Maybank climbs on earnings upgrades

Maybank climbs on earnings upgrades
Published: 2009/09/08

Malayan Banking Bhd rose the most in a month in Kuala Lumpur trading, leading gains among lenders, after Credit Suisse Group AG said analysts had increased their profit estimates.

Malayan Banking, the country’s biggest bank and known as Maybank, climbed 1.5 per cent to RM6.60 at 10:22 am local time, set for its biggest advance since August 3. Analysts have raised their estimates for Malaysian bank earnings by 11 per cent for 2009 and 16 per cent for 2010 over the past six months, Danny Goh, an analyst at Credit Suisse, wrote in a report today.

“The earnings upgrades were to a large extent a reflection of increased optimism over the outlook for non-performing loans,” Goh said. “Improvement in non-interest income growth prospects could also be another key driver.”

Malaysian bank earnings may surge a “sterling” 34 per cent next year as the economy strengthens, CIMB Investment Bank Bhd said on September 3. Malaysia’s economy, the third-biggest in Southeast Asia, is forecast by the government to return to growth in the fourth quarter after slipping into its first recession in a decade last quarter.

Bumiputra-Commerce Holdings Bhd, the second-biggest, added 0.4 per cent to RM10.38, while RHB Capital Bhd added 0.8 per cent to RM5.04.

Loan applications in Malaysia in July rose 19 per cent, the largest monthly increase since August 2008, central bank data show. Since September, the banking industry’s gross non- performing loan ratio has fallen to its post-Asian financial crisis low of 3.9 per cent, Ng Wee Siang, a banking analyst at BNP Paribas, wrote in a report last month.

BNP Upgrade

BNP Paribas upgraded Malaysia’s banking industry to “buy” from “reduce” in August, saying positive government initiatives and an improving economy are helping to curb bad debts and revive lending growth.

Analysts’ estimates for Bumiputra-Commerce’s profit have been “materially upgraded but are still 3-4 per cent below Credit Suisse’s 2009 and 2010 estimates,” Credit Suisse’s Goh said in the report. Credit Suisse’s forecasts for Public Bank Bhd’s earnings are below analysts’ estimates, he said. -- Bloomberg