HwangDBS Vickers has raised its dividend expectations on Malayan Banking Bhd (Maybank) to
70 per cent from 60 per cent as it expects the bank to utilise its existing S108 tax credits before it expires.
In a note here today, the research house said the RM1.95 billion tax credit which expires in 2013,
implied that Maybank could pay a dividend of up to RM7.8 billion without incurring an additional tax.
It said, the bank's growth in Singapore and Indonesia remained strong, recording last year a
year-on-year (y-o-y) loan growth of 44.6 per cent and 28.8 per cent respectively,
which is seen to be stronger than Malaysia's 18.6 per cent.
In addition, HwangDBS noted that Singapore and Indonesia contributed
14 per cent and six per cent respectively to Maybank's pre-tax profit.
Maybank has an advantage of leveraging on deposits franchise for transactional banking,
given its high current and savings account base, which has a share of 36 per cent of the total deposits, it said.
"It is less susceptible to capital market weakness as over 50 per cent of its non-interest income is recurring,
mainly from transaction banking activities," added HwangDBS.
Maybank remains its top pick for defensive qualities and highest dividend yields in the sector.
Meanwhile, the research firm has maintained a "buy" call on the bank with a RM10.60 target price. -- Bernama
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