Research firms remain upbeat on Maybank

Kuala Lumpur: Research firms have reaffirmed their upbeat stances on Malayan Banking Bhd (Maybank) after the country’s largest financial services group revealed its next five-year business strategy (2021-2025) at a briefing with analysts recently.

The business strategy, known as M25, emphasised heavily on sustainable and responsible profitability with digitalisation and the environmental, social and corporate governance (ESG) both taking centre stage of the plan.

By end-2025, the group aims to achieve a return on equity of between 13 per cent and 15 per cent, cost-income (CI) ratio of not more than 45 per cent, earnings per share of over 100 sen and dividend payout ratio of up to 60 per cent.

New profit drivers have been identified to lift the group’s business-as-usual return-on-equity (ROE) of 11.5 per cent to its aspirational ROE target of 13-15 per cent by 2025

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In a research note today, AmInvestment Bank Bhd said it viewed these targets as achievable given that it has already reported a CI ratio of 45.4 per cent in financial year 2020 and its average ROE was circa 11 per cent over the last four years prior to financial year 2020 (FY20).

“Under the pervasive digitalisation priority, the group aims to evolve from just a financial services provider to a customer’s lifestyle partner with wraparound experiences built within Maybank’s services, products and platform.

“We see this as essential to build stickiness with customers before restrictions on digital banks’ assets expansion are eventually eased three to five years later when five new licences are awarded in early 2022,” it said.

Meanwhile, in a separate note, RHB Investment Bank said it is positive about Maybank’s digital innovations as the bank is now capable of approving retail small and medium enterprises loans in 10 minutes with the process being completed on the bank’s app.

“A credit rating model, using artificial intelligence, is being refined which could potentially be a game changer to the group,” it added.

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AmInvestment Bank has maintained its “Buy” call on Maybank with a revised fair value of RM10.10 per share from RM9.80 previously. RHB Investment Bank has also kept its “Buy” call on Maybank with a 20.6 per cent upside on the target price at RM10.

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