd and Velesto Energy Bhd.

Malayan Banking Bhd (Maybank) and the Bank of Hangzhou of China have tied up to enhance customer services and support cross-border business initiatives.

PETALING JAYA: Malayan Banking Bhd (Maybank) and the Bank of Hangzhou of China have tied up to enhance customer services and support cross-border business initiatives.

KUALA LUMPUR: Malayan Banking Bhd (Maybank) has appointed Mazhatulshima Mohd Zahid as its group chief human capital officer, effective Oct 3, 2024.

KUALA LUMPUR: Alliance Bank Malaysia Bhd has appointed Tan Sri Amirsham A Aziz, the former president and chief executive officer of Malayan Banking Bhd (Maybank), to its board.

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by Public
Trading Buy – TP RM11.40

"Improving Further”

Maybank reported another sequentially better set of results, with 2QFY24 net profit of RM2.53bn (+8.2% YoY, +1.7% QoQ) contributing to a cumulative 1HFY24 net profit of RM5.02bn (+9.0% YoY) which met both our and consensus estimates at 51% of full-year numbers. Steady improvements were seen all round, with strong core fee (wealth management, brokerage, advisory) growth of +16.5% supported by better insurance performance, higher treasury and markets income and steady net interest income contributions as a result of the robust Loans base expansion. Our earnings estimates are kept unchanged, though we raise our dividend-based TP to RM11.40 as we make changes to our valuationvariables (i.e. risk premiums). Forward earnings multiple remain relatively inexpensive despite the healthy YTD share price gain. We continue to like the Group’s longer term prospects underpinned by its M25+ initiatives, and retain our Trading Buy call.

Analyst:
Ching Weng Jin
research@publicinvestbank.com.my

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by RHB
Neutral– TP RM 11.30

"Expect a Slower 2H”

NEUTRAL, new MYR11.30 TP from MYR10.60, 4% upside. Malayan Banking’s 2Q24 results are in line, with 1H24 reported ROE of 11% tracking its 2024 target of 11%. While 1H24 headline PATMI growth looks strong, Maybank guided for a moderation ahead in both loan growth and non-II, and hence, has left its 2024 ROE target unchanged. With valuations approaching long-term mean levels and dividend yield for FY24 having compressed to <6%, its current valuation looks fair, in our view

Analyst:
David Chong, CFA
david.chongvc@rhbgroup.com
Nabil Thoo
nabil.thoo@rhbgroup.com

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by HLIB
HOLD – TP RM10.80

"Lower provisions boost”

Maybank’s 2Q24 profit rose 2% QoQ given lower loan loss allowances, effective tax rate, and impairment write-back of financial assets. Moreover, NIM expanded sequentially and GIL ratio ticked down. However, loans growth tapered. Overall, results were in line with expectations and hence, forecasts were unchanged. All in all, we still believe Maybank’s risk-reward profile is balanced. Although most headline financial indicators and dividends stayed resilient, we are now slightly concerned of the Fed rate cuts and currency headwinds that could potentially impact its Singapore operations. Retain Hold with a higher GGM-TP of RM10.80 (from RM9.60), based on 1.3x FY25 P/B.

Analyst:
Chan Jit Hoong, CFA, CPA
jhchan@hlib.hongleong.com.my

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by TA
BUY – TP RM11.85

"Higher Operating Income”

We updated the beta and lowered our market risk premium from 6% to 5.5% for the banking sector on the back of the improving economic environment in Malaysia, the banking system’s healthy asset quality and capital ratios, stable interest rate environment and more positive investor sentiments. With that, we raise Maybank’s TP from RM11.12 to RM11.85. Our valuation is based on an implied PBV of c. 1.40x based on the Gordon Growth Model and a 3% ESG premium. Buy maintained on Maybank

Analyst:
Li Hsia Wong
liwong@ta.com.my

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by CGS
ADD – TP RM12.30

"An upturn in NIM in 2Q24”

■ Maybank’s 1H24 net profit was within expectations, accounting for 48% of our full-year forecast and 51% of Bloomberg consensus’.
■ We project a 14.2% yoy increase in its 2H24F net profit, driven by higher non-interest income and potential recovery in net interest income growth.
■ Reiterate Add, premised on potential write-backs in its management overlay and our expectation of an expansion in ROE in FY23-26F

Analyst:
Winson NG, CFA
winson.ng@cgsi.com

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
Research by MIDF
BUY – TP RM12.11

"2QFY24 Results: Can Foreign Interest Keep Up?”

