Maybank; Buy; RM8.80 Price Target: RM10.60; MAY
Maybank expects NIM compression
Maybank
expects a contraction of 10 bps in the group’s net interest margin
(NIM) in 2012. It cited price competition between banks as the reason as
new loans secured at lower pricing has narrowed NIM. This is in line
with our expectation as we have imputed 10bps decline in NIM in our FY12
forecasts.
Separately, Maybank said that its exposure to
the USD600m (c.RM1.8bn) unsecured funding facility on which Vietnam
Shipbuilding Industry Group (Vinashin) has recently defaulted is minimal
and insignificant. Maybank’s total assets as at Dec-11 stood at RM451bn
and it has a loan loss coverage ratio of 87%.
Maybank
remains our top pick among the large cap Malaysian banks. Its dividend
yield is appealing at c.6%, assuming a sustainable 70% payout ratio.
Apart from its improving domestic business, we believe that its
long-term growth potential of its Indonesian operations remains a key
re-rating catalyst. Maintain Buy and RM10.60 TP.
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