KUALA LUMPUR (Aug 18): Malayan Banking Bhd (Maybank) shares gained as much as 25 sen or 3% as investors bought the beaten-down stock ahead of the group's second quarter results announcement next week.

Maybank (fundamental: 1.5; valuation: 2.25) rose to its highest so far today at RM8.44. At 12.30pm, the stock settled at RM8.41 with some six million shares done.

At RM8.41, Maybank has a market capitalisation of RM80.23 billion.

Maybank was the sixth-largest gainer across the exchange. The stock, which closed at RM8.60 last Thursday, had fallen to RM8.19 yesterday amid broader market weakness and a depreciating ringgit.

The group is scheduled to announce this August 27 its financials for the second quarter ended June 30, 2015 (2QFY15).

Today, Affin Hwang Investment Bank Bhd said Maybank's 2QFY15 results could have been "well anchored" by stable domestic net interest margin (NIM) and non-interest income.

In a note to clients today, Affin Hwang said it was optimistic on Maybank’s earnings sustainability, strong balance sheet and established domestic franchise amid a tougher landscape for the financial services sector.

"Management believes that NIM should be relatively steady throughout 2H15, though a y-o-y contraction is inevitable. We also believe that non-interest income will be boosted by forex translation gains while steady broking income from Thailand and Indonesia is likely to continue to support fee income.

"We currently expect the overall industry loan growth to moderate, driven by increased repayments as well as a more cautious economic outlook which could cause delayed business expansion, and a slowdown in trades and consumer spending (autos and housing). This may weaken interest income generation and cause NIM to contract further," Affin Hwang said.

While Maybank shares have rebounded, the stock's high foreign shareholding at 20.75% as at August 7 this year versus 22.8% a year earlier is a crucial concern for analysts.

This is because a selldown by foreign investors could drive Maybank's share price lower, according to Affin Hwang, which downgraded its target price for Maybank shares to RM8 from RM9 previously.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)