MALAYAN BANKING BERHAD

Business Summary

Malayan Banking Berhad (Maybank Bhd) is Malaysia’s biggest bank in terms of market cap, operating in 2,400 branches in 20 countries in the ASEAN region. 

Last update: 09.02.2019

Dividends (4/5): ⭐ ⭐ ⭐ ⭐

Value (4/5): ⭐ ⭐ ⭐ ⭐ 

Financials (4/5): ⭐ ⭐ ⭐ ⭐ 

Growth (4/5): ⭐ ⭐ ⭐ ⭐ 

Business (4/5): ⭐ ⭐ ⭐ ⭐ 

Reference: (i) MyKayaPlus Metrics Definition (ii) MyKayaPlus Metric Evaluation Scale


2018 Geographical Statistics

Countries & RegionOperating RevenueProfit Before Tax
Malaysia64%76%
Singapore16%10%
Indonesia9%5%
Others11%9%

Being one of the biggest banks in South East Asia, Maybank Berhad derives a majority of its revenue and profits from its home base Malaysia. It also has a strong presence in Singapore and Indonesia. 

Financial Performance

Maybank Berhad has proven to be able to consistently generate more revenue year in year out. Its profit has also shown a steady increase. Even though its a gigantic company by market cap, Maybank Bhd is still able to grow, creating more value to its shareholders. 

Return on Equity came down between the year 2012 till 2016 but slowly to trend back up. During 2013 to 2015, the Basel Committee on Banking Supervision passed a set of financial regulations known as Basel III, intended to strengthen a bank’s capital requirement by increasing liquidity and decreasing leverage.

Hence, we notice that retained profits of Maybank Bhd grew significantly since the year 2013. Due to the increase of equity more than profits generated, ROE trended lower during the mentioned few years. 

 

2018 Operating Revenue Breakdown

A bank’s primary business is to earn interest from its borrowers. The same goes for Maybank Berhad. From the latest operating revenue breakdown, interest income contributes to a huge portion of Maybank Berhad’s revenue.

Apart from earning interest by lending money, Maybank Berhad is also active in investments and also the insurance sector. 

Maybank has been generating steady growth YoY. As the biggest lender in Malaysia, Maybank Berhad not only commands a big market share in loans and mortgages, it has also ventured into multiple revenue streams such as Islamic Banking and Insurance. Profit has also increased alongside the growing revenue

Having multiple revenue segments provide Maybank Berhad more opportunities and synergism in growing its revenues year by year.

 

Balance Sheet

 

YearAssets (RM’000)Liabilities (RM’000)Equities (RM’000)Current Ratio
2018806,991,681729,254,42175,330,1271.09
2017765,301,766690,118,16172,988,6141.09
2016735,956,253665,481,43068,515,7311.09
2015708,344,503644,831,04661,694,9901.08
2014640,299,956585,558,78152,974,5691.08

 

2018 Capital Adequacy Ratio

 

Tier 1 Capital Ratio15.02%
Total Capital Ratio19.02%

In the year 2018, Maybank Bhd has Assets of RM807 billion, liabilities of RM729 billion and Equities of RM75 million. The current ratio is stable at 1.09, and total Capital Ratio is at 19.02%, much more than the safety limit set by Bank Negara Malaysia.

 

Operating Cash Flow & Dividends Paid Out

Source: MAYBANK BHD ANNUAL REPORT

On top of increasing revenues and profit, Maybank Berhad also has a good track record of improving its operational cash flow YoY. Dividends paid out in the form of cash is also on an increasing trend. Maybank Bhd may be a big cap stock, but it is not true to say that big-cap companies do not grow. 

Price

MyKayaPlus Verdict

Maybank Bhd has proven time to time it is able to reward shareholders with consistent dividends at pretty attractive yields (~5.7% trailing dividend yield per annum). The bank’s business upside includes a future potential contribution from Islamic Banking and also its Insurance segment, not to mention its potential growth outside of the Malaysia market in another ASEAN region. Of course, do remember to check the Maybank’s key financial ratios and asset quality to ensure its financials remain healthy.

Banks earn a vast amount of their earnings via charging interests to borrowers. Maybank having a high CASA ratio (>35%) compared to its competitors would surely benefit and ride along with the growth of the Malaysian economy.

Like our Malayan Banking Berhad analysis? Check out our CIMB Group Holdings Berhad analysis here

DISCLAIMER
The information available in this article/report/analysis is for sharing and education purposes only. This is neither a recommendation to purchase or sell any of the shares, securities or other instruments mentioned; nor can it be treated as professional advice to buy, sell or take a position in any shares, securities or other instruments. If you need specific investment advice, please consult the relevant professional investment advice and/or for study or research only.
No warranty is made with respect to the accuracy, adequacy, reliability, suitability, applicability, or completeness of the information contained. The author disclaims any reward or responsibility for any gains or losses arising from direct and indirect use & application of any contents of the article/report/written material

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