#Hot Stock* Maybank's falls 0.4% on flat 2Q profit, downgrades

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KUALA LUMPUR (Aug 29): Malayan Banking Bhd (Maybank) fell as much as four sen or 0.4% after the group said net profit came in flat at RM1.58 billion in the second quarter ended June 30, 2014 (2QFY14). Maybank's latest financials have invited analyst downgrades on the group.

Maybank fell to a low of RM10.06 before changing hands at RM10.08 at 10.56am. The stock traded flat at RM10.10 at 11.17am with some two million shares done.

Yesterday, Maybank said 2QFY14 net profit rose to RM1.58 billion from RM1.57 billion a year earlier. Revenue climbed to RM8.76 billion from RM8.59 billion.

AllianceDBS Research Sdn Bhd wrote in a note to clients today the research house had retained its "buy" call for Maybank shares with an unchanged target price (TP) of RM11.80.

The stock's recommendation and TP, however, came with a downward revision in AllianceDBS'
growth forecast for Maybank.

"Our TP is intact despite rolling forward valuation base to FY15 and reducing long term growth rate to 6.5% from 7.0% in view of softer growth in Indonesia.

According to AllianceDBS, Maybank's loan growth target is expected to be maintained at 13%, driven by international operations, especially in Singapore.  AllianceDBS expects further cross selling opportunities as Maybank regionalised its consumer banking platform in 2014.

Meanwhile, Hong Leong Investment Bank Bhd said it had cut its FY14 to FY16 income forecast for Maybank by 3.4 to 4.9%. The downgrade reflected Maybank's lower non-interest income and other minor adjustments.

"Dividend projection also cut accordingly as we maintained payout ratio at 70%," Hong Leong said.

The lower income forecast has led Hong Leong to lower its TP for Maybank shares to RM11.47 from RM11.98. Hong Leong, however, maintained its "buy" rating on Maybank shares.