'Compelling regional growth' for Maybank

The acquisition of Singapore's banking franchise, Kim Eng Holdings, and the longer-term growth potential of Bank Internasional Indonesia (BII), will set the stage for a potentially compelling regional growth for Malayan Banking Bank Bhd (Maybank).

OSK Research said the bank's latest quarter net profit year-on-year (y-o-y) growth of 25.1 per cent and quarter-on-quarter growth of 11.4 per cent, respectively, far outpaced the industry's aggregate of 15.6 per cent and 8.2 per cent, respectively.

"Its earnings were propelled by an industry-beating loans growth of 17.6 per cent, y-o-y, the hefty 62.1 per cent drop in loans loss provision and maiden contribution from Kim Eng," OSK Research said in a note today.

It said BII was also aggressively expanding via new hiring and enlarging its branch network by 43 per cent over the next one-and-a-half years.

The research firm said BII's operating leverage would begin to flow through by financial year 2012 and financial year 2013 on a more stable cost base while generate new revenue from its enlarged presence.

"This would naturally help bring down the cost-to-income ratio closer to the industry average, driven largely by revenue growth from its enhanced infrastructure investments, as costs stabilises," it said.

OSK Research is maintaining a "Buy" call and fair value of RM9.60 on Maybank given the qualities provided by the bank and its alluring 7.6 per cent dividend yield which is the highest among domestic banking stocks. -- Bernama