KUALA LUMPUR (March 1): CIMB IB Research and Hong Leong IB Research (HLIB) have both maintained their respective ratings on Malayan Banking Bhd (Maybank) after the banking reported an  11.5% year-on-year increase in net profit in the financial year just ended.

Maybank's net profit rose to RM7.52 billion in the financial year ended Dec 31, 2017 (FY17), from RM6.74 billion in the previous year.

In separate results notes today, CIMB Research and HLIB maintained their “Hold” and “Buy” recommendation respectively on the counter and said the company’s FY17 earnings were within expectation.

CIMB Research retained its target price (TP) of RM9.80 on Maybank, while HLIB raised their TP to RM11.

CIMB Research analyst Winson Ng said the bank’s core FY17 net profit advanced by 11.5%, mainly driven by the 30.8% drop in loan loss provisioning.

“We regard this as normalisation of provisioning, following the chunky provisions for certain oil and gas loans in FY16.

“Despite the weak loan growth, FY17 net interest income grew by a healthy 6.9%, thanks to a 9 basis point expansion in net interest margin to 2.36%,” he said.

Ng added the upside and downside risks for the research house include pick-up and slowdown in loan and fee income growth.

Meanwhile, HLIB analyst Khairul Azizi Kairudin fine tuned his FY18 earnings by 4.2% to reflect higher net interest income on healthy net interest margin and lower credit cost assumption which is line with management guidance.

“Maybank delivered robust earnings in FY17. Given their well well-balanced exposure in both retail and corporate segments,

“Maybank is the front-runner beneficiary and the best proxy to ride on a sustained recovery in economic growth,” he added.