KUALA LUMPUR: AmResearch keeps 'hold' rating on Malayan Banking Bhd (Maybank) as share price likely to be supported by upcoming dividend payout.
"We expect Maybank to continue to experience slower consumer loans growth in second quarter (Q2). This is mainly due to ongoing effects of more prudent household measures.
"We believe that trade finance volume and value are likely to have not picked up as well in Q2. Note that Maybank has the highest market share in terms of trade finance in Malaysia at 23.7 per cent in February 2014.
"This may be partly due to effects of slower trade in China. We estimate that about 23 per cent of the company’s trade finance are related to exports activities, while 77 per cent are related to import business," said AmResearch in its research notes.
AmResearch said as for the corporate segment, the company hinted that despite some drawdowns, these have been partly offset by settlements and repayments.
"This may be due to companies deferring capex plans in the earlier part of the year, as the rapid movement of the Ringgit to 3.30 in early first quarter (Q1) may have made import components more expensive.
"Thus, we believe that the Q2 may be reflective of Q1’s trend. Recall that Q1’s annualised loans growth was only 5.3 per cent, below the group’s loans growth target of 13 per cent for financial year (FY) 2014F (forward).
"With the recent rate hike, the company believes that it may experience low single-digit compression in terms of NIM. This is ahead of its earlier target NIM compression of 10 basis points (bps) for FY 2014F."
AmResearch said non-interest income trend may be slower as well, due to a more subdued stockbroking environment, lower gains on the treasury division and lower loan processing fees.
"We believe that a slower revenue line is likely within expectations (our loans growth forecast is 6.4 per cent for FY 2014F). Given a high earnings base of at least RM6billion, we reckon that Maybank’s net earnings should be able to withstand any possible slowdown when compared to that in 2008.
"In the meantime, we believe that the share price may be underpinned by the upcoming interim dividend.”