KUALA LUMPUR (May 30): Hong Leong IB Research has maintained its “Buy” rating on Malayan Banking Bhd with a lower target price of RM9.33 and said Maybank’s 1Q16 net profit of RM1.43 billion (q-o-q: -13.6%; y-o-y; -16.1%) came in below expectations, accounting for only 21.3% and 20.3% of consensus and our full-year forecasts.

In a note today, the research house said key variance against our forecast – higher-than-expected credit cost.

“While keeping to its FY16 KPI targets, management has turned more cautious on Singapore, as it has guided down loan growth target in Singapore by 2%-pts to 1-2%, while highlighted that asset quality there may deteriorate further.

“FY16-17 net profit forecasts are tweaked lower by 5.3% and 0.6% to RM6.67 billion and RM7.53 billion respectively, large to account for higher credit cost assumptions.

“Post earnings adjustments, Gordon Growth-derived target price lowered by 5% to RM9.33 (based on ROE and WACC of 10.7% and 9%),” it said.