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Business Times
3 days ago
- Business
- Business Times
Maybank cuts view on Malaysian banking sector to ‘neutral' as tariffs, slower GDP weigh on earnings
[SINGAPORE] Maybank Investment Bank has downgraded its rating for the Malaysian banking sector to 'neutral', from 'positive' previously, due to slower gross domestic product growth (GDP), subdued earnings prospects, and macroeconomic uncertainty. Despite the downgrade, the bank's analyst, Desmond Ch'ng, said in a note on Tuesday (Jun 3) that Maybank still recommended 'buy' calls for Public Bank, AMMB (AmBank), Hong Leong Bank, and Hong Leong Financial Group – in this order of preference –citing strong management, prudent credit buffers, and resilient fundamentals. Disappointing performance Overall, Ch'ng noted that the results for the first quarter of FY2025 were 'lacklustre' and that no bank surprised positively as the results of several – such as Hong Leong Bank, Hong Leong Financial Group, RHB Bank, Public Bank and Bank Islam Malaysia (BIMB) – came in below expectations. For instance, on a quarter-on-quarter basis, Hong Leong Bank's core net profit dipped 8 per cent to RM1.1 billion (S$333.6 million), while RHB Bank saw a 10 per cent decline to RM750 million. Public Bank's core net profit fell 3 per cent to RM1.75 billion. On BIMB, Ch'ng highlighted that the bank was falling short of its full-year return on equity target of 8 per cent, having achieved only 7.6 per cent. That said, Ch'ng noted that Alliance Bank Malaysia, AmBank, CIMB Group Holdings (CIMB), and Maybank had results that were within consensus' expectations. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Alliance Bank's core net profit rose 6 per cent quarter-on-quarter to RM197 million for the first quarter of FY2025; AmBank's increased 6 per cent to RM514 million; CIMB posted a 10 per cent improvement to RM2 billion; and Maybank recorded a 2 per cent uptick to RM2.6 billion. Still, sector-wide indicators point to a muted quarter. For example, cumulative loan growth slowed to 4.4 per cent year-on-year as at end-March 2025, down from 5.5 per cent previously. Meanwhile, net interest margins also narrowed further to 2.07 per cent, continuing a downward trend, while fee income rose just 1 per cent year-on-year, a sharp pullback from last year's double-digit growth. Lowered GDP forecasts In terms of GDP growth, Ch'ng said that Maybank's economics team has lowered its forecast across the region due to the widespread tariffs imposed by US President Donald Trump and heightened global economic uncertainty. For Malaysia, Maybank has lowered its GDP growth forecast to 4.1 per cent in 2025 and 4.2 per cent in 2026, down from earlier projections of 4.9 per cent and 4.6 per cent respectively. In comparison, Singapore's growth is now expected to come in at 2.4 per cent in 2025 – from 2.6 per cent – and 1.8 per cent in 2026. Indonesia's 2025 growth forecast has been cut to 1.7 per cent, from 2.55 per cent previously, while the 2026 forecast remains unchanged at 4.7 per cent. Ch'ng added that Maybank expects the US Federal Reserve to cut the Fed Funds Rate by 75 basis points in 2025, followed by a further 50 basis points in 2026. In Malaysia, a 25-basis-point rate cut is anticipated in the second half of 2025. Meanwhile, the 3-month Singapore Overnight Rate Average is expected to moderate from 2.28 per cent currently to 1.7 per cent in 2025, and further to 1.4 per cent in 2026. In Indonesia, the benchmark rate, currently at 5.50 per cent, is projected to fall by 25 basis points in the first half of 2025, and by another 50 basis points in 2026, bringing it to 4.75 per cent. Taking these into account, Maybank has lowered its earnings estimates for Malaysia's banks by 5 per cent in 2025 and 4 per cent in 2026. 'Buy' picks On its 'buy' calls, Ch'ng said Public Bank is seen as well-managed with sufficient credit buffers and rising non-interest income. AmBank, he said, is focused on funding cost control and business banking, with potential for higher dividends. As for Hong Leong Bank, it stands out for its strong asset quality and liquidity, while Hong Leong Financial Group provides cheaper exposure to Hong Leong Bank, albeit with lower liquidity.
