The group reported a 21.2% y-o-y and 6.7% q-o-q growth in net profit, propelled by strong loans growth, NIMs expansion, trading gains and improved operation efficiency. Upon revising upwards our FY12 and FY13 loans growth forecasts, we are nudging up our FY12 and FY13 earnings forecasts by 4.6% and 5.2%. Accordingly, we are tweaking upward our ROE estimates marginally by 60bps and 80bps respectively to 15.8% and 15.5%. This lifts our FV from RM9.85 to RM10.30 (2.12x FY12 PBV, with an implied PE of 14.9x). Maintain BUY.
Above expectations. Maybank’s annualized 1HFY12 net profit was 12.3% above consensus and 8.6% above our estimates, with the 1HFY12 earnings representing 56.2% of consensus and 54.3% of both full-year forecasts. 1HFY12 earnings expanded 21.3% y-o-y while those for 2QFY12 rose 6.7% q-o-q. The group’s pre-provision operating profits were equally impressive, growing by 7.2% q-o-q and 22.9% y-o-y.
Firing on all cylinders. The stronger-than-expected results were largely driven by: i) a 5.6% q-o-q surge in loans growth with an accompanying 4bps uptick in sequential NIMs, ii) a 67% growth in transaction service charges and fee income, and iii) improved operating efficiencies, which helped to bring down the cost to income ratio to 47.3% from 49.2% in 1Q12. On a y-o-y comparison, net profit and pre-provision operating profit jumped 21.2% and 22.9% respectively despite a 229% y-o-y surge in provision charge. The y-o-y performance was boosted by: i) a robust 15.0% annualized loans growth, which translated into a 14.7% y-o-y net interest income growth, and ii) strong trading gains from available-for-sale securities, which soared 293.3% y-o-y.
Loans growth spurred by domestic consumer, corporates and Indonesia. The group’s annualised loans growth of 15.0% was a sharp improvement from 1Q12’s 6% annualised rate. Domestic loans growth was the key positive surprise, registering stronger than expected annualised growth of 15.8% (mortgage +14.9%, auto financing +14.3% and corporate loans +24.4%). Loans growth in Indonesia moderated to an 18.8% annualised growth vs FY11’s 28% but this was well compensated by a sharp q-o-q improvement in NIM, which rose 46bps to 5.89%, largely owing to BII’s strategy of selective growth focusing on profitability rather than volume. This move was in view of the macroeconomic uncertainties and potential asset quality concerns in Indonesia.
Deposit growth equally promising. Despite the robust 15.0% annualized loans growth, the group’s LDR ratio improved by 30bps to 86.9% q-o-q, boosted by strong deposit growth of 16.9%. It also displayed promising CASA growth, with its current and savings accounts expanding 17.8% and 8.2% respectively, with its Malaysia and Indonesia operations displaying the strongest growth.
Asset quality holds firm. Overall, impaired loans improved markedly, growing by 13.6% q-o-q, with the group’s Singapore operations posting a 7.3% improvement and its Malaysian counterpart improving by 18.4%,. This led to gross and net impaired loans declining 44bps and 29bps q-o-q to 2.00% and 1.28% respectively. The decline was attributed to improved recoveries and write-offs. We have built in a higher credit cost assumption of 30bps for FY12 vs the 1HFY12 annualised charge-off rate of 28bps.
Revising earnings. Upon revising upwards our FY12 and FY13 loans growth forecasts from 12.3% to 14.6% and 11.2% to 13.4% respectively, we nudge up our FY12 and FY13 earnings forecasts by 4.6% and 5.2%.
Source: OSK
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