Analysts Raise Concerns Over Maybank’s Mid-Term Prospects
MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a NEUTRAL rating on Malayan Banking Bhd (Maybank), with an unchanged target price of RM10.20, citing that while the group delivered a decent set of results for the first quarter of financial year 2025 (1QFY25), its outlook remains mixed amid headwinds. CIMB Investment Bank Bhd (CIMB Securities) also reiterated a HOLD call, keeping its target price at RM9.40, noting that earnings came in below consensus expectations despite modest improvements quarter-on-quarter.
Maybank reported a 1QFY25 core net profit of RM2.59 billion, marking a 4% year-on-year and 2% quarter-on-quarter increase, driven primarily by stronger non-interest income (NOII) and lower provisions. MIDF Research noted the performance was within both its and the street’s forecasts, with earnings making up 25% of full-year estimates. However, CIMB Securities highlighted that while earnings were slightly above its forecast by 1%, they missed consensus by 1.1%, flagging weaker-than-expected loan growth and pressure on net interest margins (NIM).
NIM fell 2 basis points to 2.04% in the quarter, with management warning that future rate cuts could compress margins further by around 3 basis points per 25 basis point policy rate reduction. MIDF Research observed that while the bank is attempting to mitigate this through cheaper funding alternatives and portfolio rebalancing, the outlook remains cloudy. Additionally, CIMB Securities stated that Maybank’s loan growth was subdued, rising only 2.2% on an annualised basis compared to its 5–6% full-year target and flagged the potential for this target to be revised down due to tariff uncertainties.
Asset quality remained relatively stable, though impaired loans rose 3.5% quarter-on-quarter, particularly in Malaysia and Singapore. Nonetheless, both research houses pointed to expected recoveries, notably from Sapura Energy’s restructuring, which may begin contributing by 3QFY25. MIDF Research also noted that provisioning appears under control, with overlays increased to RM1.8 billion. CIMB Securities estimated credit costs at 23 basis points—better than Maybank’s own 30 basis point full-year target.
While management has maintained key performance indicators such as a return on equity (ROE) above 11.3%, it acknowledged ongoing pressure from elevated costs. Post-M25+ investments in technology are likely to keep the cost-to-income ratio above the historical ~45% range. MIDF Research added that Maybank’s Indonesian operations remain in transition, with a strategic pivot away from low-margin state-owned enterprise loans and a focus on reducing expensive funding.
Despite headwinds, analysts agreed that Maybank’s dividend yield remains a highlight. MIDF Research estimates yields at 6.9% for FY25, among the most attractive in the sector, although it also cautioned that the current valuation—trading at 1.24 times FY25 forecast price-to-book value—is relatively expensive.
In sum, while Maybank continues to deliver steady profits and attractive dividends, analysts are cautious on its medium-term prospects, citing risks from NIM compression, slower loan growth and continued cost pressures.