• 6MFY24’s Core NP of RM4,955m was Within/Within our/street forecasts: 51%/50% of full-year forecasts
• Management’s tone: Neutral
• Core themes: (a) Liquidity concerns weigh down on NIM, (b) Dividend payout under watch, (c) Core beneficiary of foreign investor interest
• Forecasts unchanged
• Upgrade to BUY | Revised TP of RM12.11 | based on a revised FY25F P/BV of 1.46x (formerly 1.21x)

Analyst:
Samuel Woo
samuel.woo@midf.com.my

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)

Titan Trading Notes For Wednesday [28/8/2024]:

$KLSE-KLCI had a good breakout towards the 1652 points region today but unfortunately, our market sentiment remains in a bearish tone as we still saw 640 counters closing red for the day. Daily trading volume settled around the 3.18 billion mark, mostly dominated by selling activities.

Main stocks that showed strong buying momentum today would be the likes of VELESTO, PBBANK, TANCO, MAYBANK, SPSETIA, PMETAL, PBA, AMBANK, and BJLAND. All of which were able to sustain their rallies throughout the day on the top volumes list.

$PBBANK / 1295 (PUBLIC BANK BERHAD) although retraced back towards the RM 4.50+ main support levels over the past few days, was able to hold above its support and broke out strong all the way towards the RM 4.70 major resistance levels today with huge volume and buying momentum.

So far looking very strong here and as long as able to sustain above its RM 4.60+ immediate support levels, could continue on towards and beyond the RM 4.85+ regions soon for an uptrend continuation pattern.

Will be monitoring PBBANK closely here as still seems to be trending upwards strongly.

$MAYBANK / 1155 (MALAYAN BANKING BERHAD) on the other hand also showed similar price action, since retracing back towards the RM 10.40+ main support levels on the hourly charts, had been able to hold above it as a higher low and broke out towards the RM 10.70++ regions today with huge volume and buying momentum.

For now looking quite bullish here and seems to be the main focus on smart monies now. As long as able to hold above its RM 10.60+ immediate support, could continue on towards and beyond the RM 11++ regions soon.

Will be monitoring MAYBANK closely here.

$HUPSENG / 5024 (HUP SENG INDUSTRIES BERHAD) despite the negative market sentiment, was able to breakout from its RM 1.10+ main downtrend resistance and rallied towards the RM 1.12 regions with good volume and buying momentum today.

For now seems to have formed its higher low regions already over the past few weeks with RM 1 as the main support. As long as able to sustain above its RM 1.08 immediate support levels on the daily chart, could continue on towards and beyond the RM 1.20++ regions soon.

People often flock to blue-chip stocks or REITs, or well-known PLCs when they first start investing in Bursa. After all, it’s considered the “safest”.

I remember buying $MAYBANK / 1155 (MALAYAN BANKING BERHAD) $CIMB / 1023 (CIMB GROUP HOLDINGS BERHAD) $KLSE-CAPITALA $SUNREIT / 5176 (SUNWAY REAL ESTATE INVESTMENT TRUST) $YTLREIT / 5109 (YTL HOSPITALITY REIT) ... that was 5 years ago.

As one progresses further, then you’ll start to know that there are more than just those handful of stocks. Then, you start to learn about basic ideas like dividend yield, and realise many misconceptions like share price doesn’t mean the stock is expensive or cheap.

PSA: A RM1.50 stock is not more “expensive” than RM0.95…… a better measure is to look at the market capitalization. But even then, that’s just barely scratching the surface of valuation.

To determine if the company is a “good deal” or an “expensive deal” is going into valuation, and it is knowing how much you are paying for the thing you're buying.

If you do not know what you are buying, how would you know if you’re paying a good price for it?

Imagine, there are 2 mystery gift boxes in front of you:
Giftbox A has nothing, but may have good packaging, it is RM100 price tag
Giftbox B has 10g gold bar in it, but is in a carton box, it is RM1000 price tag.
Which is more expensive?

In this context, share price is just the price tag, it doesn't indicate if you are buying something valuable or with a reasonable price.

So, how do you know the amount of “gold” inside the giftboxes? Look at stocks as businesses, read their quarter reports and annual reports, to KNOW what you are buying.

Anyway, I digress. I hope more people don’t just say a company stock is expensive just because it’s above RM1. Sekian.

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
$CIMB / 1023 (CIMB GROUP HOLDINGS BERHAD)
$PBBANK / 1295 (PUBLIC BANK BERHAD)

$MAYBANK / 1155 (MALAYAN BANKING BERHAD)
$CIMB / 1023 (CIMB GROUP HOLDINGS BERHAD)