SINCE the launch of Malayan Banking Bhd's Global Wholesale Banking (GWB) operations, which included corporate banking and investment banking in July 2010, the group has made significant progress in building up the GWB's business. We are convinced that it's Maybank's wholesale banking would eventually become a leading player in the Asean region.
We continue to maintain our “outperform” rating with an unchanged target price of RM10.40.
Under Maybank's Enterprise Transformation Services programme, GWB is one of the three pillars under the new Maybank group. It aims to regain domestic leadership and aggressively pursue an Asean market expansion through better client interaction. Since the start of this transformation programme, the group has been gaining market shares in both the corporate and investment banking businesses locally.
In the first quarter ended March 31 (1Q12), Maybank IB was ranked either first or second place in a few IB businesses such as merger and acquisitions, equity capital market, debt capital market and equity brokerage. This has contributed positively to the group's strong 1Q12 performance.
Maybank's 1Q12 profit after tax (PAT) of RM1.347bil made up 27% of the consensus' forecast and 26% of ours. Its non-interest incomes were RM1.654bil, a 54.5% increase year-on-year, on the back of stronger local IB business and Kim Eng's contribution in the quarter.
Corporate banking and Investment banking contributed RM800mil to RM5.020bil total revenues, which accounted for 39% of total revenues in 1Q12.
The group remains optimistic on its 2Q12 profit guidance as it still has a strong pipeline of investment banking deals. Although, the economic situation remains volatile with the eurozone crisis, we believe that positive growths in the local ETP's related sectors are expected to stimulate private investments and in turn, spur domestic loans growth as well as fuel local capital market activities.
The next journey would see the group aiming to be a leading wholesale bank in Asean by 2015. Areas of opportunities in the region include driving more cross border deals, growing its Islamic banking business and seeking more treasury products businesses, which should result in a non-interest income growth over the medium term. Maybank is likely to be one of the key beneficiaries from ETP projects rollout this year with its corporate loans growth likely to see an impressive rise for the second half (2H) of the year.
We do not discount the possibility of the group delivering or even outperforming its FY12 total loans growth target of 16.2%. Adding to that, earnings upside could also come from a lower credit charged-off rate going forward as well as a stronger than expected fee-based incomes after the acquisition of Kim Eng. The group offers a good dividend yield of 6.3%.
Monday June 18, 2012
