Maybank, Malaysia's largest banking group, continues to show potential upside in its stock performance, with most analysts maintaining positive ratings. After reporting a net profit of RM9.35 billion for FY2023, surpassing pre-pandemic levels, analysts are optimistic about Maybank’s overall trajectory. However, concerns remain regarding its net interest margin (NIM) and dividend sustainability.
While 12 analysts recommend a “buy” on Maybank shares, seven suggest a “hold”, and one advises a “sell”, according to Bloomberg data as of Oct 3. The average target price of RM11.42 indicates potential for growth, with Maybank shares closing at RM10.54 on that date, giving the bank a market value of RM127.19 billion.
Maybank's NIM growth remains a focus after six consecutive quarters of decline, but it rose by 2 basis points (bps) in Q2 FY2024. Analysts are monitoring its ability to maintain this improvement, especially given rising costs and competitive pressures.
Loan growth is expected to slow to 7%-8% this year from 9.2% last year to ease NIM pressure, and the bank’s provision overlays and non-interest income momentum support earnings growth.
Although analysts expect Maybank's profit to increase, concerns remain about the impact of US Federal Reserve rate cuts on its Singapore operations. Additionally, its dividend payout ratio, which was lower than expected for 1H2024, is under scrutiny. Nevertheless, Maybank's management is confident about sustaining dividend levels similar to last year’s 60 sen.
Looking forward, data centre projects in Malaysia are expected to contribute to Maybank's loan growth, positioning the bank well for future performance. Analysts anticipate Maybank's net profit to grow to RM9.94 billion in FY2024 and RM10.59 billion in FY2025, supported by stable earnings momentum and the potential write-back of provision overlays.
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