Borneo Post
30-05-2025
- Business
- Borneo Post
Warisan's GLC talk an insult to Sabahans' intelligence - Mandela
Mandela KOTA KINABALU (May 30): Gabungan Rakyat Sabah (GRS) Penampang Youth chief Datuk Ceasar Mandela Malakun has dismissed recent claims by Warisan vice president Datuk Junz Wong on good governance, saying Warisan's track record with state-linked companies tells a very different story. Mandela said Warisan's portrayal of itself as a reform-oriented administration does not reflect the realities of its time in government from 2018 to 2020, particularly in the management of Sabah International Petroleum (SIP) and Sabah Development Bank (SDBank). 'When the then Chief Minister and Finance Minister also took on the role of SIP chairman, it raised serious concerns about the concentration of power and oversight,' he said in a statement on Friday. 'From May 2018 to September 2020, SIP's debts to SDBank increased from RM1.05 billion to RM1.24 billion, while its total group liabilities — combining those with commercial banks — rose to RM1.75 billion.' Mandela also pointed to SDBank's deteriorating fiscal position during the same period. The bank's external bond obligations reportedly jumped from RM3.66 billion to RM4.57 billion by the time Warisan left office. 'Despite clear signs of financial distress, the bank continued to declare annual profits — a situation which, according to industry observers at the time, raised concerns of pervasive and systemic governance weaknesses, including the possible use of creative accounting practices that may have masked the bank's underlying financial risks,' he added. He said the GRS-led government is currently undertaking restructuring efforts to address the issues left behind. 'Today, SIP and SDBank are undergoing necessary reforms to restore proper financial discipline, improve risk management, and ensure that these institutions serve their developmental mandate effectively.' While Mandela welcomed public discussion on GLC reform, he stressed that such conversations must be rooted in truth, not politically motivated historical distortion. 'Sabahans deserve the truth, not Junz's selective memory. Governance isn't about rhetorics — it's about taking responsibility,' he said. Mandela added that the GRS administration remains focused on restoring public trust in state institutions through long-term, structural improvements.
New Straits Times
22-05-2025
- Business
- New Straits Times
Public Bank's Q1 below forecast, but dividend impact likely marginal
KUALA LUMPUR: Public Bank Bhd's core net profit for the first quarter ended March 31, 2025 (Q1) came in below expectations at RM1.75 billion due to the decline in non-interest income and a more normalised loan loss provision. CIMB securities Research said Public Bank Bhd's annualised Q1 net earnings came in 3.8 per cent and 6.8 per cent below the firm's and consensus forecasts, respectively, mainly owing to softer-than-expected net interest income. However, the firm said this is not unusual as Q1 is typically a shorter quarter. "Q1 earnings accounted for 24.1 per cent and 23.3 per cent of our and consensus full-year forecasts, respectively," it said in a note. At its results briefing, CIMB Securities said Public Bank indicated that its exposure to trade-related loans, including the exports and imports and logistics segments, stands at 2.0 per cent of domestic loans, and 3.0 per cent of total group loans. "The company hinted that it is still too early to provide an estimate on the impact from the US tariffs, but confirmed that most of its customers are primarily focused on domestic operations and are expected to remain quite resilient. "Consequently, it is maintaining its credit cost guidance at a low single- digit level," it said. CIMB Securities said that even if Public Bank's credit costs were to rise to the Covid-19 pandemic peak of 33 basis points and the central bank were to implement two policy rate cuts of 25 basis points each, the impact on its dividend would be minimal. Under such a scenario, the forecast for dividend per share may be downgraded by only one sen from 21.5 sen currently to 20.5 sen. However, the firm noted that the bank's dividend yield remains quite decent at 4.6 per cent for financial year 2025 even under this scenario. "We maintain 'Buy' on Public Bank with an unchanged target price of RM5.10. Dividend yield is expected to remain decent, even in a more stressed scenario," it added.
