Islamic Finance 

Malaysia’s Maybank Islamic not likely to meet 40pc asset target contribution

| 06 July, 2018
 NST Business
Malaysia’s Maybank Islamic not likely to meet 40pc asset target contribution
FILE PHOTO: Customers leave a branch of Malaysia's Maybank in Putrajaya October 9, 2009. REUTERS/Bazuki Muhammad/File Photo

JULY 6, 2018 | 11:53AM MYT | KUALA LUMPUR

MIDF Research do not expect Maybank Islamic Bhd to make its target of contributing 40 per cent to the overall Maybank Group’s asset and funding by 2020.

In a note published recently, the research house said most of the targets that have been set out by the bank comes across ambitious, but given Maybank Islamic track record, is achievable.

“Maybank Islamic target to grow contribution to the group’s assets, funding and profit before tax (PBT) to 50 per cent, 50 per cent and 40 per cent respectively by the year 2020. We view this target to be very ambitious,” said the note.

“As at end FY17, the contributions were 28.8 per cent, 31 per cent and 26.6 per cent from 26.9 , 27.9 per cent and 21.2 per cent the previous year respectively.

"Assuming current run rate, we estimate Maybank Islamic’s contribution to the group’s asset and funding by 2020 may fall short of its target by five to 10 per cent respectively. However, we believe that its PBT contribution target will be achievable.”

MIDF recognise the group has grown strongly over the years especially in comparison to its conventional counterpart.

The Compounded Annual Growth Rate (CAGR) for Maybank Islamic’s financing deposits and profit before tax and zakat (PBTZ) for the period, according to the research house, was increases of 21.4 per cent, 20.5 per cent and 20.4 per cent to RM163.7 billion, RM154.6 billion and RM2.36 billion respectively,” it said.

Comparatively, the rest of the group’s CAGR, excluding Maybank Islamic’s CAGR was increases of eight per cent, 7.9 per cent and 6.1 per cent to RM330.1 billion, RM371.9 billion and RM7.74 billion respectively.

“From this, we determine that Maybank Islamic have been a very important feature to the Group,” said MIDF Resarch while noting that opportunities from expected growth in Islamic finance given that the global Islamic finance market size are expected to grow at CAGR of 9.4 per cent between 2016 to 2022.

“We believe all of these represents a great opportunity for Maybank Islamic to continue its growth trajectory, especially as it is the top five largest Islamic bank globally by asset size and the only of non Gulf Co-operation Country (GCC) bank.”

The research house maintains its “BUY” call with a target price of RM11.40.

“Maybank Islamic have grown strongly over the years and have become an essential part of the Group. We are optimistic of its future given the expected continuing growth for demand of shariah based financial products,” it said.

“We believe that Maybank Islamic will be in a good position to take advantage of this demand.”

Copyright New Straits Times