Buy Maybank, say research houses

KUALA LUMPUR: Three research houses have given a 'buy'
recommendation on Malayan Banking Bhd (Maybank) shares based on its attractive dividend policy for financial year 2012 (FY12).

Alliance Research, in its note today, said Maybank's first quarter FY12 results were within its expectation and market consensus, mainly driven by the surge in non-interest and higher Islamic banking income and lower loan loss allowance.

For this current financial year, it said the bank's attractive dividend yield of 5.9 per cent should mitigate the downside risks of its current valuation.

"They include slower-than-expected integration progress with Kim Eng, lower-than-expected loan growth and net interest margin compression due to competition or overnight policy rate cut and deterioration in asset quality, it said.

Alliance Research has maintained its 'buy' with the target price of RM9.29.

HwangDBS Vickers Research said Maybank would continue to pay high dividends to fully utilise its section 108 tax credit before its expires end-December 2013.

"We forecast six per cent dividend yield with a target price of RM10.60," it said in a note today.

It said positively, fee and commission income improved quarter-on-quarter with expenses fell quarter-on-quarter on lower information technology and marketing spend, together with provision which also fell due to recoveries and write-off.

Meanwhile, Hong Leong Investment Bank has maintained the bank's target price at RM10.12 backed by strong year-on-year growth earnings.

In a note today, the bank said it was positive on Maybank's earnings growth from Indonesia with improving domestic operations and new divisions to better address competition. Bernama