BusinessToday
21-05-2025
- Business
- BusinessToday
Solid Start For Public Bank With Revenue Of RM7.3 Billion And Profit Of RM1.7 Billion
Public Bank Group announced its financial performance for the first quarter ended 31 March 2025, with pre-tax profit reaching RM2.31 billion, an 8.5% increase compared to the same period in 2024. The Group's net profit also saw growth, rising by 5.6% to RM1.75 billion. The Group's net interest and financing income increased by 3.5% to RM2.80 billion, supported by a stable net interest margin and growth in loans and deposits. Non-interest income showed a stronger increase, rising by 18.9% to RM772.1 million. Key financial indicators reported by Public Bank include: Total loans and deposits expanded at annualised growth rates of 5.6% and 3.5%, respectively. Net return on equity was 12.4%. Cost-to-income ratio stood at 35.0%. Gross impaired loans ratio was 0.5%. Loan-to-fund and equity ratio was 83.9%. Common Equity Tier 1 capital ratio was 14.0%, and the total capital ratio was 16.8%. On prospects, the banking group acknowledged concerns about potential disruptions to international trade due to reciprocal tariffs announced by the United States. While a 90-day pause has been implemented, uncertainties remain about the long-term impact on global growth. The bank noted that Malaysia, being an open economy and a key trade partner to the US, is susceptible to these trade tensions. However, it also pointed to supportive domestic measures such as wage hikes, ongoing infrastructure projects, a stable employment market, and a diversified economic structure, which are expected to mitigate some of the downside risks. Tan Sri Tay, in the statement, emphasised the Public Bank Group's commitment to maintaining long-term resilience and sustainable growth. The Group plans to focus on its core competencies, capitalize on emerging opportunities and support customers in adapting to the evolving economic landscape Related
New Straits Times
21-05-2025
- Business
- New Straits Times
Public Bank posts strong Q1 results with 5.6pct rise in profit to RM1.75bil
KUALA LUMPUR: Public Bank Bhd's net profit rose 5.6 per cent to RM1.75 billion in the first quarter (Q1) ended March 31, 2025, from RM1.65 billion a year ago. In a statement, the group said its revenue rose 9.9 per cent to RM7.31 billion in the quarter from RM6.65 billion last year supported by healthy loans and customer deposits growth. "Supported by a stable net interest margin as well as healthy loan and deposit growth, the group's net interest and financing income improved by 3.5 per cent to RM2.80 billion. "Non-interest income increased by 18.9 per cent to RM772.1 million compared with the corresponding period last year," it said. Meanwhile, Public Bank said the group continued to maintain sound asset quality, as reflected in its low gross impaired loans ratio of 0.5 per cent as at end-March 2025. Loan loss coverage, standing at 159.9 per cent, continued to provide an ample buffer against potential credit losses, it said. Public Bank managing director and chief executive officer Tan Seri Tay Ah Lek said despite prevailing challenges in the operating environment, the group's latest financial performance reflects the resilience and strength of its fundamentals. "Prudent cost management yielded an efficient cost income ratio of 35.0 per cent, coupled with continued top-line growth, and return on equity stood at 12.4 per cent," Tay said. The Public Bank Group recorded total loans of RM430.1 billion as at March 2025, which marked a 5.6 per cent annualised loan growth for the first quarter of 2025. Domestically, the group's loan portfolios grew by 6.3 per cent to RM403.9 billion on an annualised basis. On its asset quality, Public Bank continued to demonstrate asset quality resilience, with a healthy gross impaired loans ratio of 0.5, as at end-March 2025. The Public Bank Group's capital position remained healthy and stable. The group's common equity tier 1, tier 1, and total capital ratios stood at 14.0 per cent, 14.1 per cent, and 16.8 per cent, respectively, as at the end of March 2025. On prospect, Tay said as the Public Bank Group continues to navigate an evolving global and domestic landscape, the group remains steadfast in fostering long-term resilience and sustainable growth. "We will continue to build on our core competencies, seize emerging opportunities, and support our customers to adapt to the fast-changing landscape. "By staying agile and forward-looking, we strive to continually deliver sustainable value to all of our stakeholders," he added.
