ASEAN KEY DESTINATIONS
Maybank set for stronger earnings
Maybank's continued improvement in domestic asset quality and loans growth will boost the group's earnings momentum in second half of financial year 2011, OSK Research says.
The research house maintains its "buy" recommendation on Maybank stocks with a target price of RM10.07.
Maybank surged 27 sen to RM8.86 at close today after reporting a 16 percent rise in group pre-tax profit to RM2.97 billion for the first six months ended Dec 31, 2010 and an interim dividend of 28 sen per share.
OSK Research, in its equity update, said Maybank's results were within expectations.
"We deem the results in line as we expect further traction in earnings momentum on a pick-up in corporate loans growth and a further downtrend in loan loss provisions," it said.
Going forward, it said that assuming Maybank's subsidiary, Bank Internasional Indonesia, was able to maintain its loans growth momentum and the management was able to deliver its domestic loans growth targets, the full year group loans growth was likely to exceed 11 percent, with potential growth coming in at 14 to 15 percent.
OSK Research said Maybank continued to display an improvement in asset quality with the gross impaired loans ratio slipping by significant 50 basis points to 4.20 percent quarter-on-quarter.
"If we were to benchmark its asset quality based on the old classification for non-performance loans (NPL), the group's net NPL would have reflected a 20 basis-point decline to 1 percent while loans loss coverage ratio would have stood at 131.8 percent, the highest ever recorded by the group," it said.
It also said that the net dividend per share of 21 sen which has been apportioned between three sen cash and a re-investment electable portion of 18 sen, translated into an attractive net dividend payout of 71.4 percent.
"Given that the group has indicated that it will indefinitely continue with its dividend reinvestment plan, its average net dividend payout ratio is likely to come in above the guided 40-60 percent pure cash dividend payout guidance," OSK Research said.
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