Period 4Q12/FY12
Actual vs. Expectations The FY12 PAT of RM5,744.7m came in generally
in line with the street’s expectations, making up 102% of the consensus
forecast and above that of ours (109%).
Dividends The
group has proposed a gross final dividend payout of 33 sen/share less 25% tax
with 4 sen cash and a 29 sen electable portion. The full year dividend payout ratio
of 74.7% is in line with our estimates.
Key Result Highlights
The 4Q12 net interest income grew
steadily by 1.7% QoQ and 2.0% YoY to RM2,194.9m. The NIM was lower by 6bps to
2.36% given the softer 12.9% (YoY) loan growth during the quarter. The loan
growth momentum was softer due to the tighter markets in the region. The 12.9%
loan growth is hence below the bank’s FY12 KPI target and our estimate of
16.2%. The slower loan demand in
Singapore and just stable growth in Malaysia were the key reasons for the unexciting
loan growth. The domestic loan grew 11.8% (vs. 3Q12: 12.4% & 2Q12: 15.8%).
Meanwhile, the 4Q12
non-interest incomes of RM2,036m were stronger by +3.1% QoQ. The FY12 non-interest incomes of 8,122.5m
were considerably strong (+13.0% YoY) thanks to: 1) a stronger Kim Eng’s
contribution, 2) transfer profits from the surplus in the insurance division
and 3) a better fee-based income from the strong issuance of Islamic debt securities.
As a result, the group’s total income grew 12.1% YoY with non-interest incomes
contributing to 48.9% of the total income.
The 4Q12 overhead
cost of RM2.14b was +4.6% higher on staff cost and the cost-to-income ratio was
up at 50.5% (vs. 49.4% in 2Q12) that within our expectation.
The NPL outstanding
balance of RM5.7b was lower in 4Q12 (from RM5.8b in 3Q12) with the net
impairment ratio improving 13bps QoQ to 1.09%. The annual credit charged-off
rate of 23bps to gross loans was within our estimate.
In summary, the
annualised 16.0% ROE achieved has exceeded the group’s 15.6% target and that of
ours as well.
Outlook During
the post-result briefing, management said that the bank’s outlook remained
positive and that it would focus on: 1) extracting value from its regional
platform to create top line synergies, 2) improving staff productivity and 3)
changing the group’s cost structure to improve efficiency.
Change to Forecasts We are raising our FY13 earnings by 13.0% to
RM6.1b (from RM5.4b previously) as we incorporated in higher non-interest
incomes contributions from Kim Eng and the insurance division and introducing
FY14 PAT at RM6.6b.
Rating Maintain OUTPERFORM
Our OUTPERFORM rating
is maintained as the current share price implies a 28% total upside (together
with a 6.3% net div. yield) to our Target Price (TP).
Valuation Our
revised Target Price of RM10.90 (RM10.40 previously) is based on an unchanged
2.0x FY13 P/BV and implies a 14.5x FY13 PER.
Risks Unexpected slowdown in its fee incomes.
Source: Kenanga
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